2011 (12) TMI 61 - HC - Income Tax

Reassessment u/s 147 / 148 after filing of revised return - after revised return AO made inquiry u/s 133(6) and issued notice u/s 148 - reason to believe - held that - Failure to communicate the said processing (u/s 143(1)) is something separate and cannot be equate with pendency of the assessment proceedings under Section 143(3) of the Act. Once the order under Section 143(1) of the Act was passed, and no notice under Section 143(2) has been issued, the Assessing Officer can issue notice under Section 147/148, if the pre-conditions are satisfied. In view of the authoritative pronouncement of the Supreme Court in the case of Rajesh Jhaveri (2007 -TMI - 6563 - SUPREME Court), we are of the opinion that in the present case the Assessing Officer has jurisdiction to invoke Section 147/148 of the Act. It is not disputed and doubted by the petitioners that the period of service of notice under Section 143(2) of the Act after filing of the original/revised returns has expired. Regular assessment proceedings under Section 143(3) cannot be initiated and the question considered. The only option available to Assessing Officer is to issue notice under Section 148 of the Act. - Decided against the assessee.

Issues Involved:
1. Validity of notice under Section 148 of the Income Tax Act.
2. Jurisdiction of the Assessing Officer to invoke Section 147/148.
3. Communication of the order under Section 143(1).
4. Legality of revised returns and the basis for grossing up and conversion of perquisites.

Detailed Analysis:

1. Validity of Notice under Section 148 of the Income Tax Act:
The petitioners challenged the notice under Section 148 of the Act dated 6th April 2011 and the subsequent rejection of objections dated 21st September 2011. They argued that the Assessing Officer had failed to intimate and send the order passed under Section 143(1) to the petitioners-assessees, rendering the proceedings under Section 147/148 invalid. The court referenced the Supreme Court's decision in CIT Vs Rajesh Jhaveri Stock Brokers (P) Ltd., which clarified that an intimation under Section 143(1) is not the same as an assessment order and does not preclude the right of the Assessing Officer to proceed under Section 143(2). The court concluded that the Assessing Officer had jurisdiction to invoke Section 147/148 as the period for serving notice under Section 143(2) had expired.

2. Jurisdiction of the Assessing Officer to Invoke Section 147/148:
The court examined whether the Assessing Officer had the jurisdiction to issue notice under Section 147/148. It was noted that the original returns were processed under Section 143(1), and no notice under Section 143(2) was issued within the stipulated period. The court held that the Assessing Officer could issue notice under Section 147/148 if the pre-conditions were satisfied. The Supreme Court in Rajesh Jhaveri Stock Brokers (P) Ltd. emphasized that the Assessing Officer could initiate proceedings under Section 147 if there was a reason to believe that income had escaped assessment.

3. Communication of the Order under Section 143(1):
The petitioners contended that the failure to communicate the processing under Section 143(1) equated to the pendency of assessment proceedings under Section 143(3). The court rejected this argument, stating that the failure to communicate the processing under Section 143(1) does not imply that assessment proceedings are pending. If assessment proceedings were pending, there would be no need to issue a re-assessment notice under Section 147/148.

4. Legality of Revised Returns and the Basis for Grossing Up and Conversion of Perquisites:
The petitioners had filed revised returns with revised Form 16, claiming refunds based on the exclusion of non-monetary perquisites. The Assessing Officer questioned the basis for the revised Form 16 and the exclusion of non-monetary perquisites. The court noted that the issue of grossing up and conversion of non-monetary into monetary perquisites was pending consideration before the High Court, as the Revenue had not accepted the decision of the tribunal in RBF Rig Corporation Vs. ACIT. The court emphasized that at the stage of initiation, only a prima facie or tentative opinion is required, and a firm conclusion is reached when the Assessing Officer passes the Assessment Order.

Conclusion:
The High Court dismissed the writ petitions, upholding the validity of the notice under Section 148 and the jurisdiction of the Assessing Officer to invoke Section 147/148. The court found no merit in the petitioners' arguments regarding the communication of the order under Section 143(1) and the legality of the revised returns. The re-assessment proceedings were deemed appropriate as the first regular assessment. The petitions were dismissed without any order as to costs.

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