Ita/52/2012 Of The Commissioner Of Income Tax, Trichur v. Shri.v.r.sreekumar

IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT: THE HONOURABLE MR.JUSTICE ANTONY DOMINIC &THE HONOURABLE MR. JUSTICE ANIL K.NARENDRAN MONDAY, THE 7TH DAY OF APRIL 2014/17TH CHAITHRA, 1936 ITA.No. 52 of 2012 () ---------------------- AGAINST THE ORDER IN ITA 70/COCH/2009 of I.T.A.TRIBUNAL,COCHIN BENCH DATED07-10-2011 APPELLANT/RESPONDENT: -------------------------------------- THE COMMISSIONER OF INCOME TAX, TRICHUR. BY ADVS.SRI.P.K.R.MENON,SR.COUNSEL, GOI(TAXES) SRI.JOSE JOSEPH, SC, FOR INCOME TAX RESPONDENT/APPELLANT: -------------------------------------- SHRI.V.R.SREEKUMAR VARIAMPAT HOUSE, TIRUR, M.G. KAVU TRICHUR-676101. BY ADV. SRI.P.BALAKRISHNAN (E) BY ADV. SRI.MOHAN PULIKKAL THIS INCOME TAX APPEAL HAVING BEEN FINALLY HEARD ON 07-04-2014,THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: APPENDIX IN ITA.52/12 PETITIONER'S ANNEXURES: ANNEXURE A:COPY OF ORDER OF THE ASSESSING OFFICER DT.28.12.2007. ANNEXURE B:COPY OF ORDER OF THE COMMISSIONER OF INCOME-TAX(APPEALS) DT.24.11.08. ANNEXURE C1:COPY OF ORDER OF THE JUDICIAL MEMBER. ANNEXURE C2:COPY OF ORDER OF THE ACCOUNTANT MEMBER DT.18.4.2011. ANNEXURE C3:COPY OF ORDER OF THE THIRD MEMBER OF THE TRIBUNALDT.8.8.11. ANNEXURE C4:COPY OF CONSEQUENTIAL ORDER OF THE TRIBUNALDT.7.10.11. RESPONDENTS' ANNEXURES: NIL TRUE COPY P.S.TO JUDGE dsn ANTONY DOMINIC & ANIL K.NARENDRAN, JJ. -------------------------------------------------- I.T.Appeal No.52 of 2012 -------------------------------------------------- DATED THIS THE 7[th] DAY OF APRIL, 2014 JUDGMENT ANTONY DOMINIC,J. This appeal is filed challenging the order passed by theIncome-taxAppellateTribunal,CochinBenchinI.T.A.No.70/Coch/2009. 2.In relation to the assessment year 2000-01, therespondent filed his return on 31.10.2000. When the return wasprocessed under Section 143(1) of the Income-tax Act ('the Act'for short) escapement of income was noticed. Thereupon, theAssessing Officer issued notice under Section 148 on 7.4.2006.The said notice was issued to the assessee without obtainingapproval of the Joint Commissioner of Income-tax. In responseto the notice, the assessee filed the same return, which he filedon 31.10.2000, showing the income as originally returned. Thiswas on 22.5.2006. Thereafter on 14.7.2006, notice underSection 143(2) of the Act was issued to the assessee. I.T.A.No.52/12 Thereupon, the proceedings issued dropped on account of theabsence of approval of the Joint Commissioner of Income-tax. 3.Thereafter, approval of the Joint Commissioner ofIncome-tax was obtained and on 4.12.2006, notice underSection 148 of the Act was issued requiring the assessee to filehis return within thirty days of service of notice. Though, thenotice was served on the assessee on 7.12.2006, he did not fileany return. Thereafter, on 5.10.2007, notice was issued to theassessee under Section 142(1) of the Act. After receipt ofnotice, on 15.10.2007, the assessee submitted a copy of thereturn which he submitted on 31.10.2000 along with certainstatements. The assessee was heard on various dates and on14.12.2007, pre-assessment notice was issued. Objectionsraised by the assessee were considered and on 28.12.2007, byAnnexure A, assessment was completed. 4.The assessee filed appeal before the Commissioner(Appeals), contending inter alia that when notice under Section148 was issued on 4.12.2006, a notice under Section 143(2),was mandatory and that since such a notice was not issued, the assessment order was illegal. Though, this contention wasrejected by the appellate authority, the appeal was allowed inpart on other grounds. 4.The assessee filed appeal before the Commissioner(Appeals), contending inter alia that when notice under Section148 was issued on 4.12.2006, a notice under Section 143(2),was mandatory and that since such a notice was not issued, the assessment order was illegal. Though, this contention wasrejected by the appellate authority, the appeal was allowed inpart on other grounds. 5.The assessee challenged the order of the AppellateCommissioner before the Tribunal. The Tribunal considered thematter and the Judicial Member accepted the contention of theassessee that in the absence of a notice under Section 143(2)of the Act, the assessment was illegal. The AccountantMember took a contrary view. The matter was referred to athird Member, who concurred with the view taken by theJudicial Member. Accordingly, the appeal filed by the assesseewas allowed and the assessment order was set aside. It is inthis background, the Revenue has filed this appeal. The assessee challenged the order of the Appellate 6.We heard the learned Standing Counsel for theRevenue and the learned counsel appearing for therespondent. We heard the learned Standing Counsel for the 7.The first contention raised by the learned counsel forthe appellant was that notice under Section 143(2) is to beissued only in a case where a return is filed. According to the The first contention raised by the learned counsel for learned counsel, in response to the notice under Section 148,the assessee did not file any return within thirty days service ofnotice and instead, he filed a copy of the return that he hadfiled as early as on 31.10.2000, along with the statements. Itis stated that when a notice is issued under Section 148, theassessee has the option of filing a fresh return or giving astatement opting for the earlier return. The learned counselcontended that, in this case the assessee did not do either ofthe two and that therefore, there was no question of issuingnotice under Section 143(2) of the Act. 8.The fact that the assessee has an option either to filereturn or to stand by the earlier return filed is not disputed bythe Revenue. Insofar as this case is concerned, facts noticedby us show that after the notice under Section 148 was servedon 7.12.2006, the assessee submitted a copy of the returnalong with statements only on 15.10.2007. Accepting this asthe return filed by the assessee, the Assessing Officercompleted the assessment also. This, therefore, means thatthe assessee submitted the return which he had already I.T.A.No.52/12 submitted on 31.10.2000 with the intention of opting forhaving the assessement completed based on the return that hehad already filed. Further, that return was accepted and actedupon by the Department. In such a case, the Departmentcannot now be allowed to contend that the assessee did not filea return in response to Section 148 and therefore, there wasno necessity to issue a notice under Section 143(2) of the Act.Therefore, this contention urged by the appellant cannot beaccepted. 9.The second contention raised was that even if it isassumed that a return submitted on 30.10.2000 was filed bythe assessee on 15.10.2007, such filing of the return was notwithin the time specified in the notice under Section 148.Therefore, according to the appellant, there was no returnvalidly filed obliging them to issue notice under Section 143(2).This argument of the learned counsel for the Revenue wasresisted by the learned counsel for the respondent, contendingthat by the notice issued under Section 142(1) issued on5.10.2007, assessee was called upon to file a return and it was in compliance of that requirement, the return in question wasfiled. Therefore, the counsel contended that the return was avalidly filed one entitling the assessee for a notice underSection 143(2). in compliance of that requirement, the return in question wasfiled. Therefore, the counsel contended that the return was avalidly filed one entitling the assessee for a notice underSection 143(2). 10.The notice under Section 148 was issued to theassessee on 4.12.2006. By this notice, the assessee was calledupon to file the return within 30 days of service of the notice.This notice was served on the assessee on 7.12.2006. Theassessee did not request for extension of time, nor was anyextension granted for complying with the notice. The assesseedid not file any return within the 30 days specified in the noticealso and instead, filed the return submitted on 30.10.2000,only on 15.10.2007. Such a return belatedly filed by theassessee, is an invalid one in view of the provisions containedin Section 139 of the Act. 11.Insofar as the notice under Section 142(2) relied onby the counsel for the assessee is concerned, reading of theprovisions of Section 142(1) itself show that this provisiondeals with cases where a return has been filed and despite I.T.A.No.52/12 notice, a return has not been filed. In the case of those whohave not filed a return, clause (i) provides for filing of return.On the other hand, in the case of those who have already fileda return under Section 139, clause (ii) enables the AssessingOfficer to issue notice under this Section to produce or causedto be produced such accounts or documents as the AssessingOfficer may require. Insofar as this case is concerned, theassessee had already filed a return under Section 139 as earlyas on 31.10.2000 and therefore calling upon the assessee tofile a return under Section 142(1) does not arise. This,therefore, means that notice under Section 142(1) issued tothe assessee on 5.10.2007 could have been only to call uponthe assessee to produce accounts or documents and not forfiling a return. Further, in a proceedings initiated underSection 148, the provision does not come into operationwhatsoever. 12.This, therefore, means that the return, if any, filedby the assessee on 15.10.2007 was not a valid return, whichcould have been acted upon by the Assessing Officer entitling the assessee for a notice under Section 143(2) of the Income-tax Act. Therefore, the conclusion of the Assessing Officer andthe Commissioner(Appeals) is perfectly legal and the viewtaken by the Income-tax Appellate Tribunal that in the absenceof a notice under Section 143(2)the assessment is illegalcannot be sustained. The order of the Income-tax AppellateTribunal, Cochin Bench in I.T.A.No.70//Coch/2009 will standset aside. 13.Since the appeal was decided entirely on the legalquestion discussed above, we remit the matter back to theTribunal to consider the other contentions that are raised bythe assessee. Since the appeal was decided entirely on the legal The appeal is allowed as above. Sd/-ANTONY DOMINIC,JUDGE dsn Sd/-ANIL K.NARENDRAN, JUDGE