The Commissioner Of Income Tax ,Faridabad v. M.p.singh

In the High Court for the States of Punjab and Haryana at Chandigarh… ITA No.10 of 2008 Date of decision:31.3.2008 The Commissioner of Income Tax ,Faridabad Appellant Versus M.P.Singh.. Respondent Coram: Hon’ble Mr.Justice Satish Kumar MittalHon'ble Mr.Justice Rakesh Kumar Garg Present:Mr.Yogesh Putney, Advocatefor the Revenue/appellant. Rakesh Kumar Garg,J 1.The Revenue has filed the present Appeal under Section260A of the Income Tax Act, 1961(for short ‘the Act’) against theorder dated 5.4.2007 passed by the Income Tax Appellate Tribunal,Delhi Bench ‘I’ New Delhi (for short ‘the Tribunal’), in ITANo.316/DEL/2005 for the Assessment Year 1999-2000 raising thefollowing proposed substantial questions of law: - “a)Whether on the facts and in the circumstances of thecase , the Hon'ble ITAT was right in law in holding thatissue of notice u/s 148 was invalid and that theassessment so framed lacks jurisdiction ? b) Whether on the facts and in the circumstances of thecase , the Hon'ble ITAT was right in law in holding that the Assessing Officer was not right in issue of notice u/s148 without framing the assessment in response to theearlier notice issued u/s 142(1) of the Income Tax Act on23.2.2000, though no valid return was filed by theassessee in response to notice dated 23.2.2000 and thereturn filed by the assessee on 18.10.2001 was treatedas invalid return and was filed.” The assessee did not furnish his return of income voluntarily. TheAssessing Officer issued notice under section 142(1) of the Act on23.2.2000 calling upon him to furnish the return of the income. Theassessee did not file any return up to 31.3.2001, i.e., the date up towhich the assessee could file the said return. The assessee filed hisreturn of income on 18.10.2001 declaring income of Rs.5,56,580/-.Since the said return filed by the assessee was treated as invalidreturn, the Assessing Officer issued notice under section 148 of theAct on 21.11.2002 after recording reasons. Assessment undersection 143(3)/147 of the Act was completed on 26.3.2004 at anincome of Rs.26,04,210/-. Aggrieved against this order of assessment, theassessee filed an appeal before Commissioner of Income Tax(Appeals) on the ground that since proceedings under Section142(1)of the Act had been initiated by the Assessing Officer vide noticedated 23.2.2000 and in response to the said notice, return of incomehad been duly filed by the appellant,therefore. there was nothing inlaw which could support the action of the Assessing Officer to issuenotice under Section 147 of the Income Tax Act as there was no case for the Assessing Officer to hold that the income had escapedassessment. Before the Commissioner of Income Tax(Appeals), thefollowing undisputed facts emerged in the case:- “a)That proceedings u/s 142 (1) had indeed been initiated by the Assessing Officer for the assessment year 1999-2000 vide notice dated 23.2.2000 and this fact is no morein dispute . b) That no assessment order was at all framed to concludethe proceedings initiated u/s 142(1). c) That the AO did not have any information on recordregarding the initiation of proceedings u/s 142(1) prior tothis fact having brought on record by the appellant. d) That there was no escapement of income once thereturn had been duly filed. e) And for once return having so filed in response to theproceedings pending u/s 142(1), the question of initiating action u/s 147 read with Section 148 could not arise.” In view of these undisputed facts, the Commissioner ofIncome Tax(Appeals) held that the notice under section 148 of theAct was a invalid notice and the assessment so framed undersection 143(2) lacks jurisdiction. The assessment was therefore,quashed by the Commissioner of Income Tax (Appeals). Not satisfied with the order of the Commissioner ofIncome Tax (Appeals), the revenue filed the appeal before theTribunal. After hearing the rival submissions, the Tribunal gave a d) That there was no escapement of income once thereturn had been duly filed. e) And for once return having so filed in response to theproceedings pending u/s 142(1), the question of initiating action u/s 147 read with Section 148 could not arise.” In view of these undisputed facts, the Commissioner ofIncome Tax(Appeals) held that the notice under section 148 of theAct was a invalid notice and the assessment so framed undersection 143(2) lacks jurisdiction. The assessment was therefore,quashed by the Commissioner of Income Tax (Appeals). Not satisfied with the order of the Commissioner ofIncome Tax (Appeals), the revenue filed the appeal before theTribunal. After hearing the rival submissions, the Tribunal gave a categoric finding of fact to the effect that the Assessing Officerinitiated proceedings under Section 142 vide notice 23.2.2000 and noassessment order was framed at all to conclude the proceedingsinitiated under section 142(1) of the Act and therefore, notice underSection 148 of the Act was invalid. On the basis of this categoricconclusion on facts reached by the Tribunal by relying upon thejudgment of Delhi High Court in the case of KLM Royal Dutch AirlinesVs. ADIT (2007) 159 Taxman 191(Del) and also the decision of theMumbai Bench of the Tribunal in the case of Income Tax Officer Vs.Capt. A.P. Kamat (ITA Nos.1084 to 1087 and 1089 to 1090(Mumbai)/2003, held that since the machinery of re-assessment was alreadyset in motion by issuance of earlier notice and re-assessment wasnot completed for whatever reasons, the stand of the AssesssingOfficer cannot be accepted as the notice under section 148 of the Actwas invalid notice and the assessment so framed under section 143(2) lacks jurisdiction. The appeal of the Revenue was dismissed. Feeling aggrieved against the said order of the Tribunal,the revenue has filed the present appeal in this Court. Shri Yogesh Putney, Advocate, learned counsel for theRevenue has vehemently argued that the assessee did not file anyreturn of income in response to notice dated 23.2.2000 issued undersection 142(1) of the Act by 31.3.2001and the return filed by theassessee on 18.10.2001 was not a valid return and therefore, thesaid return was treated as invalid return by the Assessing Officerand on the basis of the details and information on record, theAssessing Officer has reason to believe that assessee's income for the year under consideration had escaped assessment andtherefore, a valid notice under section 148 of the Act was issued tothe assessee on 21.11.2002 after recording reasons in writing. We have heard learned counsel for the appellant.However, we find no merit in the arguments raised by the counsel forthe Revenue. Undisputedly, the proceedings under section 142(1) ofthe Act had been initiated by the Assessing Officer for theassessment year 1999-2000 vide notice dated 23.2.2000 but noassessment order was at all framed to conclude these proceedingsinitiated under section 142(1) of the Act. The Assessing Officer didnot have any information on record regarding the initiation ofproceedings under Section 142(1) of the Act, prior to this fact havingbeen brought on record by the assessee and there was noescapement of income once the return had been filed. In view of the above undisputed facts, the question ofinitiating action under Section 147 read with Section 148 of the Actcould not arise as the machinery of re-assessment was already setin motion by issuance of earlier notice and if re-assessment is notcompleted for whatever reasons, it could not be revived by issuingfresh notice as the time for completing re-assessment in pursuanceof earlier notice had already expired. The Tribunal also held that nospecific defect has been pin pointed by the revenue for theconclusions arrived at by the Commissioner of Income Tax(Appeals). In view of the above undisputed facts, the question ofinitiating action under Section 147 read with Section 148 of the Actcould not arise as the machinery of re-assessment was already setin motion by issuance of earlier notice and if re-assessment is notcompleted for whatever reasons, it could not be revived by issuingfresh notice as the time for completing re-assessment in pursuanceof earlier notice had already expired. The Tribunal also held that nospecific defect has been pin pointed by the revenue for theconclusions arrived at by the Commissioner of Income Tax(Appeals). Hence, no substantial question of law is arising from theimpugned order passed by the Tribunal for the determination of thisCourt. Thus the appeal is hereby dismissed. (RAKESH KUMAR GARG) JUDGE March 31, 2008 (SATISH KUMAR MITTAL)nk JUDGE