Ita/221/2015 Of M/S. Travancore Diagnostics (P) Ltd v. The Assistant Commissioner Of Income-Tax

IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT: THE HONOURABLE MR.JUSTICE THOTTATHIL B.RADHAKRISHNAN & THE HONOURABLE MR. JUSTICE DEVAN RAMACHANDRAN WEDNESDAY, THE 19TH DAY OF OCTOBER 2016/27TH ASWINA, 1938 ITA.No. 221 of 2015 -------------------------------- ORDER IN ITA 289/2014 of I.T.A.TRIBUNAL,COCHIN BENCH ............... APPELLANT: M/S. TRAVANCORE DIAGNOSTICS (P) LTD., KAILAS ARCADE, DISTRICT HOSPITAL ROAD, KOLLAM, REPRESENTED BY ITS MANAGING DIRECTOR, I.C.CHERIAN. BY ADVS.SRI.D.S.SREEKUMARAN SMT.T.S.MAYA (THIYADIL) RESPONDENT: THE ASSISTANT COMMISSIONER OF INCOME-TAX, CIRCLE-1, KOLLAM. BY ADV. SRI.K.M.V.PANDALAI THIS INCOME TAX APPEAL HAVING BEEN FINALLY HEARD ON 06-10-2016ALONG WITH ITA. 228/2015, THE COURT ON 19-10-2016 DELIVERED THE FOLLOWING: APPENDIX IN ITA 221/2015 PETITIONER'S EXHIBITS: ANNEXURE-A1 TRUE COPY OF NOTICE DATED 5.10.2016 ISSUED BY RESPONDENT ANNEXURE-A2 TRUE COPY OF THE ORDER SHEET ANNEXURE-A3 ENGLISH TRANSLATION OF THE SWORN STATEMENT ANNEXURE-A4 TRUE COPY OF THE ASSESSMENT ORDER DATED 31.03.2016 PASSED BYTHE ASSISTANT COMMISSIONER OF INCOME-TAX, CIRCLE-1, KOLLAM ANNEXURE-A5 TRUE COPY OF GROUNDS OF APPEAL AND ADDITIONAL GROUNDS OFAPPEAL ANNEXURE-A6 TRUE COPY OF THE ORDER DATED 25.03.2014 ANNEXURE-A7 TRUE COPY OF GROUNDS OF APPEAL OF THE DEPARTMENT ANNEXURE-A8 TRUE COPY OF GROUNDS OF CROSS OBJECTION ANNEXURE-A9 COPY OF THE ORDER OF THE TRIBUNAL DATED 12.02.2015 ANNEXURE-A10 COPY OF THE ORDER NO.AACFT1116C/CIR.1/KLM DATED 18.7.2016 OFTHE RESPONDENT ANNEXURE-A11 TRUE COPY OF THE REPLY DATED 02.11.2010 SENT TO THE ASSESSINGOFFICER BY THE APPELLANT IN RESPONSE TO ANNEXURE-A NOTICE ISSUED BY THERESPONDENT ANNEXURE-A12 TRUE COPY OF THE NOTICE UNDER SECTION 148 OF THE IT ACTISSUED BY THE RESPONDENT ASSESSING OFFICER DATED 11.01.2012 ANNEXURE-A13 TRUE COPY OF THE STATEMENT OF INCOME FROM DIAGNOSTICS ASPER STATEMENT IMPOUNDED AND THE BOOKS OF ACCOUNT ANNEXURE-A15 TRUE ENGLISH TRANSLATION SHOWING ANSWERS TO THE QUESTIONNOS.1 TO 18 (IA 2131/2016) RESPONDENT'S EXHIBITS: NIL. /TRUE COPY/ P.S. TO JUDGE Thottathil B.Radhakrishnanand Devan Ramachandran, JJ. ----------------------------------------------- I.T.A.Nos.221 & 228 of 2015 ----------------------------------------------- Dated this the 19[th] day of October, 2016 C.R. JUDGMENT Devan Ramachandran, J. “The subjects of every State ought to havecontributed towards support of the Government, asmerely as possible in proportion to their respectiveabilities” Adam Smith said in his celebrated treatise“Wealth of Nations” in the year 1776. 2. Most citizens recognise that the taxes are unexpendable for the creation, protection andmaintenance of all the constitutive infrastructuralservices provided by the Government. Citizens wouldgenerally comply with the tax levies as long as certaininviolable criterion are met. As the society grows in ITA 221 & 228/15 complexity, especially in financial and fiscal areas, it maynot be easy to design and administer a tax system that isfair and equitable in the absolute sense. However, our taxsystem would achieve an acceptable level of trust of itscitizenry if it is generally seen as fair and equitable andthis would be the desideratum that any society wouldaspire to obtain. 3. Perhaps, the most primary pre-requisite toachieve a process of equality in a tax regime would be thesafeguards and the checks and balances that the regimeadopts for itself. This is because, for a system based onvoluntary compliance, the tax payers must have aperception that the system treats them with equity andfairness. 4. The Income Tax Act, 1961 ('the Act' for brevity)provides ineluctably for several layers of safeguardsagainst arbitrary and capricious action. The mostfundamental among them is that the tax payers are madeto understand and put to notice about the detriment that ITA 221 & 228/15 3. Perhaps, the most primary pre-requisite toachieve a process of equality in a tax regime would be thesafeguards and the checks and balances that the regimeadopts for itself. This is because, for a system based onvoluntary compliance, the tax payers must have aperception that the system treats them with equity andfairness. 4. The Income Tax Act, 1961 ('the Act' for brevity)provides ineluctably for several layers of safeguardsagainst arbitrary and capricious action. The mostfundamental among them is that the tax payers are madeto understand and put to notice about the detriment that ITA 221 & 228/15 the Act would inflict on them in case fiscal violation,evasion of tax or suppression of income are substantiated in the manner prescribed. It is when these safeguardsand checks are perceived as being primary and inviolablethat the system would achieve its most desired level ofcompetence. 5. Taxation is a realm that is completely and absolutely authorised and defined by statute. No tax canbe levied or collected except under the authority of law.While implementing and administering the tax statute,the classic words of Rowlatt, J. in Cape Brandy SyndicateV.I.R.C. (1921) 1 KB 64 would be the fundamentalguiding line: “In a taxing statute one has to look merely at what isclearly said. There is no reason for any intendment.There is no equity about a tax. There is nopresumption as to a tax. Nothing is to be read in,nothing is to be implied. One can look fairly at thelanguage used.” That the statutes imposing taxes or monetary burdens are to be strictly construed is settled by the Hon'ble Supreme Court of India in a multitude of decisions and the above ITA 221 & 228/15 words of Rowlatt J. has found approval in them. It is thestatutes of taxation that the maxim “A verbis legis non estrecedendum” is the most apt and apodictic. This maximdirects the construction to be put on statutes, against theexpress letter of which the courts will not sanction anyinterpretation. 6. We have started this judgment with the aboveexordium, since we find certain issues that have beenraised in this matter, essentially relating to non-compliance, on account of oversight or heedlessness, bythe Tax Officers of imperative provisions, whichunfortunately obtain to the assessees the benefit oftechnical defences against orders, which otherwise theywould have had to legally suffer. 7. The facts of this case, compendiously, for thepurpose of answering the issues raised herein are thatthe Revenue claims that the assessee, who is theappellant herein, is a company having a DiagnosticsLaboratory at Kollam and a branch at Kottarakkara. The ITA 221 & 228/15 factual controversy starts straightaway, since theassessee maintains that the alleged branch at Kollam,which is having a Magnetic Resonance Imaging (MRI)Scan facility, is not owned by it but it is owned by anothercompany by name M/s.Travancore Health Care (P) Ltd.and that it has no connection whatsoever with thiscompany. The Revenue of course asserts otherwise and itis alleged that the assessee has facilities for MRI Scan,CT Scan, Ultrasound Scan, X-ray and Laboratory tests inboth the Labs. On a suspicion of suppression or escapedassessment, a survey was conducted under the provisionsof Section 133A of the Act both in the Kollam andKottarakkara premises of the assessee on 24.09.2009.The Revenue maintains that during the course of survey,it was found that the assessee had suppressed thereceipts for taking MRI Scan and CT Scan among othersand also that it had paid the commission and professionalfees to the doctors without deducting tax at source.Perhaps, as a response to the survey or being alerted of ITA 221 & 228/15 ITA 221 & 228/15 having to file their return to avoid further issues, theassessee, on 30.09.2009, filed their return of incomeunder Section 139(1) of the Act for the assessment year2009-10 declaring a total income at Rs.1,58,519/-. Thereturn for the year 2010-11 was subsequently filed, alsounder Section 139(1), on 14.10.2010. The return for theyear 2009-10 was processed under Section 143(1) of theAct on 01.11.2010. However, on the basis of certainalleged incriminating documents and materials unearthedduring the survey, the Revenue issued a notice underSection 148 of the Act on 11.01.2012. This notice hasbeen annexed to the papers in ITA 221/2015 as Annexure-A12. It is admitted by both sides that the assessee filed areply on 08.02.2012, in response to the Section 148notice, to treat the return earlier filed by them on30.09.2009 under Section 139(1), also to be a return inresponse to the notice under Section 148. It appears thatthereafter, the case was posted for hearing on 19.12.2012and that the assessee's authorised representative Sri.Alex ITA 221 & 228/15 Kuriakose, Chartered Accountant, appeared before theauthorities and submitted certain details. A questionnaireunder Section 142(1) of the Act was issued to Sri.AlexKuriakose on 25.02.2013, and his answers shown to besworn under oath, were furnished by him on 05.03.2013.Thereafter, the Revenue issued a proposal to the assesseeon 25.03.2013, in response to which the assessee filed areply on 26.03.2013 and again Sri.Alex Kuriakoseappeared personally representing the assessee on19.12.2012, 11.03.2013 and 27.03.2013. 8. The Assistant Commissioner of Income Tax,Circle-1, Kollam, who was the relevant Assessing Officer,assessed the assessee under Section 143(3) read withSection 147 of the Act to a total income ofRs.1,09,38,057/- as per the assessment order dated30.03.2013. This was for the assessment year 2009-10.This order is annexed as Annexure-A4 along with ITA221/2015. ITA 221 & 228/15 9. As far as the next assessment year, namely A/Y 2010-11 was concerned, on the same set of allegationsthe Assessing Officer issued an assessment order underSection 143(3) of the Act dated 30.03.2013 assessing atotal income of Rs.1,43,52,665/-. This order is annexed asAnnexure-A2 in ITA 228/2015. The assessment for theyear 2010-11, as is perspicuous from Annexure-A2 wasbased on the calculations and computations arrived at bytaking into account the gross receipts and income atKollam and Kottarakkara branches of the assesseeobtained through the documents impounded during thesurvey and then adopting such figures for the assessmentyear 2010-11. 10. The two assessment orders mentioned abovewere challenged by the assessee before the Commissionerof Income Tax (Appeals), Thiruvananthapuram in separateAppeals numbered as ITA No.15/CIT(A)/TVM/13-14 andITA No.14/CIT(A)/TVM/13-14 with respect to theassessment years 2009-10 and 2010-11 respectively. The ITA 221 & 228/15 10. The two assessment orders mentioned abovewere challenged by the assessee before the Commissionerof Income Tax (Appeals), Thiruvananthapuram in separateAppeals numbered as ITA No.15/CIT(A)/TVM/13-14 andITA No.14/CIT(A)/TVM/13-14 with respect to theassessment years 2009-10 and 2010-11 respectively. The ITA 221 & 228/15 appeals were heard by the Appellate Officer and byseparate orders, both dated 25.03.2014, it was concludedthat the Assessing Officer's estimation of income wasbased on mere presumptive ratios. He also came to theconclusion that the business of M/s.Travancore HealthCare (P) Ltd. has been considered by the AssessingOfficer to be that of the assessee though an incorrectinterpretation of the statement of oath of therepresentative of the assessee. In such view, theappellate authority concluded that the Assessing Officerhad no fundamental basis for estimating the incomebased on such presumptive ratios and therefore, herestricted the additions made by the assessing authorityfor the year 2009-10 to Rs.3,37,755/- being the differencein the actual gross collection as was reflected in theincriminating papers, namely receipts showing collectionfor four months to which such materials related to andthe collection shown for this period in the books ofaccounts. With reference to the assessment year 2010-11, the appellate authority deleted all the additions made bythe Assessing Officer. 11. As is expected, the Revenue carried the orders of the CIT (Appeals) in further appeals before the IncomeTax Appellate Tribunal (ITAT), Kochi Bench, which werenumbered as ITA Nos.289 and 290/Coch/14 for theassessment years 2009-10 and 2010-11 respectively. Theassessee had also filed cross objections, numbered asC.O.No.31/Coch/2014 against the order of the CIT(Appeals) for the assessment year 2009-10 and C.O.No.32/Coch/2014 for the assessment year 2010-11. 12. The ITAT thereafter proceeded to dispose ofboth the cross objections of the assessee and the appealsfiled by the Revenue by a common order dated12.02.2015. 13. Additional jurisdictional grounds were raisedby the assessee before the ITAT. Primary among thembeing that since the assessment was completed by theassessing authority under Section 143(3) read with ITA 221 & 228/15 Section 147 of the Act, a notice under Section 143(2) ofthe Act had to be issued within the period of limitation.The assessee maintains that no such notice under Section143(2) had ever been issued to him and that in suchcircumstances, the entire assessment fails. The assesseealso raised an issue regarding the assumption ofjurisdiction for assessment by the Assessing Officer underSection 147(1) which he claimed was without jurisdiction.It is the specific case of the assessee that the AssessingOfficer had initiated action under Section 147 withoutsufficient material and without sufficient cause or reasonand that thus it eroded the substratum of the entireprocess initiated under Section 147 of the Act. Theassessee has also asserted that the quantification ofunaccounted income and that the assessment/re-assessment has been done without any discerniblerationale or comprehensible reason and that it, therefore,suffers from gross illegality. ITA 221 & 228/15 ITA 221 & 228/15 14. The ITAT, however, after considering each ofthe above issues, rejected all the contentions of theassessee and allowed the appeals filed by the Revenueholding that since the representative of the assessee hadparticipated in the re-assessment proceedings underSection 147 and the assessment proceedings underSection 143, absence of issuance of notice under Section143(2) would have no bearing and would stand condonedin view of Section 292BB of the Act and that there werevalid cause and grounds for assumption of jurisdictionunder Section 147, since the Assessing Ovfficer hadrecorded reasons for issuance of notice under Section148 of the Act. The ITAT had also concluded that therewas clear case of suppression of collection by theassessee for the years 2009-10 and 2010-11 as havingbeen found during the course of survey and which wasadmitted by the assessee's representative Mr.AlexKuriakose in his sworn statement. The ITAT thenproceeded to hold that the estimate made by the ITA 221 & 228/15 assessing authority is a bona fide estimate, based onrationale basis and concluded the total suppressedcollection for the assessment year 2009-10 atRs.24,35,576/- as against Rs.3,37,755/- assessed by theCIT(A). The ITAT then proceeded to estimate thesuppressed receipts for the year 2010-11 adopting thesame figures as were arrived at for the previous year.Since there was an increase of 24% per annum in thedeclared receipts for the year 2010-11 when compared tothe assessment year 2009-10, the ITAT used thispercentile of 24% to estimate the income for theassessment year 2010-11, arriving at a figure ofRs.28,97,354/- for the assessment year 2010-11 over andabove the returned income. 15. The assessee has filed these ITAs against theorder of the ITAT raising various substantial questions oflaw. ITA 221/2015 has been filed against the order of theITAT for the assessment year 2009-10 and ITA 228/2015has been filed against the order of the ITAT for the ITA 221 & 228/15 assessment year 2010-11. Since the factual substratum ofboth these appeals are identical and arises out of thesame set of incidents, we are proceeding to dispose ofboth the appeals by a common judgment. For the purposeof convenience, we are treating ITA 221/2015 as the casein lead and all the documents and references to parties, ifnot otherwise specifically mentioned, would be as per thereference made in ITA 221/2015. 16. We have heard Sri.D.S.Sreekumaran, thelearned counsel appearing for the appellant andSri.Christopher Abraham, the learned Standing Counselfor the Assistant Commissioner of Income Tax, Circle-1,Kollam, the sole respondent in both the appeals. We havealso read the notes of arguments filed byMr.Sreekumaran on 26.08.2016 and 07.09.2016. 17. An ex facie examination of the questions of lawthat have been raised as above, would clearly show thatsome of the questions that have been raised areessentially questions of fact sought to be presented with ITA 221 & 228/15 the facade of questions of law, especially in the case ofITA 288/2015. 18. The questions that have been raised in ITA228/2015 would also, according to our view, deal with thequestions that have been raised in ITA 221/2015. Thequestions raised in ITA 221/2015 can be clubbed broadlyinto three classes. Question Nos.1 to 4 relate to theauthority of the Assessing Officer to assume jurisdictionfor re-assessment under Section 147 of the Act. QuestionNo.6 relates to the service of notice under Section 143(2)and question Nos.5 to 10 relate to the method adopted bythe authorities in arriving at the quantum of assessmentand the method used for doing so. ITA 221 & 228/15 the facade of questions of law, especially in the case ofITA 288/2015. 18. The questions that have been raised in ITA228/2015 would also, according to our view, deal with thequestions that have been raised in ITA 221/2015. Thequestions raised in ITA 221/2015 can be clubbed broadlyinto three classes. Question Nos.1 to 4 relate to theauthority of the Assessing Officer to assume jurisdictionfor re-assessment under Section 147 of the Act. QuestionNo.6 relates to the service of notice under Section 143(2)and question Nos.5 to 10 relate to the method adopted bythe authorities in arriving at the quantum of assessmentand the method used for doing so. 19. As to the question of assumption ofjurisdiction, the ITAT has clearly found that sufficientreasons are recorded by the Assessing Officer in order toissue a notice seeking to re-open the assessment underSection 147 of the Act. Section 147 is a provision thatempowers the Assessing Officer to make an assessment or a re-assessment, if he has reason to believe that any income chargeable to tax has escaped assessment. Thesweep of Section 147 has been stated with felicity by aBench of this Court in Commissioner of Income Tax v.Abad Fisheries ((2012) 246 CTR 513). Paragraph 7 ofthe judgment declares the position succinctly and isextracted hereunder for immediate reference: “So far as s.147 is concerned, in the first place, it isan income escaping assessment and it can be madefor the first time as an assessment, no matter whetherassessee has filed return or not. However, the sinequa non for initiating proceedings under s.147 isinformation available with the officer that any incomechargeable to tax has escaped assessment within themeaning of that term explained in the statute, It is asettled position that the AO has to record his reasonsfor initiating proceedings for assessment under s.147and notice has to be issued under s.148 and ifassessee calls for justification for initiation ofproceedings, the AO is bound to communicatereasons for initiating the income escaping assessmentfor any year against the assessee. Therefore, anincome escaping asessment need not be based onreturn filed or the materials available therein or inthe statement of accounts or documents attachedthereto, but can be based on materials independentlycollected by the AO and available with him. In ourview, s.147 is a distinct and separate power conferredon the AO to initiate action for assessment orreassessment and the only condition provided in thestatute is that the AO has reason to believe thatincome chargeable to tax has escaped assessment.This, however, does not mean that in order to make an assessment or reassessment, there should bealready an assessment or even a return filed by theassessee. In our view, s.147 cannot be related to anintimation under s.143(1) or a regular assessmentunder s.143(3), though in a case where assessee hasfiled return escaped income has to be determinedwith reference to income so returned or assessed. Inother words, whether return is filed or intimation sentor regular assessment is completed or not, the AO caninitiate and complete an assessment under s.147 forany year, if he has reason to believe that any incomechargeable to tax has escaped assessment within themeaning of the said expression contained in the Act.As already stated, s.147 is a self-contained provisionand the limitations and conditions are only thosespecifically stated therein. This position is fortifiedby the first proviso to s.147 which provides forextended period of limitation for reassessment unders.147 beyond four years after completion ofassessment under s.143(3) only if assessee failed todisclose fully and truly all material facts necessary forassessment.” 20. We are in absolute agreement with the above 20. We are in absolute agreement with the above stated position of law and it is indubitable that, an incomeescaping assessment as provided under Section 147, maynot be based on the return filed or on the basis of thematerials thereunder, but may be the materialsindependently collected leading to a subjective opinion inthe minds of the Assessing Officer that he has reasons tobelieve that any income has escaped assessment with theonly limitation that this shall be done within four years after the completion of assessment. The Assessing Officer has recorded the reasons for issuance of notice underSection 148 as under: “a. A survey was conducted under Section 133A ofthe Act. b. The return of income under Section 139(1) hadbeen filed by the assessee electronically and c. During the course of survey, it was found that theassessee had not maintained copies of the bills issuedto the pateients earlier for the years to substantiatethe receipts admitted in the books of account.” 21. For the purpose of entertaining an initial suspicion by the Assessing Officer, the materialsimpounded and recovered during the survey and thestatement of the Manager of the assessee, Sri.PhilipVarghese, were sufficient and it would become thefoundational basis for the initial suspicion that theassessee had suppressed receipts for conducting MRI, CTScan, etc. Further, though the assessee had issuedreceipts to the patients for conducting various tests, itwas noticed during the survey that the copies of thesereceipts were not maintained in the books of account and ITA 221 & 228/15 that only ad hoc amounts were recorded in the bookswithout any basis. It is also seen that there was variancebetween the actual receipts and declared receipts in thebooks of account. This justifiably led to a suspicion thatincome had escaped from assessment and it was in suchcircumstances that the Assessing Officer issued noticeunder Section 148 of the Act. Our opinion on this issue isguided by the dicta in the judgment of the Hon'bleSupreme Court in ACIT v. Rajesh Jhaveri StockBrokers (P) Ltd. ((2007) 291 ITR 500), which leculentlydeclared the pre-requisites for assumption of jurisdictionunder Section 147 of the Assessing Officer as under: “16. Section 147 authorizes and permits theAssessing officer to assess or reassess incomechargeable to tax if he has reason to believe thatincome for any assessment year has escapedassessment. The word 'reason' in the phrase 'reasonto believe' would mean cause or justification to knowor suppose that income had escaped assessment, itcan be said to have reason to believe that an incomehad escaped assessment. The expression cannot beread to mean that the Assessing officer should havefinally ascertained the fact by legal evidence orconclusion. The function of the Assessing officer is toadminister the statute with solicitude for the publicexchequer with an inbuilt idea of fairness totaxpayers. As observed by the Delhi High Court in Central Province Manganese Ore Co. Ltd. v. ITO(1991) (191 ITR 662), for initiation of action u/s.147(a) (as the provision stood at the relevant time)fulfillment of the two requisite conditions in thatregard is essential. At that stage, the final outcome ofthe proceeding, is not relevant. In other words, at theinitiation stage, what is required is reason to believe,but not the established fact of escapement of income.At the stage of issue of notice, the only question iswhether there was relevant material on which areasonable person could have formed a requisitebelief. Whether the materials would conclusivelyprove the escapement is not the concern at thatstage. This is so because the formation of belief bythe Assessing officer is within the realm of subjectivesatisfaction. 17. The scope and effect of section 147 as substitutedwith effect from April 1, 1989, as also sections 148 to152 are substantially different from the provisions asthey stood prior to such substitution. Under the oldprovisions of section 147, separate clauses (a) and (b)laid down the ciucumstances under which incomeescaping assessment for the past assessment yearscould be assessed or reassessed. To conferjurisdiction u/s. 147(a) two conditions were requiredto be satisfied firstly the Assessing officer must havereason to believe that income profits or gainschargeable to income-tax have escaped assessment,and secondly he must also have reason to believe thatsuch escapement has occurred by reason of either (i)omission or failure on the part of the assessee todisclose fully or truly all material facts necessary forhis assessment of that year. Both these conditionswere conditions precedent to be satisfied before theAssessing officer could have jurisdiction to issuenotice u/s.148 read with section 147(a). But under thesubstituted section 147 existence of only the firstcondition suffices. In other words, if the Assessingofficer for whatever reason has reason to believe thatincome has escaped assessment it confers jurisdictionto re-open the assessment. It is, however, to be noted that both the conditions must be fulfilled if the casefalls within the ambit of the proviso to section 147.The case at hand is covered by the main provision andnot the proviso.” 22. Continuing on the path of challenge of theauthority of the Assessing Officer under Section 147 ofthe Act, Mr.Sreekumaran, the learned counsel for theappellant, further asserts that no notice under Section148 of the Act could have been issued by the AssessingOfficer when the returns filed by the assessee in responseto the earlier notice under Section 142(1) was pendingand not processed. This contention again has beenanswered to the contrary in Abad Fisheries (supra). Thejudgment grants complete clarity to this position also inits further findings as below: “Therefore, in our view, an assessment under s.147 ispermissible subject to the period of limitation statedtherein, irrespective of whether the return was filedor intimation sent to the assessee or regularassessment under s.143(3) after issuing notice unders.143(2) of the Act was made or not. In other words,even within the time available for issuing noticeunder s.143(2) for making regular assessment if theAO is of the view that materials available with him ordiscovered by him are such as to justify incomeescaping assessment under s.147, he is free to recordthe reasons for the belief and proceed to make income escaping assessment under s.147 withoutproceeding to make a regular assessment under s.143(3) of the Act.“ The only caveat in the nature of a proscription noticed by this Court in Abad Fisheries (supra) while proceedingwith re-assessment under Section 147 when theassessment proceedings under Section 143(3) is pending,is that “an income escaping assessment under Section147 cannot be completed within the time available forissuing notice under Section 143(2) of the Act and for thecompletion of assessment under Section 143(3)”. 23. On a conspectus of the ratio of the judgmentsnoticed above and the reasons stated by us supra, we areof the view that the Assessing Officer was forensicallyempowered and justified for assuming the jurisdictionvested in him under Section 147 of the Act and that thenotice issued to him under Section 148 of the Act suffersfrom no legal error or infirmity. 24. Quoad hoc the contention of the appellant thatthe assessments for the years 2009-10 and 2010-11 have ITA 221 & 228/15 23. On a conspectus of the ratio of the judgmentsnoticed above and the reasons stated by us supra, we areof the view that the Assessing Officer was forensicallyempowered and justified for assuming the jurisdictionvested in him under Section 147 of the Act and that thenotice issued to him under Section 148 of the Act suffersfrom no legal error or infirmity. 24. Quoad hoc the contention of the appellant thatthe assessments for the years 2009-10 and 2010-11 have ITA 221 & 228/15 been made by the Assessing Officer without anydiscernable rationale and on conjunctures and surmises.We are of the considered view that the contention will nothold water. The assessments were made based onincrimanating materials that were impounded during thesurvey and on the basis of the statement given by therepresentative of the assessee to the questionnarepresented to him under Section 133A(3)(iii) of the Act.For ease of comprehension, Section 133A(3)(iii) isextreacted below: “record the statement of any person which may beuseful for, or relevant to, any proceeding under thisAct.” As has been recorded by the ITAT also, the AssessingOfficer had assessed the escaped income based on thecollections that were reflected in the impoundeddocuments and the differance between the figuresmentioned in those documents and the books of account maintained by the assessee which was justifiably found tobe escaped and suppressed. Since the figures that were ITA 221 & 228/15 unearthed during the survey related to four months, theAssessing Officer then, on a pro-rata basis, adopted thesame figures for the whole year and made an assessmentfor the year 2009-10. These figures were thenextrapolated to the year 2010-11 and taking into accountthe fact that there was 24% increase in the incomedeclared by the assessee, vis-a-vis the income declaredfor the year 2009-10, the Assessing Officer proceeded toaseess the income for the year 2010-11 adopting thispercentile of 24%. This method has been approved by theITAT in its orders. However, the learned counsel for theappellant assails this on two grounds. For the first, heasserts that the materials impounded during the surveyand the statement given by the representative to thequestionnaire have no evidenciary value and that theycannot be used by the assessee for the purpose ofassessment. He relies on the judgment of this Court inPaul Mathew and Sons v. CIT ((2003) 263 ITR 101(Ker.)) and he placed before us paragraph 11 of the said judgment, which is as under: “......... we find that such a power to examine a personon oath is specifically conferred on the authorisedofficer only under s.132(4) of the IT Act in the courseof any search or seizure. Thus, the IT Act, wheneverit thought fit and ncesssary to confer such power toexamine a person on oath, the same has beenexpressly provided whereas s.133A does notempower any ITO to examine any person on oath.Thus, in contradistinction to the power under s.133A,s.132(4) of the IT Act enables the authorised officerto examine a person on oath and any statement madeby such person during such examination can also beused in evidence under the IT Act. On the other hand,whatever statement recorded under s.133A of the ITAct, is not given any evidentiary value obviously forthe reason that the officer is not authorised toadminister oath and to take any sworn in statementwhich alone has the evidentiary value ascontemplated under law. Therefore, there is muchforce in the argument of the learned counsel for theappellant that the statement, elicited during thesurvey operation has no evidentiary value and theITO was well aware of this.” 25. Before we examine this contention, we have to bear in mind that another Bench of this Court in the 25. Before we examine this contention, we have to bear in mind that another Bench of this Court in the judgment in Commissioner of Income-Tax v. HotelSamrat ((2010) 323 ITR 353 (Ker)) has virtually gone tothe extent of thinking that the judgment in Paul Mathewand Sons (supra) may not lay down the correct law.However, in the said judgment, since the learned counsel ITA 221 & 228/15 for the assessee did not press further contentions basedon the vires of Paul Mathew and Sons, no furtherdiscussion as to the correctness or otherwise of PaulMathew and Sons was recorded. However, since thelearned counsel for the appellant presses before us thesame contention, we are contrained to answer it. For thepurpose of this case, we do not think that it is necessaryto venture into a question as to whether Paul Mathewand Sons lays down the right law. Even taking the dictain Paul Mathew and Sons as the correct law, it is clearfrom the judgment that what this Court had said is thatthe statement made by the assessee under Section 133Aof the Act is not conclusive and that it is open to theperson who made the admission to rescile from it and tostate the same to be incorrect, in which event, theassessee should be given an opportunity to show that thebooks of account discloses the correct statement of facts.We draw support for our opinion from the judgment ofthe Hon'ble Supreme Court in Pullangode Rubber ITA 221 & 228/15 Produce Co. Ltd. v. State of Kerala ((1973) 91 ITR 18(SC)). The position appears to be clear that the personmaking the admission or the statement will be at libertyto withdraw from the statement or admission, since suchstatement had not been made under Section 132(4),which provides for a sworn statement, but one underSection 133A of the Act. 26. In the case at hand, it is obvious that thestatement made by the assessee was never resciled orrecanted by it, but it continued to hold the statement tobe correct throughout the proceedings. All that has beenattempted to be done by the assessee is to show that thesaid statement has been wrongly interpreted by theAssessing Officer and that the statements given on itsbehalf by its authorised representative do not give rise toany admission. We have examined the answers to thequestionnaire given by the representative of the assessee,which has been produced as Annexure-A15 in the papersannexed to ITA 221/2015. The answers are obviously self ITA 221 & 228/15 incriminating and the admissions are rather clear thatseveral heads of income have not been accounted in thebooks of account and that this has been the pattern in thebranch at Kottarakkara also. Further, the pleadings in theappeal filed by the assessee before the CIT (Appeals),which is produced as Annexure-A5 to the papers in ITA221/2015, would also show that the consistent case of theassessee is that “even though separare bills are issued tothe patients for MRI Scan and other diagnostic services,cash collection is done at one single point. On the end ofthe day, total income is separated and the income fromMRI Scan and X-ray is given to Travancore Health CarePrivate Limited, which is accounted for by them and theincome from other diagnostic services is account for bythe appellant”. In view of these specific pleadings, theuncontroverted and admitted statement given on behalfof the assessee under Section 133A and the documentsimpounded during the survey, which were also virtuallyadmitted by the assessee, we do not find any error in the order of the ITAT in accepting the materials on record inorder to arrive at an assessment. 27. The learned counsel for the appellant finally order of the ITAT in accepting the materials on record inorder to arrive at an assessment. 27. The learned counsel for the appellant finally asserts that even if the documents impounded and thestatement made are acceptable in evidence, the methodadopted by the Assessing Officer and approved by theorders of ITAT in adopting the figures, found in thedocuments impounded, for the whole year on a proratabasis and the extrapolation of such figures for thesubsequent year in order to make a best judgment orassessment is completely erroneous. We cannot acceptthis contention. As has been already found by us, thematerials obtained during the survey and the statementmade on behalf of the assessee remain uncontrovertedand are not resciled or recanted by them and thusvirtually being admitted by the assessee. When thesuppression had been thus found from the documents andthe statement on record, the Assessing Officer wascompletely justified in adopting those figures for the ITA 221 & 228/15 whole year and for the next year, which is based on soundrationale, since from the statement on behalf of theassessee the suppression was found to be continued. Thismethod has already been found imprimatur by this Courtin Commissioner of Income-Tax v. Dr.P.Sasikumar((2016) 387 ITR 8 (ker)) as well as in the judgment of theHon'ble Supreme Court in Commissioner of Sales Tax,Madhya Pradesh v. H.M.Esufali H.M.Abdulali ((1973)90 ITR 271 (SC)). Even though the latter case relates tosales tax, the principles that have been stated thereinwould apply in all force for a best judgment in a matter ofthis nature also. In any event of the matter, thiscontention raises no question of law and is substantiallyin the nature of questions of facts, which we do not intentto entertain under Section 166 of the Act. 28. The issue that, however, engages out attentionmore than the other issues is the contention of thelearned counsel for the appellant that before making anassessment under Section 143(3) read with Section 147 ITA 221 & 228/15 of the Act, they ought to have been given a statutory notice under Section 143(2) of the Act. We must say thatthis contention, in our mind, assumes great significance.The question as to whether a notice has to be issuedunder Section 143(2) before making an assessment or re-assessment under the provisions of Sections 143 and 147respectively is no longer res integra and is not untouchedby dicta. The Hon'ble Supreme Court has answered thiswith precision in Assistant Commissioner of IncomeTax v. Hotel Blue Moon ((2010) 321 ITR 0362)) statingas under: “But s.143(2) itself becomes necessary only where itbecomes necessary to ckeck the return, so that whereblock return conforms to the undisclosed incomeinferred by the authorities, there is no reason, whythe authorities should issue notice under s.143(2).However, it an assessment is to be completed unders.143(3) read with s.158BC, notice under s.143(2)should be issued within one year from the date offiling of block return. Omission on the part of theassessing authority to issue notice under s.143(2)cannot be a procedural irregularity and the same isnot curable and, therefor, the requirement of noticeunder s.143(2) cannot be dispensed with.” 29. At the time when the matter was heard, the learned counsel for the Revenue virtually admitted that ITA 221 & 228/15 “But s.143(2) itself becomes necessary only where itbecomes necessary to ckeck the return, so that whereblock return conforms to the undisclosed incomeinferred by the authorities, there is no reason, whythe authorities should issue notice under s.143(2).However, it an assessment is to be completed unders.143(3) read with s.158BC, notice under s.143(2)should be issued within one year from the date offiling of block return. Omission on the part of theassessing authority to issue notice under s.143(2)cannot be a procedural irregularity and the same isnot curable and, therefor, the requirement of noticeunder s.143(2) cannot be dispensed with.” 29. At the time when the matter was heard, the learned counsel for the Revenue virtually admitted that ITA 221 & 228/15 no notice under Section 143(2) of the Act has been issuedbut held out that even in the absence of Section 143(2)notice, the assessment made could be maintained on twogrounds. He contends that the Assessing Officer had,during the proceedings, issued a notice as is discerniblefrom the order sheet produced as Annexure-A2 in thepapers of ITA 221/2015, on 10.12.2012. Even though thesaid notice has not been produced before us, we see fromthe order of the ITAT that same has been extracted. Forease of reference and since the Revenue contends thatthis notice can be treated as one issued under Section143(2), we deem it appropriate to extract the same here: Government of IndiaIncome Tax DepartmentOffice of the Additional Commissioner of Income-taxKollam Range, Kollam No.AACFT1116C/Cir.1/2011-12Date: 10/12/2012 To M/s.Travancoe Diagnostics Pvt. Ltd. Chamakada, Najeem Complex, Kollam. Sub: Incometax Assessment in your own case-A.Y.2009-10 reg. Ref: Notice u/s. 143(2) dated 11/01/2012. .......... Sir, Income tax assessment for the A.Y. 2009-10 isposted for hearing at my office at Kollam on 19-12-12at 3.30 p.m. You are requested to appear before meon the date of hearing either in person or through anAuthorized Representative. Failure on your part, theassessment will be finalized on the basis of materialavailable on record. Yours faithfully, Sd/- (V.VINODKUMAR) Asst. Commissioner of Income-tax Circle-1, Kollam. From a reading of this notice, we believe that the submission that this may be treated as one issued underSection 143(2) of the Act is a contention bordering onbrinkmanship by the Revenue and not one with realconviction. The order sheet very clearly shows that this isa notice that had been issued as a “posting notice” andnothing else. The above extracted notice ineffably refer toa notice under Section 143(2) dated 11.01.2012.However, the learned counsel for the Revenue took adefence that it was only a typographical error and in fact, ITA 221 & 228/15 refers to Section 148 notice that was issued on11.01.2012. In any event of the matter, the fact that theabove extracted notice can no way qualify itself to be anotice under Section 143(2) becomes obvious from theway Section 143(2) is engrafted in the Statute. 30. Section 143(2) of the Act, as it stood beforebeing substituted by the Finance Act, 2016, reads asunder: “Where a return has been furnished under section139, or in response to a notice under sub-section (1)of section 142, the Assessing Officer or theprescribed income-tax authority, as the case may be,if, considers it necessary or expedient to ensure thatthe assessee has not understated the income or hasnot computed excessive loss or has not under-paidthe tax in any manner, shall serve on the assessee anotice requiring him, on a date to be specifed therein,either to attend the office of the Assessing Officer orto produce, or cause to be produced before theAssessing Officer any evidence on which the assesseemay rely in support of the return: Provided that no notice under this sub-section shallbe served on the assessee after the expiry of sixmonths from the end of the financial year in whichthe return is furnished.” Provided that no notice under this sub-section shallbe served on the assessee after the expiry of sixmonths from the end of the financial year in whichthe return is furnished.” It is indubitable from the section that the Assessing Officer shall serve on the assessee a notice specifying the particulars of such claim of loss, exemption, deduction,allowance or relief made in the return, if he has reason tobelieve that all such are inadmissible. The notice is alsoto direct the assessee to produce or cause to be producedany evidence or particulars specified therein or on whichthe assessee may rely. A notice under Section 143(2) isthe hypostasis on which any proceedings under Section143(3) or a re-assessment under Section 147 (if the timefor regular assessment is not over) will have to be restedon. In the absence of a notice under Section 143(2), it isobvious that no further proceedings can be continued