TMI Blog2006 (7) TMI 246X X X X Extracts X X X X X X X X Extracts X X X X ..... sment proceedings, the Assessing Officer made disallowance of Rs. 16,90,135 under section 14A against dividend income exempted under section 10(33). Similar are the facts relating to assessment year 1999-2000. The return for assessment year 1999-2000 was filed on 22-12-1999 and the same was processed under section 143(1)(a) of the Act by issuing intimation on 8-3-2002 excepting the returned loss. The period for issuing the notice under section 143(2) expired on 22-1-2001 and subsequently, the assessment was re-opened by issuing of notice under section 148 on 1-6-2001. In such reassessment proceedings, the Assessing Officer disallowed the sum of Rs. 33,00,554 under section 14A against the dividend income exempted under section 10(33). 3. The learned CIT(A) has confirmed the orders of the Assessing Officer for both the years. Aggrieved by the same, the assessee has preferred these appeals before the Tribunal. 4. Both the parties have been heard at length. The first contention raised by the learned counsel for the assessee Mr. Gulanikar is that, the Assessing Officer could not re-open the concluded assessment by issuing notice under section 148 in view of the proviso to section 14 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ess income. Thus, there is no reference regarding disallowance under section 14A of the Act. It is not the case of the assessee that re-opening was bad-in-law on the basis of the reasons recorded by the Assessing Officer. Thus, it is clear that the assessment was not re-opened on the basis of the provisions of section 14A but was re-opened on some other ground. Accordingly, it cannot be said that the Assessing Officer re-opened the assessment for making disallowance under section 14A. The decision of the Tribunal relied upon by the assessee's counsel is distinguishable inasmuch as that case, the assessment was reopened for the purpose of making disallowance under section 14A. Hence, the first contention raised by the assessee's counsel is rejected. 6. The next contention of Mr. Gulanikar is that, assuming that reassessment proceedings were validly initiated, the Assessing Officer is prohibited to reassess under section 147 or pass an order enhancing the assessment order reducing a refund already made or otherwise increasing the liability of the assessee under section 154 for any assessment year beginning on/or before the first day of April, 2001. According to him, if the proceedi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... section 143(1) amounts to an order of assessment. No doubt, the High Court was considering this aspect of the issue for the purpose of assumption of jurisdiction under section 263 of the Act but the conclusion was reached by the Hon'ble High Court by independently evaluating the entire provisions of section 143. The relevant portion of the judgment of the Hon'ble Bombay High Court is being reproduced as under: "The amended provision of section 143(1) of the Income-tax Act, 1961, is applicable with effect from April 1, 1989 i.e., the assessment year 1989-90. The amendment has introduced a change in the procedure for assessment. The scheme is that the return as filed by the assessee should be accepted at its face value being self-assessment. However, the said sub-section is without prejudice to the provisions of sub-section (2) of section 143. In other words, the procedure for assessment has been simplified so as to dispense with a regular assessment order to be passed by the Assessing Officer in every case. Acceptance or acknowledgement of the return filed by the assessee and intimation sent for the purpose of section 143(1) is an assessment. Assessment has been defined in sectio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Assessing Officer was prohibited to reassess by invoking the provisions of section 14A. 9. Without prejudice to our above finding, we are of the view that disallowance could not be made under section 14A in the reassessment proceedings even assuming that intimation under section 143(1) does not amount to an assessment order. We have gone through the Board Circular No. 11, dated 23-7-2001, wherein the Board has reduced the rigor of the provisions of section 14A by providing in para 4 of the Circular that where assessment proceedings have become final before 1-4-2001, then such proceedings should not be re-opened under section 147. Even at the cost of repetition, para 4 of the Board Circular is being reproduced as under: "4. The Board have considered this matter and hereby directs that the assessments where the proceedings have become final before the first day of April, 2001 should not be re-opened under section 147 of the Act to disallow expenditure incurred to earn exempt income by applying the provisions of newly inserted section 14A of the Act." The perusal of the above clearly shows that the Board has referred to the finality of the assessment proceedings, which is differ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... notice under subsection (2) of section 143 of the Act thereafter is served on the assessee within the stipulated period of 12 months, the assessment proceedings under section 143 come to an end and the matter becomes final. Thus, although technically no assessment is framed in such a case, yet the proceedings for assessment stand terminated." The above judgment clearly holds that even where intimation is not issued but the period of limitation provided in section 143(2) has expired, the assessment proceedings became final. Therefore, such cases would fall within the ambit of para 4 of the Board Circular. Consequently, the Assessing Officer is prohibited from taking any action under section 147. It is a settled legal position that what cannot be done directly cannot be done indirectly. If the Assessing Officer is prohibited to take any action under section 147 in terms of the proviso to section 14A, then in our opinion, he is also prohibited from re-assessing the income even though the notice under section 148 was valid. If the Assessing Officer is permitted to take action in the valid reassessment proceedings, then the purpose of the proviso would be defeated. The object of the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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