2016 (6) TMI 551 - AT - Income Tax

Reopening of assessment - Time limit of initiating scrutiny assessment u/s 143(2) is not expired - reasons to believe - Held that - Assessing Officer in issuing notice under section 148 of the Act, within the time limit available for issue of notice under section 143(2) of the Act being as per law. The Income Tax Act is a self contained Act, whereby provisions are made for different situations. Every section, sub-section, clause, proviso, Explanation, etc. are put in the Act at their respective places with some specific intention of the Legislature behind such placement. The provision of section 143(2) and Section 148 are placed on a totally different trajectories in the sense that notice under section 143(2) is issued in order to make regular assessment of an assessee on yearly basis, while notice under section 148 is to be issued on satisfaction of certain conditions prescribed therein where the income of the assessee escaped assessment. The escapement of income is not one of the conditions for issue of notice under section 143(2) of the Act. A limited time is available for issue of notice under section 143(2) of the Act and also to complete assessment under section 143(3) of the Act initiated through notice under section 143(2). While an extended period is available for issue of notice under section 148 of the Act and to make assessment initiated by issue of such notice. Apart from this, we also feel that every provision of the Act has a sanctity attached to it, which has to be maintained at any cost. By allowing such leverage to the Department to enter into the territory of any other provision while intending to remain on a specific provision will only lead to a chaotic situation. If the Assessing Officer has time in his hands to issue notice under section 143(2), why is he issuing notice under section 148 of the Act, we do not understand, specifically in the background of the legal position that the scope of assessment made on issue of notice under section 148 of the Act has limited as against the wide scope of assessment available to him by issuing notice under section 143(2) of the Act. CIT Vs. K.M. Pachaiyappan (2007 (7) TMI 229 - MADRAS HIGH COURT ), wherein the Court has held that no reassessment proceedings could be initiated so long as the assessment proceedings pending on the basis of return already filed are not terminated. Respectfully following the above case, we hold that the notice issued under section 148 of the Act by the Assessing Officer in the present case is not as per law and the consequential order made is hereby quashed. - Decided in favour of assessee.

Summary

Issues Involved:
1. Notice under section 148 of the Income Tax Act instead of notice under section 143(2) for assessment year 2002-03.
2. Appeal against the order of the Commissioner of Income Tax (Appeals) sustaining the penalty under section 271(1)(c) of the Act.

Issue 1: Notice under section 148 instead of section 143(2):
The case involved a dispute regarding the issuance of a notice under section 148 of the Income Tax Act instead of section 143(2) for assessment year 2002-03. The assessee contended that the Assessing Officer issued the notice under section 148 merely to extend the assessment period. The assessee argued that since the revised return was filed within the time limit, the notice under section 148 was unnecessary. The Tribunal analyzed the relevant provisions of the Act and held that the notice under section 148 was not in accordance with the law. The Tribunal emphasized the distinct purposes of notices under section 143(2) and section 148, highlighting that the scope of assessment under section 148 is narrower. Relying on judicial precedents, the Tribunal concluded that the notice under section 148 was improper and quashed the order of the Assessing Officer.

Issue 2: Appeal against penalty under section 271(1)(c):
The appeal also involved a challenge to the penalty imposed under section 271(1)(c) for assessment year 2002-03. However, since the Tribunal had already quashed the Assessing Officer's order pertaining to the notice under section 148, the penalty was also deleted. Consequently, the Tribunal allowed the assessee's appeal against the penalty.

In conclusion, the Tribunal allowed the assessee's appeal against the improper notice under section 148 and the consequent penalty under section 271(1)(c). The appeal of the Revenue was dismissed as it became infructuous due to the quashing of the Assessing Officer's order. The Tribunal's decision was pronounced on May 5, 2016, by the Vice President and the Accountant Member of the Appellate Tribunal ITAT Chandigarh.