M/S Daulat Ram Tirlok Chand v. Assistant Commissioner Of Income Tax

C.W. P. No. 18450 of 1991 [1] IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH C.W.P. No. 18450 of 1991 (O&M)Date of decision: 7.1.2011 M/s Daulat Ram Tirlok Chand ..Petitioner v. Assistant Commissioner of Income Tax .. Respondent CORAM: HON'BLE MR. JUSTICE ADARSH KUMAR GOELHON'BLE MR. JUSTICE RAJESH BINDAL Present: Mr. Akshay Bhan, Advocate for the petitioner. Mr. Yogesh Putney, Advocate for the respondent. ... Rajesh BindalJ. The petitioner has approached this court by filing the presentpetition seeking quashing of notices (Annexures P4 and P5) and theproceedings initiated in consequence thereof. Further prayer has been madefor a direction to the respondent to refund the amount of tax alreadydeposited by it at the time of filing of return. The facts, as stated in the petition, are that the petitioner-firmsubmitted his return of income for the assessment year 1988-89 on30.8.1988 disclosing his taxable income at ` 59,985/-. On 6.8.1991, therespondent issued notice to the petitioner under Section 143(3) of theIncome-tax Act, 1961 (for short, `the Act') for assessing the income, whichallegedly escaped assessment. Reply to the notice was submitted.Thereafter, notice under Section 148 of the Act was issued to the petitioneron 16.9.1991 asking the petitioner to file the return. The same was replied toby the petitioner stating therein that no notice under Section 148 of the Act,as stated in notice dated 16.9.1991, was ever received by the petitioner in C.W. P. No. 18450 of 1991 [2] March, 1990. No assessment on the basis of return initially filed by thepetitioner can be framed at this stage, as the same got time barred on31.3.1990 and in case no assessment had been framed originally,proceedings under Section 148 of the Act could not be initiated. Thepetitioner also asked for reasons, if any, recorded for issuance of noticeunder Section 148 of the Act, though return was also filed under protest.Challenge was made in the petition to the notice issued for re-assessment. Itwas also prayed that during the year in question, the petitioner haddeposited ` 4,125/- as advance tax and no regular assessment having beenframed assessing that amount of tax, the amount deserves to be refunded tohim. Reply to the petition was filed by the department controvertingthe allegations raised by the petitioner in the petition. The prayer was fordismissal of the writ petition.The petitioner filed replication reiterating what was stated inthe petition. Reply to the petition was filed by the department controvertingthe allegations raised by the petitioner in the petition. The prayer was fordismissal of the writ petition.The petitioner filed replication reiterating what was stated inthe petition. Learned counsel for the petitioner submitted that after the filingof return for the assessment year in question on 30.8.1988, no assessmentwas framed. Section 153(1)(a)(iii) of the Act provides for limitation forframing the assessment, in terms of which no order of assessment could bemade under Section 153 of the Act or under Section 144 of the Act at anytime after the expiry of two years from the end of assessment year in whichthe income was first assessable. In the present case, the assessment yearbeing 1988-89, the assessment at the most could be framed upto 31.3.1991.The notice, which was allegedly issued under Section 148 of the Act inMarch, 1990, was never served upon the petitioner. The fact that noassessment was framed is evident from a communication dated 26.11.1990received by the petitioner from the Assistant Commissioner of Income-tax,Investigation Circle, Ambala, wherein it was stated that from the memory ofthe signatory of the communication and his staff members, assessment ofthe petitioner under Section 143(3) of the Act was never completed. If theassessment had not been completed, there was no question of issuance ofnotice under Sections 147/148 of the Act. Further, at the time of issuance ofnotice under Section 148 of the Act in March, 1990, as is sought to beclaimed by the department, the assessment proceedings itself were pending. C.W. P. No. 18450 of 1991 [3] As far as claim for refund of the amount of advance tax by thepetitioner is concerned, the petitioner fairly stated that he does not wish topress for that relief. C.W. P. No. 18450 of 1991 [3] As far as claim for refund of the amount of advance tax by thepetitioner is concerned, the petitioner fairly stated that he does not wish topress for that relief. On the other hand, learned counsel for the revenue inter aliasubmitted that the petitioner in the present case has effective alternativeremedy to approach the officer concerned by raising whatever objection hewishes to raise to the initiation of proceedings under Sections 147/148 ofthe Act. He further submitted that assessment of the petitioner in fact wasframed during the period of limitation. Thereafter, search and seizureoperation was carried out at the premises of the petitioner on 5.5.1989 andcertain incriminating documents were found. The proceedings underSections 147/148 of the Act were initiated in March, 1990 on the basis ofthe material found during the course of search. He further submitted that onaccount of fire in the Income-tax office at Ambala on 21.9.1990 and atKurukshetra on 22.9.1990 during Anti-Mandal Commission agitation, lot ofrecords were burnt which included some record of the petitioner. Learnedcounsel further submitted that the name of the petitioner appeared at Sr. No.76 in the list submitted to the Commissioner of Income-tx, which containedthe names of cases where notices under Section 148 of the Act were issued.From the list, it was evident that assessment proceedings against thepetitioner under Sections 147/148 of the Act were pending, as the noticehad been served upon him on 31.3.1990, though there was no written proofavailable as the record had been burnt in the fire. It was further submittedthat jurisdiction of the assessee upto the date of search and seizureoperation, i.e., 5.5.1989 was with Income-tax Officer, Kurukshetra.Enquiries from him revealed that in the demand and collection register forthe assessment year 1988-89, the note of demand of ` 74/- created on27.2.1989 was carried over at Sr. No. 236 of the AVS Demand andCollection register for the assessment year 1990-91. Thus, it is evident thathis assessment for the year in question had already been completed.Summing up the submissions, learned counsel stated that in view of thepeculiar facts and circumstances of the case when part of the record hasbeen burnt in the fire, but still there is some material available with thedepartment which established that assessment of the petitioner had beencompleted prior to the search and seizure operation carried out at his C.W. P. No. 18450 of 1991 [4] premises and thereafter notice under Sections 147/148 of the Act wasissued. As there was no case made out by the petitioner for quashing of thenotice and consequential proceedings initiated thereupon, mere relianceupon a letter written by the Assistant Commissioner of Income-tax,Investigation Circle, Ambala, which is based upon his memory is neitherhere nor there. Heard learned counsel for the parties and perused the paperbook. As far as the claim for refund of amount of advance taxdeposited by the petitioner is concerned, the petitioner himself was fairenough to state that he does not press for the relief. Even otherwise, it is notadmissible to him considering the judgment of Hon'ble the Supreme Courtin Commissioner of Income Taxv. Shelly Products and another, (2003) 261ITR 367 (SC). Heard learned counsel for the parties and perused the paperbook. As far as the claim for refund of amount of advance taxdeposited by the petitioner is concerned, the petitioner himself was fairenough to state that he does not press for the relief. Even otherwise, it is notadmissible to him considering the judgment of Hon'ble the Supreme Courtin Commissioner of Income Taxv. Shelly Products and another, (2003) 261ITR 367 (SC). As far as prayer for setting aside of the notices issued to thepetitioner under Sections 147/148 of the Act is concerned, in the factualmatrix, as have been narrated above, in our opinion, considering the case inhand to be peculiar on account of the fact that part of the records was burntin Anti-Mandal Commission agitation, but still the department claims thatthere is some supporting record available which establishes framing of theassessment; search and seizure operation and also issuance and service ofnotice under Sections 147/148 of the Act, in our opinion, the matter needsto be considered by the competent authority at the first instance, who willconsider the objections regarding initiation of re-assessment proceedingsand decide the same before proceeding further to frame the assessment. The writ petition is disposed of accordingly. ( Rajesh Bindal ) Judge (Adarsh Kumar Goel) Judge