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TMI Blog2006 (4) TMI 439X X X X Extracts X X X X X X X X Extracts X X X X ..... That the assessment made on the basis of the notice under section 148 is therefore bad in law. 3. It is respectfully submitted that the above additional grounds which are sought to be raised for the first time, are pure question of law and that no additional facts which are not already on the records of the Assessing Officer are required for adjudicating these additional grounds. 4. It is respectfully submitted further that the omission to take these grounds at the time of filing the appeal was inadvertent and bona fide. 5. It is respectfully submitted that in Jute Corporation of India Ltd. v. Commissioner of Income-tax the Hon ble Supreme Court held that an appellate authority has all the plenary powers which the subordinate authority may have in the matter. There is no good reason to justify curtailment of the powers of the Appellate Assistant Commissioner in entertaining an additional ground raised by the assessee in seeking modification of the order of assessment passed by the Income-tax Officer. In Commissioner of Income-tax v. Kerala State Co-operative Marketing Federation Ltd. 193 ITR 624 the Hon ble High Court of Kerala following the decision in Jute Corp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he total income returned by the assessee. Subsequently, it was found that an amount of Rs. 390 lakhs received by the assessee under a restrictive covenant with Terumo Corporation and claimed as exempt had not been considered for assessment and consequently income chargeable to tax had escaped assessment. The assessment was therefore, re-opened under section 147 by issue of notice under section 148 of the Income-tax Act, 1961, on 13-6-2002. In response to the notice under section 148, the assessee filed a letter on 5-7-2002 requesting the Assessing Officer treat the return originally filed on 31-8-2000 as one in response to notice under section 148. (B)Having observed as above, the Assessing Officer proceeded to discuss about the facts in respect of receipt of Rs. 390 lakhs and the submissions of the assessee s counsel and ultimately treated the said sum of Rs. 390 lakhs as income under section 28( a )( iii ) of the Income-tax Act, 1961. Aggrieved by this order of the Assessing Officer on merit, the assessee moved the matter in appeal before the first appellate authority. The facts narrated in the appellate order in respect of the reopening are that : ( i )The appellant was the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... book consisting of 130 pages, comprising therein the following : S. No. Contents Pages 1. Return of income and connected papers 1-31 2. Notice dated 22-5-2002 from the Assessing Officer 32 3. Assessee s replay dated 24-5-2002 33 4. Notice under section 148 of the Income-tax Act, 1961, dated 13-6-2002 34 5. Paragraph 46 of CBDT Circular No. 779, dated 14-9-1999 (Explanatory Notes to Finance Act, 1999) 35 6. Sample form of intimation under section 143(1) of the Income-tax Act, 1961 36-37 7. Letter dated 18-1-2005 addressed to Asstt. Commissioner of Income-tax, Circle 1(1) Trivandrum requesting for reason recorded reopening the assessment. 38 8. Letter No. ABXPC 6443P/Cir. 1(1)/TVM, dated 19-1-2005 from the Asstt. Commr. of Income-tax, Circle 1(1), Trivandrum In reply to letter dated 18-1-2005 39 9. Letter dated 4-2-2005 addressed to the Asstt. Commr. of Income-tax, Circle 1(1), Trivandrum enclosing letter from the Legal Counsel, Mr. V.U. Eradi s letter dated 1-2-2005. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is written submission dated 1-7-2005 that "the assessee has received the intimation sent under section 143(1)" and further pointed out that nothing was produced before the Hon ble Bench to show that the copy of the intimation was served on the assessee. The Hon ble Tribunal added further that the assessee has filed an affidavit stating that he has not received any intimation in respect of his return processed under section 143(1). Pursuant to the order of the Hon ble Tribunal referred to above, the relevant "intimation on the record of the Assessing Officer in respect of the assessee s return for the assessment year 2000-01 processed under section 143(1) of the Income-tax Act" and relevant order sheets were allowed to be inspected by the appellant s counsel, certified copies thereof have also been since furnished by the learned departmental representative on 7-9-2005, in the Court Room immediately prior to the adjourning the hearing to 12-9-2005 by the Hon ble Bench. It is clear from a careful analysis of those papers that the then Assessing Officer did not affix his signature or initials on the "intimation" form on 28-3-2002. In fact, the officer submitted that, while the inti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... section 143(1). The absolute need for there being an intimation, in the scheme of the Act as effective from 1-4-1989 is also borne out by this deeming provision. The facts set out above as fully borne out by the record, point clearly to one inescapable fact : There was no intimation sent to the assessee, as required under section 143(1)( ii ). One further fact is the issue and service of notice dated 22-5-2002 for the purpose of making an assessment, by the Assessing Officer, on this assessee who had admittedly made a return under section 139. It is also clear from the notice that it was with reference to the return filed on 31-8-2000. The assessee had duly complied. Failure to comply would also have attracted the provisions of section 144 of the Act. Thus, on 13-6-2002, the assessment proceedings for the assessment year 2000-01, were actively pending before the Assessing Officer. No assessment order under section 143(3) or 144 was passed pursuant to the notice dated 22-5-2002. Where in respect of any year a return has been voluntarily submitted before assessment, the ITO cannot choose to ignore the return and any notice of assessment and consequent assessment under section 3 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tted that a valid return has been filed by the assessee on 31-8-2000. Section 143(1) proceedings stand terminated in view of the order sheet entry dated 28-3-2002. Though there is nothing on record in respect of the issue of intimation, this is only an irregularity and hence the department is free to take action under section 147 of the Act. Hence, the proceedings under section 147 of the Act, was validly initiated. 9. We have heard rival submissions and considered the facts and mate-rials on record including the case laws and Board s Circular No. 549, relied upon by the learned counsel of the assessee, before us. We have also gone through the assessment records which were produced before us by the learned departmental representative. On going through the order sheet entries in the respective files of the department relating to the assessee, it transpires that all receipts and issue of correspondences, notices, orders, etc. are faithfully recorded in the order sheet; there is no recording on the issue of intimation to the assessee in the order sheet or elsewhere. Notings at the bottom of the order sheet at page (1) explains the reasons for non-issue of intimation for which it w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e conclusion that income escapes assessment at the end of the assessment year if neither any notice issued to the assessee nor the assessee filed any return as per sub-section (1) of section 139 before the end of the year." 9.2 In the case of Muthukaruppan Chettiar ( supra ) the Hon ble Apex Court has dealt with the question as to when a return of income filed by the assessee can be considered as having been disposed of, so as not to invalidate proceedings for reopening of the matter. In that case, the Hon ble Apex Court found that the voluntary returns filed " have not been properly and legally proceeded with " [Emphasis supplied] and for that reason held that proceedings under the then section 34 (now section 147) as invalid. 9.3 The Hon ble Supreme Court in the case of Trustees of H.E.H. The Nizam s Supplemental Family Trust v. CIT [2000] 242 ITR 381, the Hon ble Apex Court had considered the need for communication of an order or a note, or note that is intended to terminate the proceedings. In the above cited case, the Apex Court has held as under : "It is settled law that unless the return of income already filed is disposed of, notice for reassessment under se ..... X X X X Extracts X X X X X X X X Extracts X X X X
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