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TMI Blog2005 (1) TMI 334X X X X Extracts X X X X X X X X Extracts X X X X ..... f the Income-tax Act, 1961? 2. If the answer to the aforesaid question is in the affirmative then what is the effect of non-service of notice under the proviso to section 143(2) within the time prescribed, to the return filed pursuant to section 148 of the Income-tax Act, 1961?" 2. Shri K. Sampath appearing for the appellant contends that proviso to section 143(2) of the Act enjoins a duty upon the Assessing Officer to serve notice on the assessee before expiry of twelve months from the end of the month in which return is furnished. Procedure for making assessment is prescribed under Chapter XIV of the Income-tax Act. Cases where income has escaped assessment, the law mandates that the Assessing Officer has to serve a notice on the assessee requiring him to furnish a return of his income and provisions of the Act shall so far as may be, apply accordingly as if such return were a return required to be furnished under section 139 of the Act. Section 148 thus envisages a return as if such return was a return under section 139. The words "so far as may be" as appearing in section 148 has always been construed to mean that those provisions may generally be followed to the extent poss ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the natural and ordinary meaning of the words used by the Legislature and the court ought not under any circumstances, substitute its own impression and ideas in place of the legislative intent as is available from a plain reading of the statutory provisions. In Keshavji Ravji & Co. v. CIT [1990] 183 ITR 1 (SC), it was stated that as long as there is no ambiguity in the statutory language, resort to any interpretative process to unfold the legislative intent becomes impermissible. The supposed intention of the Legislature cannot then be appealed to whittle down the statutory language which is otherwise unambiguous. If the intendment is not in the words, it is nowhere else. The need for interpretation arises when the words used in the statute are, on their own terms, ambivalent and do not manifest the intention of the Legislature. When words acquire a particular meaning or sense because of their authoritative construction by superior courts, they are presumed to have been used in the same sense when used in a subsequent legislation in the same or similar context. In Prakash Nath Khanna v. CIT [2004] 266 ITR 1(SC), the Apex Court has said that while interpreting a provision, the cou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d, as there is no waiver in the matter where there is a question of jurisdiction. The Tribunal has entertained such a view in Dr. K.C. Verma v. Asstt. CIT [2003] 84 ITD 33 (Delhi). 8. Shri M.K. Kulkarni, Advocate and Shri Kangadharan, CA, interveners advanced the same arguments as that of the appellant and contended that the assessment made on the strength of a notice served beyond the period prescribed under the proviso to section 143(2) of the Act shall be vitiated and needed to be annulled. 9. Shri V.S. Rastogi, intervener appearing for Cray Research (I) Ltd. contends that section 148 of the Act applies to assessment as well as reassessment cases and no different treatment is prescribed for either of the cases when return is required to be furnished by issuance of a notice under section 148. He seeks to refer that section 148 mandates that the provisions of this Act shall, so far as may be, apply accordingly as if such return were a return required to be furnished under section 139. He, therefore, makes four propositions:- (i) That this provision has employed the word "shall". By use of the word "shall", the provision has been made mandatory and it cannot be construed as dir ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ns' case. 12. On the proposition that there exists a fiction of law as the return filed pursuant to notice under section 148 is deemed to be a return under section 139 of the Act, reference was made to the judgment of CIT v. S. Teja Singh [1959] 35 ITR 408 (SC), 413 by stating that deeming provisions are to be extended to the legitimate purpose for which they are enacted. Furthermore, there is no inconsistency between section 143(2) and section 148, the same procedure has to be followed in an assessment or reassessment under section 147. Reference was made to the decision of Andhra Pradesh High Court in CIT v. Supreme Construction Co. [1995] 213 ITR 137. 13. CBDT Circular No. 549, dated 31-10-1989 reported in 182 ITR (St.) 1, para 5.13, has also been referred to where it is stated that the department must serve the notice on the assessee as required by the proviso to section 143(2) of the Act, within the period specified therein. If the assessee does not receive the notice, he can take it that the return filed by him had become final. The Circulars of Board are binding on the revenue authorities. Reliance was placed on the judgments in CCE v. Dhiren Chemical Industries [2002] ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... section 143(2) will not apply in relation to assessment completed consequent to notice issued under section 148. This was done by paraphrasing the judgment of the Special Bench rendered with respect to section 158BC of the Act. 17. Shri Ajay Vohra, Advocate appearing as intervener for Jayco India (P.) Ltd. contends that after a notice under section 148 is issued, four courses are open to the Assessing Officer, (i) the Assessing Officer may drop the notice, (ii) if assessee files the return he may process the same under section 143(1) of the Act, (iii) if he wants to scrutinize the return, notice under section 143(2) has to be issued, and (iv) if the assessee does not file the return, an assessment under section 144 is made to the best of his judgment. Procedure is also prescribed for making assessment. Broad propositions have been set out in the written note filed. The Full Bench of the Allahabad High Court had occasion to consider the true meaning and import of the similar expression in Jai Kishan Srivastava v. ITO [1960] 40 ITR 222, 226-228, where under section 34(1) of the Indian Income-tax Act, 1922, corresponding to section 148 of the Income-tax Act, 1961 also used the simil ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the case of A.N Lakshman Shenoy v. ITO [1958] 34 ITR 275, 297 also observed as under: "... It is to be remembered that where an assessment starts with a notice under section 34 of the Indian Income-tax Act (or corresponding section of the Cochin or Travancore Act), all the relevant provisions of that Act apply as effectively as where the assessment starts with a notice under section 22(2)." 19. In the light of the judicial precedents in Tribunal and cases cited at the bar by other counsel and the history of section 148 so traced, Shri Vohra submits that the return filed pursuant to a notice under section 148, for all intent and purposes of the Act, must be assumed and treated to be a return filed under section 139 of the Act. The assessment must, thereafter be made under section 143 or 144 of the Act after complying with all the mandatory provisions of the Act. As a necessary corollary, if the Assessing Officer seeks to verify/scrutinize the return, he must issue notice under section 143(2) of the Act in order to assume valid jurisdiction. 19.1. Mr. B. Ramakrishnan and Mr. R. Krishnamurthy, interveners, in their joint written submissions have also stated that if the statutory ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion, then he shall serve on the assessee a notice requiring him to produce evidence in support of the return filed by him. 20.6 The next step, thereafter, is for the Assessing Officer to make an assessment of total income or loss by an order in writing determining the sum payable by him or refund of any amount on the basis of such assessment. 20.7 The Assessing Officer may not take recourse of section 143(2) of the Act in respect of the returns furnished under section 139 or 142(1) of the Act. In that event, the intimation becomes final. The intimation is not an assessment order as is evident from the provisions of section 143(1)(a)(i) where it is deemed to be a notice of demand under section 156 of the Act. Further insertion of clause (b) in section 154(1) and insertion of "or an intimation under sub-section (1) or sub-section (1B) of section 143, where the assessee objects to the making of adjustments", in section 246(1)(a) clearly indicate that the process laid down in sub-section (1) of section 143 from 1-4-1989 cannot be termed as making an assessment under section 143(1) upto 31-3-1989. 20.8 Section 147 mandates the Assessing Officer to assess or reassess "such income and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on with the service of notice within one year [Para 14 of Nawal Kishore & Sons Jewellers v. Dy. CIT [2003] 87 ITD 407 (Lucknow) (SB) may be referred to]. 20.12 The words "as if" appearing in section 148 are presumptive words and should be given a restricted meaning. The applicability of other provisions of the Act would be limited to wherever and whatever is necessary to make the assessment under consideration. In the case of proceedings under section 147, the Assessing Officer is under obligation to make an assessment as is indicated in the opening line of section 148 which read as "Before making the assessment, reassessment or re-computation under section 147,...". The Assessing Officer does not have a choice here to accept the return without making an assessment, an option available to him in respect of returns furnished under section 139 or 142(1) of the Act. 20.13 The proviso to section 143(2) has no application to the proceedings under section 148 as it has no contribution in making the assessment under section 148. The Assessing Officer assumes jurisdiction under section 148 to issue notice only after recording reasons for doing so. The limitation to pass the order is laid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ame has no application to returns under section 148 as not required and therefore has to be excluded due to the operation of the phrase "so far as may be". 20.16 The Assessing Officer assumes jurisdiction over the case with the issue of the notice under section 148 and non-issue or late issue of notice under section 143(2) would not take away the said jurisdiction to complete the assessment. The jurisdictional foundation is validly laid and another procedural provision cannot take away the jurisdiction to make the assessment. The text and context have to be considered while analyzing the relevant provisions. (Para 23 of Nawal Kishore & Sons Jewellers v. Dy. CIT [2003] 87 ITD 407 (Lucknow) (SB) may kindly be referred to). Further, reliance has been placed on the decision in the case of CIT v. Banshidhar Jalan & Sons [1994] 207 ITR 488 (Cal.) and Vishwanath Prasad Bhagwati Prasad v. CIT [1993] 202 ITR 469, 473 (All.) 21. Submissions in respect of question No. 2 made by Ld. CIT-DR are as under: "Where the assessee has participated in the proceedings so initiated, the doctrine of waiver/acquiescence is attracted. While the want of inherent jurisdiction cannot be cured or made good ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2) in case of a return furnished under section 148 well beyond the period of limitation to make assessment. This interpretation would result in absurdity and such an interpretation should be avoided. 22. We have heard the parties with reference to material on record and precedents referred. The relevant provisions of section 148 as it stood in the relevant year are reproduced hereunder: "Section 148: Issue of notice where income has escaped assessment - (1) Before making the assessment, reassessment or re-computation under section 147, the Assessing Officer shall serve on the assessee a notice requiring him to furnish within such period, not being less than thirty days as may be specified in the notice, a return of his income or the income of any other person in respect of which he is assessable under this Act during the previous year corresponding to the relevant assessment year, in the prescribed form and verified in the prescribed manner and setting forth such other particulars as may be prescribed and the provisions of this Act shall, so far as may be, apply accordingly as if such return were a return required to be furnished under section 139. (2) The Assessing Officer sh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to frame the assessment on the basis of information available in the return. Section 143(2) talks of a situation where a return filed or in response to a notice calling of return under section 142 in which the Assessing Officer feels it necessary or expedient, making sure that the assessee has not understated the income or has not computed excessive loss or has not underpaid the tax in any manner, serve on the assessee a notice requiring him on a date to be specified therein, either to attend his office or to produce or cause to be produced therein evidence where the assessee may rely in support of the return. This section has a proviso, which says that no notice under this section shall be served on the assessee after the expiry of twelve months after the end of the month in which the return is furnished. 26. The purpose of serving the notice has been explained in Circular No. 545, dated 31-10-1989 as reported in 182 ITR (St.) as under:- "A proviso to sub-section (2) provides that a notice under the subsection can be served on the assessee only during the financial year in which the return is furnished or within six months from the end of the month in which the return is furnis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 140A also give an indication that an assessment made in pursuance of a notice under section 148 is a regular assessment under section 143 or section 144, for section 140A(2) provides that any admitted tax paid in pursuance of section 140A(1) shall be deemed to have been paid towards the regular assessment under section 143 or section 144. It is pertinent to note that section 140A(1) deals with a return required to be furnished under section 139 or section 148. That makes the provision clear that an assessment made under section 147 also will be a regular assessment under section 143 or section 144. Accordingly, we hold that any assessment made for the first time by resort to section 147 will also be a regular assessment for the purpose of invoking section 217 of the Act. With great respect, we dissent from the view expressed in certain decisions referred to earlier in this judgment which take a contrary view." Essentially, therefore, there is no choice to apply part of the section and leave the other part when the effect has to be given to the scheme contained in the whole section i.e. section 143(2) of the Act along with the proviso. Proviso, therefore, cannot be divorced from t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lso any other income chargeable to tax which has escaped assessment and which comes to his notice subsequently in the course of the proceedings under this section or re-compute the loss or the depreciation allowance or any other allowance as the case may be, for the assessment year concerned (hereafter in this section and in sections 148 to 153 referred to as the relevant assessment year)." 30. Now it should be appreciated that there is vast difference between an assessment made under section 148 and the assessment made under section 158BC of the Act. They are as under: 1. Chapter XIV-B is a complete code for assessment of search cases. Reassessment under section 148 falls under Chapter XIV which prescribes the procedure for making assessment and incorporates sections 139, 142, 143, 144, 147, 148 and 153 etc. Thus the two falls under different chapter. 2. Sub-section (1) of section 158BA clearly spells out that where search takes place, the Assessing Officer shall proceed to determine the undisclosed income of the person in accordance with the procedure laid down in this chapter. 3. Explanation to sub-section (2) of section 158BA provides that assessment made under this chap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be made applicable to the provisions of Chapter XIV, which are different to the provisions of special provisions of assessment contained in Chapter XIV-B of the Act. 33. The learned D.R. in his written submission has pointed out that there is a marked difference in the return filed pursuant to notice under section 148 and a return under section 139 or one required to be filed under section 142(1). This difference was highlighted by pointing out that time-limit of filing return under both the provisions are different. The appeal provisions under section 246 and limitation provision under section 153 are different. These are trite arguments and have already been considered in numerous judgments, some of which are as follows:- a. Mrs. Rama Sinha v. CIT [2002] 256 ITR 481, 486-487 (Punj. & Har.) b. R.B. Seth Shreeram Durga Prasad & Fateh Chand Nursing Das (Export Firm) v. CIT [1989] 168 ITR 619 (Bom.) c. R. Dalmia (AOP) v. CIT [1992] 194 ITR 700 (Delhi) d. R. Dalmia v. CIT [1999] 236 ITR 480 (SC) e. Mrs. Lally Jacob v. ITO [1992] 197 ITR 439 (Ker.) (FB) f. K. Govindan & Sons v. CIT [2001] 247 ITR 192 (SC) g. CIT v. Usha Aggarwal [1989] 178 ITR 406 (Punj. & Har.). Suffi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... this regard if the proviso is applied to section 147. A feeble attempt was made by the learned D.R. to highlight the so called inconsistency in the provisions of section 147 and proviso by citing an example that in case a notice under section 148 is served in July 2001, then assessment would be required to be completed by 31-3-2003. However, assessee may choose to file return on 31-1-2003. Then as per section 153(2) assessment has to be completed by 31-3-2003 whereas as per the proviso Assessing Officer still has time to issue notice under section 143(2) upto 31-1-2004. We are afraid, this argument is erroneous on its face. The proviso is applicable to a valid return and not to an invalid return. Whenever a notice is issued under section 148 calling for a return, a time-limit of filing return will be prescribed (normally a period of 30 days from the date of receipt of notice is allowed). Assessing Officer will never issue a notice granting the assessee unlimited period to file the return. If he does so, he would be doing so at his own peril. If the return is not filed within that period, that would not amount to a return pursuant to notice under section 148. Therefore a situation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t answered the said contention as under:- "It was submitted on behalf of the assessee that the provisions of section 144B were not applicable to assessments and reassessments under section 147 because section 144B stated that it applied only to "an assessment to be made under sub-section (3) of section 143". The submission cannot be accepted because the words we have quoted from section 148 cannot be ignored. A notice having been issued under section 148, the procedure set out in the sections subsequent to section 139 has to be followed "so far as may be". Section 144B is a procedural provision. It fits into the procedural scheme as hereinbefore noted and, therefore, it cannot be excluded by reason of the use of the words "so far as may be". Nor is there any other good reason to exclude it from the procedure to be followed subsequent to notice under section 148." On the same analogy the provisions of section 143 cannot be ignored. 35.1. Finally, by placing reliance on the Apex Court decision in Ujagar Prints v. Union of India [1989] 179 ITR 317 (SC), the ld. DR has argued that it being a referential legislation only machinery provision of section 143 will be applicable and noth ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 979 SC 798. On the other hand, the later statute may not incorporate the earlier provisions. It may only make a reference of a broad nature as to the law on subject generally, as in Bajya v. Gopikabai (Smt.) [1978] 3 SCR 561, or contain a general reference to the terms of an earlier statute which are to be made applicable. In this case, any modification, repeal or re-enactment of the earlier statute will also be carried into the later, for here, the idea is that certain provisions of an earlier statute which become applicable in certain circumstances are to be made use of for the purpose of the later Act also. Examples of this type of legislation are to be seen in Collector of Customs v. Nathella Sampathu Chetty [1962] 3 SCR 786, New Central Jute Mills Co. Ltd v. Assistant Collector [1971] 2 SCR 92 and Special Land Acquisition Officer, City Improvement Trust Board v. P. Govindan [1977] 1 SCR 549. Whether a particular statute falls into the first or second category is always a question of construction. In the present case, in my view, the legislation falls into the second category. Section 3(3) of the 1957 Act does not incorporate into the 1957 Act any specific provisions of the 194 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... trary, law requires a strict interpretation of the proviso. We may here clarify that provisions of limitation are to be strictly construed. An illuminating reference to this aspect can be found in the following observation of the Supreme Court in the case of K.M. Sharma v. ITO [2002] 254 ITR 772:- "A fiscal statute more particularly a provision such as the present one regulating period of limitation must receive strict construction. The Law of limitation is intended to give certainty and finality to legal proceedings and to avoid exposure to risk of litigation to litigants for an indefinite period on future unforeseen events." If limitations are not followed strictly chaotic situation would follow. 40. In the light of the analysis of the relevant provisions of law and judicial precedents, we are of the considered view that the return filed pursuant to notice under section 148 of the Act must be assumed and treated to be a return filed under section 139 of the Act and the assessment must thereafter be made under section 143 or 144 of the Act after complying with all the mandatory provisions. Accordingly, it is incumbent upon the assessing authority to issue notice under section ..... X X X X Extracts X X X X X X X X Extracts X X X X
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