TMI Blog2005 (9) TMI 241X X X X Extracts X X X X X X X X Extracts X X X X ..... as the CIT(A) correctly records the date as 24th Aug., 1998. However, the Tribunal has committed mistake in recording date as 24th Aug., 1997. Consequently this mistake is apparent on record which requires to be rectified. 3. On rectification of the above date, the first ground will have to be considered in the light of the correct date whether the notices under s. 142(1) have been issued after the end of the assessment year. The assessment has been completed on the basis of the said notices under s. 142(1). Since the said notices were issued after the end of the relevant assessment year, the notices become illegal and invalid. In support of this argument. the assessee relied on the decision of the Hon'ble Supreme Court in case of CIT vs. Narsee Nagsee Co. (1960) 40 ITR 307 (SC) and also mentioned several other decisions of various Courts as well as that of Tribunal. Further reliance was also placed on the decision of the Hon'ble Supreme Court in the case of Union of India Anr. vs. British India Corporation Ltd. Ors. (2004) 190 CTR (SC) 385 : (2004) 268 ITR 481 (SC). It was also mentioned that no notice under s. 148 of the Act was ever issued before passing the assessment o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 44 was passed. 6. It is further mentioned that the requirement of notice is mandatory even under s. 145(3) of the Act, though the section does not specifically provide for it. But the Hon'ble Supreme Court in the case of C.B. Gautam vs. Union of India Ors. (1992) 108 CTR (SC) 304 : (1993) 199 ITR 530 (SC) had held that the principles of natural justice have to be read into the Act even in instances of no specific provision or provision contrary to providing opportunity. Our attention was invited to the portion of the said decision given at p. 552 in para F to p. 553 para C. It was pointed out that in this case, no opportunity had been given what to say about adequate opportunity. Thus the assessee in this case was served with the assessment order as 'fait accompli' on 31st March, 2000 without a prior show-cause notice, which was mandatory as per s. 154 of the Act. Besides the above said decision of the Hon'ble Supreme Court, the specific wordings under s. 144 warrant that a proposition notice ought to have been given before the assessment is completed, whereas in this case no such notice was given and this fact has not been considered by the Hon'ble Bench of the Tribunal. Thus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at p. 217 specifically in para 6 and p. 220 of the paper book. In respect of this ground, the learned CIT(A) has given the following findings: "I have carefully considered the above submissions and I find that the grounds canvassed before me were identical to that taken before my predecessor during appellate proceedings for asst. yr. 1990-91. It was held in the said proceedings that in the above facts and circumstances, the disallowance of interest was not justified. I have given a careful thought to the reasons to the weighed with my learned predecessor and I am in full agreement that the addition under this head is totally uncalled for. There is "no dispute" that the debts arose out of the business activities of the appellant. There is no dispute that subsequently due to sickness of the companies, the BIFR was trying to formulate a financial package for their reconstruction. As per this package, there was a bar on charging of interest on the outstandings with the appellant-company....." Further, the Tribunal has erred in considering argument of the learned Departmental Representative for the Revenue that in para 10 that the findings in the asst. yr. 1991-92 was not accepted ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Finance Act, 2001 to s. 36(1)(vii), when amended section has not been made available to the assessee at the time of framing the assessment. The applicability of the amended provision was not discussed by the learned CIT(A) nor the Tribunal. Thereby the provisions of law not applicable have been considered and relied by the Bench. This has resulted in a mistake of non-consideration of relevant provisions of law which is a mistake apparent from the record and requires rectification. 9. As regards the issue of prior period expenses of Rs. 18,27,00,543, the Hon'ble Bench in paras 26 to 27 has confirmed the disallowance on this issue. The AO has disallowed a sum of Rs. 16,34,19,000 debited by the assessee under the head 'prior 'period expenses'. The learned CIT(A) not only confirmed the addition but also enhanced the same by Rs. 1,92,81,541 without giving notice of enhancement to the assessee. The disallowance had been made largely on the ground that details of expenses were not furnished and the assessee had not submitted any evidence to substantiate the claim of the expenses. The Bench of the Tribunal has upheld the order for the reasons treated by the authorities below. The assesse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... been served on the assessee till the date is undisputed. The Tribunal factually failed in error on the issue of ITNS 150. Since no ITNS 150 has been served, the liability to pay the interest merely in the demand notice is contrary to the position of law as explained by the Hon'ble Supreme Court in case of CIT vs. Ranchi Club Ltd. (2000) 164 CTR (SC) 200 : (2001) 247 ITR 209 (SC). Several decisions on this issue supporting the case of the assessee have not been considered. Further, that no opportunity was given to the assessee before levy of interest which was confirmed by the Tribunal. Even if alleged ITNS 150 was available with the AO, still no liability could arise until ITNS 150 was served which has been ignored by the Bench. In this regard, reliance was placed on the decision of the Hon'ble Supreme Court in case of Kalyan Kumar Ray vs. CIT (1992) 102 CTR (SC) 188 : (1991) 191 ITR 634 (SC) which reads as under: "By the Court: To avoid unnecessary controversies like this, the Department should, in future, adopt the salutary and useful practice of incorporating the entire calculations in ITNS No. 65 Form itself or, in the alternative, make the ITNS 150 an Annexure to form part o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... har Gidwany vs. CIT (1983) 139 ITR 498 (Cal) and the decision in CIT vs. Willard India Ltd. (1993) 202 ITR 423 (Cal) has not been considered in deciding this issue. (f) Further the levy of interest under s. 201(1A) without a specific/separate order has not been dealt by the Tribunal. (g) No separate order has been made for levy of interest and no prior opportunity has been provided as per law.All the above results in rendering the order of the Tribunal open for rectification to rectify mistakes apparent on record. As is evident, the order has been rendered overlooking the binding decisions of the Supreme Court, jurisdictional High Court. decisions of other High Courts and decisions of other Benches of the Tribunals as well as non-consideration of express provisions of the IT Act, non-consideration of evidence placed on record, wrong mention of facts and law and miscarriage of justice by denying opportunity of being heard." The basis of above mistakes, it is submitted that the Bench can rectify the order under s. 254(2) of the Act as held in case of Himachal Pradesh Financial Corporation vs. CIT (1999) 152 CTR (HP) 146 : (1998) 233 ITR 450 (HP). Further reliance was placed on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . in case of Motorola Inc. vs. Dy. CIT and Ericsson Radio Systems A.B. vs. Dy. CIT and other case of Kiran Singh Ors. vs. Chaman Paswan Ors. AIR 1954 SC 340. He submitted that though the date of notice under s. 142(1) was wrongly mentioned by the Hon'ble Tribunal, he has no objection correcting the date as 24th Aug., 1998. He objected for holding the assessment as invalid. He further submitted that a number of notices were issued after 24th Aug., 1998, all of which were partially complied or fully complied by the assessee. The assessee-company never filed a valid return under the Act consequently only recourse available under law is the best judgment assessment under s. 144. He submitted that time-limit for completion of assessment for 1997-98 was available upto 31st March, 2000 under s. 153(1)(a) of the Act. 13. He further submitted that escapement of income, if any, will occur only after 2nd April, 2000. Any assessment after 1st April, 2000 alone requires notice under s. 148 of the Act and in this case the assessment was completed on 31st March, 2000, no notice under s. 148 is required to be given. He further submitted that the AO has a choice to complete the assessment eit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g an order under s. 144 of the Act. He invited our attention to the second proviso to s. 142(1), provided further that "it shall not be necessary to give such opportunity in a case where a notice under sub-s. (1) or s. 142 has been issued prior to the making of an assessment under this section". This would not be applicable in the instant case, the assessee will be governed by first proviso i.e., where a show-cause notice is necessary before passing best judgment assessment under s. 144 of the Act. He further invited our attention to s. 145(3), where it is mentioned that before rejecting the books or account it was necessary for the AO to have given an opportunity even though s. 145(3) does not specifically provide. The duty to give opportunity must be read into the provisions as held by the Hon'ble Supreme Court in the case of G.B. Gautam vs. Union of India Ors. The learned counsel further brought to our attention the order-sheet and notings of the AO in the assessment proceedings found in the paper book at pp. 96 to 109 and submitted in the original hearing, particularly pp. 102 and 103 which clearly indicates that no hearing was granted after 7th Feb., 2000. Though voluminous ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... "reason to believe" and other conditions are specially provided to control and check the powers of the AO to issue notice under s. 148 of the IT Act. We read no such restriction under s. 142(1)(i) of the Act. The two provisions govern different fields and can be exercised in different circumstances. There is no similarity, as we have noticed while considering the provisions of ss. 139(1) and 139(2) or those of ss. 139(4) and 148 of the IT Act. Both the sub-sections here relate to the powers of the AO to be exercised in different circumstances. If income "escapes assessment", then the only way to initiate assessment proceedings is to issue notice under s. 148 of the IT Act. There is no such requirement as far as notice under s. 142(1)(i) of the IT Act is concerned. If fact is notice has already been issued under s. 148 of the IT Act calling for a return from the assessee, it looks absurd to call for a return again under s. 142(1)(i). We, therefore, do not find any force in the contention of the Revenue." 15. The assessee's learned counsel further submitted that the issue of statutory notice under s. 148 is mandatory and cannot be waived by consent or participation as clarified by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... while passing the order has decided the issue taking the date as 24th Aug., 1997 against the assessee on the basis of incorrect recording of the date in the order. On recording the correct date, the issue of jurisdiction becomes important and has to be decided based on the correct date. The Tribunal Bench has sufficient power to rectify the said mistake arising on account of incorrect recording of the date. Since the issue of jurisdiction and validity goes to the root of the matter, therefore, this issue can be raised at any point of time and even before the Hon'ble Supreme Court. Therefore, there is no substance in the argument of the learned Departmental Representative that this issue cannot be raised before this Bench. It is a trite law that the issue of jurisdiction and validity which goes to the root of the matter can be raised at any stage. For this proposition, reliance is placed on the decisions of Kiran Singh Ors. vs. Chaman Paswan Ors., Manindra Land Buildmg Corp. Ltd. vs. Bhutnath Banerjee Ors. AIR 1964 SC 1336 and K.M. Sharma vs. ITO (2002) 174 CTR (SC) 210 : (2002) 4 SCC 339. In this regard, the assessee's learned counsel Shri Pradeep has cited plethora of deci ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tely discussed the provisions of ss. 139(1), 142, 148, 153 and also related s. 239, vis-a-vis, the provisions of ss. 11, 14 of old IT Act, 1922 and he has come to the conclusion that "where the assessee had not filed the returns suo motu within the time prescribed under s. 139(1), the Revenue had not issued any notice under s. 142(1) before the end of the assessment year and the returns furnished by the assessee had been filed beyond the time-limit prescribed under s. 139(4) and were rightly treated to be invalid by the AO. In case, the Department was to reopen the assessment by way of escaped assessment, notice under s. 148 has to be issued otherwise the assessments completed without issuing notice under s. 148 will be invalid and bad in law and are to be quashed. 19. We would like to mention here that after the introduction of time-limit for completing the assessments, the proceedings can be said to be pending during the period starting from the date of filing of the return by the assessee suo motu or issuance of notice under s. 142 by the AO and till the time-limit prescribed to complete the assessment under s. 153, i.e., two years from the end of the assessment year in which ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d for the sake of brevity, is extracted as under: "38.1 On a careful consideration of the rival submissions, we are of the view that the arguments advanced for the assessees are well taken. Sec. 142 of IT Act prior to its amendment, had the title "Inquiry before assessment". It started with the words "for the purpose of making an assessment". It then did not have c1. (i) of sub-s. (1) authorizing the AO to call for a return from the assessee. Other clauses empowered the AO to ask the assessee to produce or cause to be produced accounts and documents and give information in writing and verified in the prescribed manner. In the present appeal. there is no quarrel that as far as powers given to the AO in the provisions other than cl. (i) of sub-s. (1) of s. 142 Ire concerned, they can be exercised for the purpose of making an assessment It any time before the assessment is made. The AO can ask the assessee to produce accounts, etc. and do everything provided in cls. (ii) and (iii) of sub-s. (1) up to the time of making the assessment. But it does not follow that the AO or making an assessment, can exercise any power at any time without satisfying the conditions attached to the exerc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he relevant assessment year. 39. In both the cases, viz., Motorola and Ericsson, the notices under s. 142(1)(i) were issued after the end of the relevant assessment years and hence invalid. Therefore, the assessments made pursuant thereto are invalid. 40. This decision of ours is sufficient to dispose of the appeals in the cases of Motorola Inc. and Ericsson and there is no need to decide the other issues. However, since the other issues have to be decided in the case of Nokia, and further since both the sides requested that all issues may be adjudicated upon having regard to their importance and also to avoid multiplicity of proceedings, we proceeded to hear arguments on all those issues and our findings thereon are recorded in the following paras." It will not be Out of place to mention here that while deciding the matter, Special Bench of the Hon'ble Tribunal in case of Motorola Inc. and Ericsson has taken support of the decision of the Hon'ble Supreme Court in case of CIT vs. Narsee Nagsee Co., where the provisions of the IT Act, 1922 in ss. 11, 14 and 22 are in pari materia with the provisions of the IT Act, 1961 which has been highlighted by the Tribunal, Hyderabad Be ..... X X X X Extracts X X X X X X X X Extracts X X X X
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