Wa/1860/2000 Of Deputy Commissioner Of Income Tax v. M/S.sree Murugan Trading Co

IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HON'BLE THE CHIEF JUSTICE MR.H.L.DATTU & THE HONOURABLE MR. JUSTICE K.T.SANKARAN MONDAY, THE 22ND OCTOBER 2007 / 30TH ASWINA 1929 WA.No. 1860 of 2000(A) AGAINST THE JUDGEMENT IN OP.NO.25620/1999 Dated 25/05/2000 APPELLANT: RESPONDENT: --------------------------------------- THE DEPUTY COMMISSIONER OF INCOME TAX,ALAPPUZHA. BY ADV. SRI.P.K.R.MENON,SR.COUNSEL,GOI(TAXES) SRI.GEORGE K. GEORGE, SC FOR IT RESPONDENT: PETITIONER: ---------------------------------------- M/S. SREE MURUGAN TRADING CO.,NEAR BUS STAND, HARIPAD,REPRESENTED BY ITS MANAGING PARTNER. BY ADV. SRI.P.BALAKRISHNAN (E) SRI.K.C.KIRAN THIS WRIT APPEAL HAVING BEEN FINALLY HEARD ON 22/10/2007, ALONG WITH OP.NO.9949 OF 2001, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: H.L.DATTU, C.J. & K.T.SANKARAN,J. ---------------------------------------------------- W.A. NO. 1860 OF 2000 andO.P. NO. 9949 OF 2001 ---------------------------------------------------- Dated this the 22[nd] October, 2007 JUDGMENT H.L.DATTU, C.J. The Income-tax Department ('Revenue' for short) has filed W.A.No.1860of 2000 before this Court, being aggrieved by the orders passed by the learnedsingle Judge in O.P.No.25620 of 1999, dated 25[th] May, 2000. 2. In O.P.No.9949 of 2001, the assessee has called in question Exts.P11and P12 notices dated 8.11.2000 and 5.3.2001 respectively, issued by the DeputyCommissioner of Income-tax, Circle – I, Alleppey. 3. To answer the contentions canvassed by the learned counsel appearingfor the parties to the lis, the brief facts require to be noticed. They are as under:The assessee is a partnership firm doing business in arrack. For the assessmentyear 1989-90, the assessee had filed its return under Section 139 of the IncomeTax Act. The assessing authority had completed the summary assessmentsunder Section 143 (1)(a) of the Income Tax Act. 4. After completion of the summary assessments, the Income-tax Officerhad taken up the scrutiny assessment proceedings for the same assessment year.Being aggrieved by the notice so issued for the purpose of scrutiny assessments,the assessee had filed an appeal before the Commissioner of Income-tax(Appeals). In the appeal, the assessee has raised two contentions, namely, withregard to the limitation, that is, the notice issued by the assessing authority isbeyond the time prescribed under the provisions of Section 143 (2)(b) of the Actand also on the merits of the notice so issued. The Commissioner of Income-tax W.A.NO.1860 OF 2000 AND O.P. NO.9949 OF 2001 (Appeals) has disposed of the appeal, holding that the notice issued by theassessing authority under Section 143(2) of the Act is within the time prescribedunder the Act and in so far as the merits of the case is concerned, it has leaned infavour of the assessee. 5. The assessee, being aggrieved by the order so passed by theCommissioner of Income-tax (Appeals), had carried the matter in appeal beforethe Income Tax Appellate Tribunal. The Tribunal, without going into the merits ordemerits of the assessee's case, was pleased to dispose of the appeal on theground that the notice issued for the scrutiny assessments is beyond the timeprescribed under the Act. W.A.NO.1860 OF 2000 AND O.P. NO.9949 OF 2001 (Appeals) has disposed of the appeal, holding that the notice issued by theassessing authority under Section 143(2) of the Act is within the time prescribedunder the Act and in so far as the merits of the case is concerned, it has leaned infavour of the assessee. 5. The assessee, being aggrieved by the order so passed by theCommissioner of Income-tax (Appeals), had carried the matter in appeal beforethe Income Tax Appellate Tribunal. The Tribunal, without going into the merits ordemerits of the assessee's case, was pleased to dispose of the appeal on theground that the notice issued for the scrutiny assessments is beyond the timeprescribed under the Act. 6. After disposal of the appeal by the Tribunal, the Revenue has initiatedproceedings under Section 148 of the Act to bring to tax the escaped assessment.Aggrieved by the notice so issued, the assessee had filed O.P.No.25620 of 1999before this Court. A learned single Judge of this Court by judgment dated 25[th]May, 2000, had disposed of the Original Petition and in that, had made it clear thatthe Revenue can assess only the escaped assessment of Rs.4,70,000/-, aspointed out by the Commissioner of Income-tax (Appeals), for the reason that theRevenue had not filed any appeal against the order passed by the Commissionerof Income-tax (Appeals). The learned single Judge had also observed that whatis questioned by the assessee is only a notice issued under Section 148 of the Actand, therefore, it can file a detailed reply before the authority objecting to thenotice so issued and the Court had further directed the assessing authority toconsider the reply that may be filed by the assessee and pass a speaking order. 7. After the disposal of the appeal, the assessing authority had intimated W.A.NO.1860 OF 2000 AND O.P. NO.9949 OF 2001 the assessee that it intends to bring to tax the income which had not beenassessed in the assessment year 1989-90. Aggrieved by the opinion soexpressed by the assessing authority, assessee is before this Court inO.P.No.9949 of 2001. Since all these proceedings are between the sameassessee, the Writ Appeal and the Original Petition are heard and disposed of bythis common judgment. 8. Sri.George K. George, learned counsel appearing for the Revenuewould submit that in view of what has been stated by the Apex Court in the caseof GKN Driveshafts (India) Ltd. v. Income-tax Officer and others ((2003) 259 I.T.R. 19) and since no other reasons are forthcoming in the note prepared beforeissuing Section 148 notice, the Revenue is restricting the notice issued underSection 148 of the Act only to the escaped assessment of Rs.4,70,000/-, whichwas sustained by the Commissioner of Income-tax (Appeals). In fact, theRevenue has filed W.A.No.1860 of 2000 only aggrieved by the direction issued bya learned single Judge of this Court, directing the Revenue to assess only theescaped assessment of Rs.4,70,000/-, as pointed out by the Commissioner ofIncome-tax (Appeals). 9. Since the Revenue itself intends to bring to tax only what has beenpointed out by the Commissioner of Income-tax (Appeals) in the orders passed inthe appeal filed by the assessee, in our opinion, as on today, the relief sought forby the Revenue in this Writ Appeal would not survive for consideration of thisCourt. Therefore, the Writ Appeal is disposed of as having become unnecessary.We make it clear that the Revenue can only assess on the escaped assessmentof Rs.4,70,000/- as pointed out by the Commissioner of Income-tax (Appeals) in the appeal filed by the Revenue and that action be after considering the objectionsthat may be filed by the assessee. 9. Since the Revenue itself intends to bring to tax only what has beenpointed out by the Commissioner of Income-tax (Appeals) in the orders passed inthe appeal filed by the assessee, in our opinion, as on today, the relief sought forby the Revenue in this Writ Appeal would not survive for consideration of thisCourt. Therefore, the Writ Appeal is disposed of as having become unnecessary.We make it clear that the Revenue can only assess on the escaped assessmentof Rs.4,70,000/- as pointed out by the Commissioner of Income-tax (Appeals) in the appeal filed by the Revenue and that action be after considering the objectionsthat may be filed by the assessee. 9. In so far as O.P.No.9949 of 2001 is concerned, this Court whileentertaining the Original Petition had directed the assessing authority to considerthe reply that may be filed by the petitioner to the notice issued under Section 148of the Act and pass a speaking order. Pursuant to the direction so issued, we areinformed by Sri.George K.George, learned counsel appearing for the Revenue,that the assessing authority has passed an order on 24.1.2006. In view of that, atthis stage, it may not be necessary for this Court to quash Exts.P11 and P12notices. Now a direction is issued to the assessing authority to complete the re-assessment proceedings as expeditiously as possible, at any rate, within twomonths from the date of receipt of a copy of this judgment, keeping in view theobservations made by us in the course of this judgment. 10. Consequently, all pending interlocutory applications are rejected.Ordered accordingly. (H.L.DATTU)Chief Justice ahz/ (K.T.SANKARAN)Judge