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TMI Blog1995 (8) TMI 93X X X X Extracts X X X X X X X X Extracts X X X X ..... es of valuation of partners' interest in the partnership which owns the property given on rent to M/s Bata India, the ALV in respect of the same was determined by the Tribunal amounted to Rs. 28,289 p.m. as against Rs. 25,000 p.m. disclosed by the assessee. Thus, according to the Assessing Officer in consequence of the order of the Tribunal income chargeable to tax had escaped assessment in the hands of the assessee firm. He issued notice under section 148 on 24-2-1992 which was served on the assessee on 17-3-1992. The assessee in its reply dated 24-3-1992 questioned the legality of assumption of jurisdiction by the Assessing Officer in issuing the said notice and pointed out that reopening of assessment was barred by time, the same having been reopened under section 147, as stood amended w.e.f. 1-4-1989. The assessee subsequently filed its return on 9-4-1992 declaring the income as already stood assessed, including income from property called Empire Stores disclosed on the same basis as before. The assessee also requested the Assessing Officer to intimate the reasons for reopening of the assessment. During the course of assessment proceedings also the assessee on 25-8-1992 submitt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Shri Aggarwal submitted that unless this condition was satisfied the Assessing Officer was prohibited from issuing notice under section 148 as assumption of a valid jurisdiction is a sine qua non for issuing notice under section 148. Shri Aggarwal submitted that the assessee in its return filed on 26-10-1981 had disclosed all primary facts necessary for its assessment, inasmuch as it had in the statement of assessable income furnished along with the return given full and proper details of rent actually received from M/s Bata India, as also from various other parties, which was accepted by the Assessing Officer. Shri Aggarwal submitted that the assessment has been reopened admittedly under the amended provisions of section 147 when the initiation of re-assessment proceedings on facts of the case is barred by limitation, inasmuch as the assessment has been reopened after the expiry of four years from the end of the relevant assessment year when there has been no failure on the part of the assessee to disclose fully and truly all material facts necessary for its assessment for the relevant assessment year at the time of filing of its original return. Shri Aggarwal invited our attent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 47 justifying issuing of notice under section 148. The mere fact that the AO obtained sanction for issuing of notice under section 151(1) does not render the proceedings initiated legally valid when legal safeguard provided in section 147 itself were ignored by the sanctioning authority and accordinaly notice issued under section 148 was also invalid. In support of this proposition, Shri Aggarwal placed reliance on Hon'ble Supreme Court judgment in the case of Chhugamal Rajpal v. S. P. Chaliha [1971] 79 ITR 603 /608. 4. On the other hand, the learned Departmental Representative submitted that all material/primary facts did not stand disclosed by the assessee when the assessee should have disclosed the security deposit as a part of rental arrangements with M/s Bata India. It was, therefore, submitted that the reopening was justified. The learned D.R. placed reliance on Supreme Court judgment in the case of A.L.A. Firm v. CIT [1991] 189 ITR 285. 5. We have heard the learned representatives of the parties and have also perused the relevant record, including the paper book filed by the assessee. There is no quarrel that the AO reopened the assessment under the amended provisions ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... en the assessee is found to have disclosed fully and truly all material facts necessary for its assessment, including the details of rent actually received from M/s Bata India. We, therefore, find merit in the submission made by Shri Aggarwal, the learned AR for the assessee. On the other hand, we find that the ratio of Hon'ble Supreme Court in the case of A.L.A. Firm is not applicable to the facts and circumstances of the case. We, therefore, quash the reassessment proceedings initiated by the AO, leading to passing of order of re-assessment. Having done so we do not consider it necessary to go into the other grounds of appeal. 6 . In the result, appeal is allowed. Per Vimal Gandhi, J.M. --- Having regard to the fact that this is one of the first appeals in which amended provision of section 147 has been taken into account, I am adding a few lines. Otherwise, I entirely agree with the order proposed by learned Accountant Member. The policy of law is that there must be a point of finality in all legal proceedings that stale issue should not be reactivated beyond a particular stage and that lapse of time must induce repose in and set at rest judicial and quasi-judicial controver ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ction 143 or 147 has been made for the assessment year for which the Assessing Officer is to take action under section 147 of the Act. The proviso prohibits any action and states that, "no action shall be taken under this section after the expiry of four years from the end of the relevant assessment year". In other words, where proviso is attracted and assessment year is 1981-82, no action could be taken under section 147 after 31-3-1986 unless the conditions stated in the proviso are satisfied. The circumstances which are condition precedents to confer jurisdiction are that the income of the relevant year should have escaped assessment on account of omission or failure on the part of the assessee : (i) to make a return under section 139 or in response to notice issued under sub-section (1) of section 142 or section 148; or (ii) to disclose fully and truly all material facts necessary for his assessment for that assessment year. The conditions provided in proviso and referred to above look similar to the conditions provided in amended clause (a) of section 147. Under that section, the Assessing Officer could initiate action by only showing, "reasons to believe' and it was not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... T(A) treated it to be a case of receipt of information covered under clause (b) of section 147. However, the legal position as discussed earlier is quite different. Learned Departmental Representative also drew our attention to provisions and to the limitation provided under sections 148 to 153 and that sanction of the higher authority to initiate action was duly taken. He accordingly justified action of the Assessing Officer under section 147 of the Income-tax Act. There is no substance in the submissions advanced on behalf of the Revenue. The time limit mentioned in section 149 is applicable only to cases where a valid notice is issued under section 148 of the Income-tax Act and proviso to section 147 is not applicable. Likewise, any sanction granted in a mechanical manner under section 151 of the Act shall not make a notice under section 147/148 valid which is not otherwise so. In the present case, no attempt was made to bring the case within four corners of proviso to section 147. Thus condition precedents to assume jurisdiction are not satisfied. The bar contained in the proviso providing, "no action shall be taken under this section" is not lifted. The notice has to be declar ..... X X X X Extracts X X X X X X X X Extracts X X X X
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