TMI Blog2017 (11) TMI 1977X X X X Extracts X X X X X X X X Extracts X X X X ..... is devoid of any merit and accordingly we dismiss the Ground No.1 of the additional ground. Validity of Notice issued u/s 142(1) - as contended that when the assessee has already filed the return of income on 26.9.2012 then the Notice issued by the Assessing Officer under Section 142(1) on 12.9.2013 is not valid - HELD THAT:- We are of the view that even if the assessee filed the return of income on 26.9.2012 and the AO has subsequently issued a Notice under Section 142(1), the same will not effect the validity of the assessment in question framed u/s 143(3) of the Act. Accordingly, we do not find any merit or substance in additional ground No.2 and the same is dismissed. Validity of assessment due to the reason that the Notice issued u/s 143(2) on 21.10.2013 is beyond the limitation provided under law and consequently the assessment framed on the basis of the said time barred Notice - We find that the assessee filed its return of income by efiling on 26.9.2012. This fact of e-filing of return has not been disputed by the AO and it is also matter of record as a copy of the said return has been now filed by the Assessing Officer along with the record. There is no dispute ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s conducted on 6.2.2012 and in pursuant to the search the Assessing Officer issued a Notice under Section 153C for the Assessment Year 2012-13 which is not valid as this assessment year is the current year in which the search itself was carried out. Therefore, he has submitted that the assessment framed under Section 153C is not valid and liable to be quashed. 3. On the other hand, the ld. CIT DR has submitted that there is no dispute that the search was conducted in the previous year relevant to the assessment year under consideration therefore the provisions of Section 153C are not applicable for the assessment year under consideration however, the mention of this Section in the order is only a mistake which is covered under the provisions of Section 292BB of the Act. 4. Having considered the rival submissions as well as the relevant material on record, we find that undisputedly when the search was carried out on 6.3.2012 then the provisions of Section 153C are not applicable for the assessment year under consideration i.e. 2012-13 therefore, the assessment framed in question for the assessment year under consideration will be treated only under Section 143(3) and mere ment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arned CIT DR has submitted that the AO has acted upon the return of income only when the assessee filed its letter dt.8.10.2013 wherein it was stated that the assessee has filed its return of income and copy was attached to the said letter. Therefore it was contended that the limitation for issue of Notice under Section 143(2) would reckon from 8.10.2013 and consequently the Notice issued by the Assessing Officer under Section 143(2) on 21.10.2013 is within the limitation. 11. We have considered the rival submissions as well as the relevant material on record. We find that the assessee filed its return of income by efiling on 26.9.2012. This fact of e-filing of return has not been disputed by the Assessing Officer and it is also matter of record as a copy of the said return has been now filed by the Assessing Officer along with the record. There is no dispute that the return of income was filed by the assessee under Section 139 of the Act and it was not filed in response to the Notice under Section 142(1). The assessee only intimated the Assessing Officer vide its letter dt.8.10.2013 that he has also filed its return of income and a copy of which was also filed before the Assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing the notice has been explained in Circular No. 545, dt. 31st Oct., 1989 as reported in (1990) 82 CTR (St) 1 : (1990) 182 ITR (St) 1 as under : A proviso to sub-s. (2) provides that a notice under the sub-section can be served on the assessee only during the financial year in which the return is furnished or within six months from the end of the month in which the return is furnished, whichever is later. This means that the Department must serve the said notice on the assessee within this period, if a case is picked up for scrutiny. It follows if an assessee, after furnishing the return of income does not receive a notice under s. 143(2) from the Department within the aforesaid period, he can take it that the return filed by him has become final and no scrutiny proceedings are to be started. 27. From the reading of the proviso as it stands in the relevant year and the above circular, it is clear that AO has got no power to make a scrutiny assessment unless he issues a notice in the prescribed time of 12 months making his intentions clear to the assessee. Further, the only procedure of making assessment which the Act prescribes are under ss. 143(1), 143(3) and 144 (in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d leave the other part when the effect has to be given to the scheme contained in the whole section i.e., s. 143(2) of the Act along with the proviso. Proviso, therefore, cannot be divorced from the main section. It has to be construed with reference to the preceding parts of the section to which it is appended and as subordinate to the main provisions of the Act. It has been said that there is no rule that an Act containing a proviso is to be construed as to its first or enacting part without reference to the proviso. The section must be construed as a whole, each portion throwing light on the rest. Lord Wright in Lemings vs. Kalley (1940) AC 206 at p. 229 said : The proper course is to apply the broad general principle of construction, which is that a section or enactment must be construed as a whole, each portion throwing light if need be on the rest. I do not think there is any other rule even in the case of a proviso in the strictest and narrowest sense. 28. The learned Departmental Representative Shri Rajnish Kumar emphasized that the provisions of sub-s. (2) of s. 143 and other provisions mentioned therein are to be applied to the extent possible/practicabl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ub-s. (2) of s. 158BA provides that assessment made under this chapter shall be in addition to the regular assessment. 4. The procedure of completing the block assessment has been laid down under s. 158BC. 5. 158BE provides the limitation of completing the block assessment. 6. 158BFA makes the provision of levying interest and penalty in block cases. 7. Sec. 113 provides the rate at which income determined under the block is to be taxed. 31. In contrast, s. 148 does not provide any methodology for computing the income on reassessment or assessment. On the contrary, it creates a legal fiction that such return shall be treated as one made under s. 139. By the creation of such legal fiction all the procedures prescribed in and subsequent to s. 139 automatically apply in toto. It is a settled principle that a legal fiction has to be taken to its logical conclusion and, therefore, what is valid for a return under s. 139 will be valid with equal force to a return filed under 148. Therefore, the proviso will apply to a return filed in response to notice under s. 148. It is pertinent to note that cl. (b) of s. 158BC specifically talks of the applicability of s. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y in the following passage of the apex Court as stated in R. Dalmia vs. CIT (supra), a judgment strongly relied by Shri Sampath, the counsel for the appellants. As to the argument based upon ss. 144A, 246 and 263, we do not doubt that assessments under s. 143 and assessments and reassessments under s. 147 are different, but in making assessments and reassessments under s. 147 the procedure laid down in sections subsequent to s. 139, including that laid down by s. 144B, has to be followed. 34. Now we come to one of the main contentions of the Department that s. 148 uses the phrase 'so far as may be and, therefore, the procedural set up in Chapter XIV will apply to the extent it is practical or possible. Consequently, the same is not applicable to the return filed in pursuance to notice under s. 148. To buttress their argument, they further relied on the cases Dr. Pratap Singh vs. Director of Enforcement (supra) and Ujagar Prints vs. Union of India (1989) 75 CTR (SC) 1 : (1989) 179 ITR 317 (SC) and CIT vs. Bansidhar Jalan Sons (supra) and Vishwanath Prasad Bhagwati Prasad vs. CIT (supra) for the proposition that jurisdictional foundation is validly laid by issue o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eturn and the period available to complete the assessment may overlap. But this overlapping is based on a misconception that proviso gives a vested right to the AO to wait till the last day of the 12th month to issue notice. In the given circumstances, notice could be issued earlier as the AO is supposed to act diligently and cannot be expected to act carelessly when the question of due share of tax of the State is concerned. It is pertinent to note that the proviso states the outer limit and not the minimum limit within which a notice could be issued if the other provision warrants, this period would get reduced. Supposing that a view is taken that proviso is not applicable and if notice under s. 148 was served on 30th March, 2002, in that case outer limit for completing assessment would be 31st March, 2003. In such a case, if the assessee does not file return till the fag end, would the AO not complete the assessment/ reassessment or was he helpless. The answer is simply no. He would proceed to complete the same by resorting to the provision of s. 144. Therefore, proviso nowhere comes in conflict with the provisions of s. 147. Had the proviso curtailed the limitation period as pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nderstand the background of the same. The aforesaid judgment pertains to the dispute under The Central Excises and Salt Act, 1944 (CE Act in short), and The Addl. Duties of Excise Act, 1957 (AD Act in short). The AD Act, 1957 did not prescribe any procedure for levy and collection of duty leviable under that Act, but provided that the procedure in the CE Act should be followed. The specific dispute was that it did not define the word 'manufacture , but by virtue of s. 2, it provided that for the purposes of the Act, definition of specified goods as contained in CE Act be adopted. Later, by an Amendment Act, 1980 the definition of 'manufacture in CE Act was enlarged to include 'processing . The assessee contended that the enlarged definition of manufacture was not applicable for the purposes of AD Act as the charge of duty in the said Act is determined under s. 3 and is only quantified in s. 2. Therefore, only the procedural provisions of CE Act would be applicable and not the substantive provisions. In any case the definition as stood in CE Act 1957 would apply and any subsequent changes made thereto would be inapplicable. 36. It is in this background the apex Cou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... There is no reason or logic why all the incidents attaching under the earlier legislations in so far as they are not clearly inconsistent with the later one, should not be extended to the later legislation as well. And concluded by saying as under : In the circumstances, I agree that we should give full and literal effect to the language of s. 3(3) and hold that it has the effect not only of attracting the procedural provisions of the 1944 Act but also all its other provisions including those containing the definition 37. From the above passages we do not find any limitation put by the apex Court in the applicability of the referential legislation. Therefore we are of the view that full provisions of s. 143 including the proviso, would be applicable to assessment/reassessment done under s. 147. 38. The learned Departmental Representative further stated that even if it is assumed that the proviso to s. 143(2) of the Act is applicable to returns filed pursuant to notice issued under s. 148, the failure to issue notice within the prescribed time of 12 months will not render the assessment as a nullity. Such a failure is to be treated as a procedural lapse whi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n affirmative. 41. So far as the issue on question No. 2 is concerned, we hold that no assessment can be made if the notice under s. 143(2) of the Act is not served within the time prescribed by the proviso under s. 143(2) of the Act and thus the return filed will be deemed as accepted. 42. In the case of appellants S/Shri Raj Kumar Chawla, Rajiv Chawla and Ajay Chawla, notice under s. 148 was issued on 26th March, 1998. Shri Ajay Chawla filed the return of income on 28th April, 1998, but notice under s. 143(2) of the Act has been issued on 13th July, 1999 for 21st July, 1999. Shri Raj Kumar Chawla filed return on 15th May, 1998, but notice under s. 143(2) is stated to have been issued on 13th July, 1999 and served on him on 21st July, 1999. In the case of Shri Rajiv Chawla the return has been filed on 15th May, 1998 and the notice under s. 143(2) was issued on 13th July, 1999 for 21st July, 1999. Parties are not able to state the exact date of service of notice but the admitted fact is that the notice under s. 143(2) in respect of the three appellants have been served after the expiry of period of 12 months as provided under proviso to s. 143(2) of the Act. Since the a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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