2012 (10) TMI 62 - HC - Income Tax

Reopening of assessment - ITAT cancelled the order passed by the AO u/s 143(3)/147/251 - Held that - As decided in Hemraj Munshi Ram Versus Union Of India And Others 1998 (9) TMI 17 - PATNA HIGH COURT issuance of notice under Section 148 itself is found to be without any reason and basis as the relevant material was already seized and were in possession of the revenue itself and in that fact circumstances, particulars furnished could be generally verifiable by the revenue and there was no reason to hold that assessee had failed to disclose fully and truly material facts to the A.O. As in the present case in consequence of search and seizure operation, the assessment was completed by making the assessment orders on 30.11.1978, 30.11.1979, 30.11.1980 and 30.11.1981. Therefore, the matters which were pending before the A.O. before making the assessment orders and against the above assessment orders, the appeals were preferred and assessment orders were set aside by CIT(A) vide order dated 15.3.1988 and matters were remanded to the A.O. These proceedings could have been completed by or before 31.3.1990. The A.O. had two years time with it. The relevant materials were already lying with the officers as they were seized during the course of the search and seizure. The A.O. could have completed the assessment but it appears that in the present cases, a pretext has been taken by the A.O. and thereafter, only for the extension of period of limitation, the A.O. issued notice under Section 148. Thus after remand order, if A.O. proceeds for assessment and there was no limitation, then there was no necessity of taking help of Section 148 and Section 147 - in favour of assessee.

Summary

Issues:
1. Justification of the ITAT in canceling the order passed by the Assessing Officer under various sections of the Income Tax Act.
2. Bar on time for filing a Tax Appeal.
3. Validity of the notice issued under Section 148 of the Income Tax Act.
4. Interpretation of Section 150 and Section 153(2) in relation to the limitation for assessment.
5. Comparison with a judgment delivered by the Patna High Court in a similar case.

Analysis:
1. The High Court addressed the issue of the ITAT's decision to cancel the order passed by the Assessing Officer under Sections 143(3), 147, and 251 of the Income Tax Act for the Assessment Years 1979-80 to 1982-83. The Court examined the legality of the notice issued under Section 148 and the subsequent reassessment order made under Section 147. It was argued that the Assessing Officer had the jurisdiction to issue the notice to comply with the appellate order. However, the Court found this argument contradictory, especially considering that the assessment orders were already completed before the notice was issued. The Court concluded that the Assessing Officer's actions were primarily aimed at extending the period of limitation rather than complying with the appellate order.

2. Another issue raised was the bar on time for filing a Tax Appeal, specifically in relation to a previous appeal dismissed on the grounds of being time-barred. The Court considered the relevant dates provided by the Income Tax Appellate Tribunal and noted that the assessment proceedings were reopened following the CIT(A)'s order dated 18.3.1988. The Court highlighted that no assessment was made until the limitation expired on 31.3.1990, and the notice under Section 148 was issued just before the deadline, raising concerns about the true intention behind the notice.

3. The Court delved into the validity of the notice issued under Section 148 of the Income Tax Act, emphasizing that the Assessing Officer's actions seemed more focused on extending the period of limitation rather than conducting a reassessment based on the appellate order. The Court questioned the necessity of issuing the notice under Sections 148 and 147 if there was no limitation on making the assessment after the remand order.

4. In interpreting Section 150 and Section 153(2) concerning the limitation for assessment, the Court found that the Assessing Officer's decision to issue the notice under Section 148 appeared to be a pretext for extending the limitation period rather than a genuine attempt to comply with the appellate order. The Court highlighted that the relevant materials for assessment were already in possession of the officers, and there was no valid reason for the delay in completing the assessment.

5. The Court compared the present case with a judgment delivered by the Patna High Court in a similar matter, emphasizing that the facts were identical to the previous case where the issuance of notice under Section 148 was deemed unjustified. The Court concluded that no question of law was involved in the appeals, and the Tribunal did not err in holding that the notice under Section 147 was beyond the provisions of the law, leading to the dismissal of the appeals.