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TMI Blog2011 (8) TMI 767X X X X Extracts X X X X X X X X Extracts X X X X ..... f difference were in respect of the following grounds taken by the Revenue in the appeal filed by it for the AY 1998- 99 arising out of the order of the Commissioner of Income-tax (Appeals) dated 9.10.2006:- 1. That the learned Commissioner of Income-tax (Appeals)-II, Agra has erred in law and on facts in quashing the assessment order under section 143(3) of the IT Act, 1961. 2. That the learned Commissioner of Income-tax (Appeals)-II, Agra has erred in law and on facts in holding that the Assessing Officer did not base his assessment order on notice issued under section 148 of the IT Act, 1961 dated 28.03.2005 ignoring the narration mentioned at Para 1.3 of the assessment order. 3. That the learned Commissioner of Income-tax (Appeals)-II, Agra has erred in law and on facts in not appreciating the facts of the case that as per record, the notice was issued well within time but the service to the assessee was not effected on account of his absence. 4. That the decision of learned Commissioner of Income-tax (Appeals)-II, Agra being erroneous in law and on facts deserves to be quashed and that of the AO deserves to be restored. 3. The facts relevant in this regard are th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nitiated under Section 148 by issuance of notice dated 17.6.2005 are time barred and ab initio. According to the assessee, the relevant notice had been issued after six years have elapsed from the end of the relevant assessment year. The submissions of the assessee before the CIT(A) were as under:- That as further mentioned in the Assessment Order itself (Pg-2, Para 1.4), Another notice u/s 148 of the I.T.Act was issued on 17.06.2005 which was served on the assessee on 29.06.2005 . That the so called notice u/s 148 issued on 28.03.2005 has been returned back unserved with the postal remark as mentioned in Assessment Order (Pg-2). That since another notice u/s 148 was issued on 17.06.2005 the so called notice u/s 148 issued on 28.03.2005 returned back unserved is nonest and the assessment proceeding cannot be said to be initiated on it basis as this notice dt. 28.03.2005 was never served. By virtue of provisions of sec. 148 the jurisdiction to assess can only be assumed by service of notice, which is mandatory and not a mere formality. That the assessment has been completed on the basis of notice u/s 148 on dt. 17.06.2005 which was served on 29.06.2005. That the proceeding ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tice u/s 148 dt. 17.06.2005 issued after the period of the limitation renders the assessment proceedings as barred by limitations. Reliance placed : 196 ITR 25 (All) CIT Vs Motilal Padampat Sugar Mills P.Ltd. That the second notice u/s 148 dt. 17.06.2005 was issued as another notice (Assessment order Pg-2) on the same reasons recorded earlier and without dropping the earlier proceeding initiated u/s 147 of the Act as the first notice dt. 28.03.2005 was not served. Thus the second notice dt. 17.06.2005 was also not valid notice and the assessment framed is pursuance of invalid notice is liable to be quartered. Reliance placed : 227 ITR 302 (Rajasthan) CIT Vs Jaide Jain 235 ITR 161 (Kerala) Smt. Nilofar Hameed Vs. ITO That the objections filed on 16.11.2005, 23.01.2006 and 08.02.2006 have not been considered and disposed off by passing speaking order. That thus in any view the assessment order passed u/s 143/147 of the I.T.Act on the basis of the invalid notice is wrong and illegal and bad in law and liable to be quashed. 6. The learned Commissioner of Income-tax (Appeals) called for a remand report from the Assessing Officer under Section 250(4) of the IT Act and th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ., the issuance of notice and service of notice, each having distinct purposes/functions. While the issuance of notice enables the assumption of jurisdiction to make an assessment under Section 147 i.e. it concerns the jurisdictional aspect. Whereas Section 148 sets in motion the process of framing the assessment for which a service of notice is a pre-condition. The two processes, according to him, are independent of each other and the difference between the two is basic and vital. All his discussions are based on the decision of the Apex Court in the case of R.K.Upadhyaya Vs. Shana Bhai P.Patel 166 ITR 163 (SC). He afterwards addressed himself on the validity of the three notices that were there on the file viz., the first notice dated 24.3.2005, second notice dated 28.3.2005 and third notice dated 17.6.2005. 8. As regards the first notice issued on 24.3.2005, the learned AM opined that there was no valid notice in law as the same stood issued without obtaining the required sanction from the competent authority in terms of that provision which, according to him, stood obtained only on 28.3.2005. Non-obtaining the said sanction under Section 151, apart from being in violation o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h he has no basis or ground. In sum and substance, the learned AM opined that the jurisdiction to assess or re-assess income is only on the basis of valid issue of notice u/s 148. The condition of valid service is only for the purpose of framing the assessment. The two are thus distinct; while one enables the Assessing Authority assuming the assessment, the other bars the actual framing of the assessment. According to him, the decision of the Hon ble Apex Court in the case of State of Estate of Late Ranglal Jajodia Vs. CIT 79 ITR 505 (SC), R.K.Upadhyaya Vs. Shana Bhai P.Patel (supra), CIT Vs. Jai Prakash Singh 219 ITR 737 (SC), CST Vs. Subash Co. (2003) 130 STC 97, 106 (SC) and also by the Hon ble Jurisdictional High Court in the case of Sant Baba Mohan Singh Vs. CIT 90 ITR 197 (All.) ought not to leave any one in any manner of doubt with regard to this. 10. With the above reasoning, the validity of the reassessment proceedings was upheld by allowing the appeal of the Revenue. 11. The learned Judicial Member, however, had no dispute as regards the facts mentioned in the order of the learned AM but, however, he went on to observe on the basis of the service of notice d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ur with the first two grounds mentioned below and held that the other grounds have become academic as the order passed by the Assessing Officer is quashed on the first two grounds:- 1. Because the Notice u/s 148 dt. 17/06/2005 is beyond the time limit u/s 149 of the Income Tax Act, thus the proceeding for assessment are void-ab-initio. 2. Because the assessment order passed u/s 143(3)/147 is wrong, illegal and thus is liable to be annulled. 15. The issue before the Division Bench as could be seen from the order of the CIT(A) itself is narrowed down as to the validity of the assessment made by the AO under Section 143(3) and 147 in the light of the initiation of reassessment proceedings by issuance of notice. The provisions of Section 147 to 151 are specific provisions which enable the Department to reassess any income that has escaped assessment. These provisions underwent significant changes with effect from 1.4.1989. In the light of these changes, each and every initiation of assessment proceedings made on or after 1.4.1989 must be governed by the amended provisions as held by the decision of Hon'ble Delhi High Court in the case of Rakesh Aggarwal Vs. ACIT 225 ITR 496. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e 1961 Act so far as notice for reassessment is concerned is quite different. What used to be contained in section 34 of the 1922 Act has been spread out into three sections, being sections 147, 148 and 149, in the 1961 Act. A clear distinction has been made out between issue of notice and service of notice under the 1961 Act. Section 149 prescribes the period of limitation. It categorically prescribes that no notice under section 148 shall be issued after the prescribed limitation has lapsed. Section 148(1) provides for service of notice as a condition precedent to making the order of assessment. Once a notice is issued within the period of limitation, jurisdiction becomes vested in the Income-tax Officer to proceed to reassess. The mandate of section 148(1) is that reassessment shall not be made until there has been service. The requirement of issue of notice is satisfied when a notice is actually issued. In this case, admittedly the notice was issued within the prescribed period of limitation as March 31, 1970, was the last day of that period. Service under the new Act is not a condition precedent to conferment of jurisdiction on the Income-tax Officer to deal with the matte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reassessment is concerned, is quite different from that of the 1922 Act. A clear distinction has been made out between issuance of notice and service of notice under the 1961 Act. Section 149 of the 1961 Act, which provides the period limitation, categorically provides that no notice under Section 148 shall be issued after the period prescribed has lapsed. Once a notice is issued within the period of limitation, jurisdiction becomes vested in the Assessing Officer to proceed to reassess. The decision of the Hon'ble Supreme Court in Shanabhai P.Patel Vs. R.K.Upadhyaya 96 ITR 141 has impliedly approved the view taken in Jai Hanuman Trading Co.Pvt.Ltd. (supra), New Bank of India Ltd. Vs. ITO 136 ITR 679 and Patna Full Bench decision in CIT Vs. Sheo Kumari Debi 157 ITR 13. 18. The expression issue has been defined in Black s Law Dictionary to mean To send forth; to emit; to promulgate; as, an officer issues orders, process issues from court. To put into circulation; as, the treasury issues notes. To send out, to send out officially; to deliver, for use, or authoritatively; to go forth as authoritative or binding. When used with reference to writs, process, and the like, the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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