2009 (4) TMI 396 - HC - Income Tax

Assessment-Reassessment- The assessee has filed its income-tax return on November 30 2000 declaring a total income of Rs. 2, 01, 51, 054. The return of income was processed under section 143(1)(a) on March 9 2001. However the Assessing Officer issued a notice under section 148 of the Income-tax Act on April 30 2001. Such a notice was objected to as time barred. In spite of that the Assessing Officer has not withdrawn the notice and he has issued notice under section 143(2) of the Act and completed the assessment on March 28 2003. That was carried on appeal before the Commissioner of Income- tax (Appeals) who held that the assessment was ab initio void inasmuch as the Assessing Officer had issued notice under section 148 of the Act when he had sufficient time to issue notice under section 143(3) of the Act Aggrieved by the order of the Commissioner of Income-tax (Appeals) the Revenue filed an appeal before the Income-tax Appellate Tribunal. The Tribunal following the decision of this court in the case of CIT v. K. M. Pachayappan has dismissed the appeal filed by the Revenue. Held that- dismissing the appeal that the Tribunal was right in holding that notice under section 148 of the Act could not be issued for making an assessment under section 147 of the Act when time limit was available for issue of notice under section 143(2) of the Act for making an assessment under section 143(3) of the Act.

Issues:
- Appeal against the order of the Income-tax Appellate Tribunal dated November 23, 2007, regarding the assessment year 2000-01.
- Validity of notice under section 148 of the Income-tax Act when notice under section 143(2) was available.
- Interpretation of the law on reopening of assessments.

Analysis:
1. The Revenue filed an appeal against the order of the Income-tax Appellate Tribunal regarding the assessment year 2000-01. The Assessing Officer issued a notice under section 148 of the Income-tax Act after the return of income was processed under section 143(1)(a) and objected to as time-barred. The Commissioner of Income-tax (Appeals) held the assessment as void since the notice under section 148 was issued when there was sufficient time to issue notice under section 143(3). The Tribunal, following previous court decisions, dismissed the Revenue's appeal, leading to the current appeal before the High Court.

2. The substantial question of law before the court was whether the notice under section 148 of the Act could be issued when the time limit for issuing notice under section 143(2) for assessment under section 143(3) was available. The court referred to the decision in Trustees of H. E. H. The Nizam's Supplemental Family Trust v. CIT, emphasizing that reassessment proceedings cannot be initiated until the assessment proceedings based on the filed return are terminated. The court highlighted that the assessment proceedings must be concluded before initiating reassessment under section 147.

3. The court relied on previous judgments, including CIT v. K. M. Pachayappan and CIT v. Qatalys Software Technologies Ltd., which held against the Revenue by interpreting the law to prevent attempts to enlarge the time available for framing assessments. The court emphasized that if assessment proceedings are not concluded within the limitation period, it must be assumed that the return was accepted as correct. Attempting to use section 147 to extend the assessment time was deemed impermissible.

4. In conclusion, the High Court upheld the Tribunal's order, stating that it was not contrary to any statutory provisions or Supreme Court decisions. The appeal was dismissed, and no costs were awarded. The court's decision was based on the interpretation of the law regarding the timing and validity of notices under different sections of the Income-tax Act, ensuring assessments are conducted within the prescribed limitations and procedures.

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