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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 ..... .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 that the assessee is an individual and returned a total income of Rs. 2,46,100/-. Subsequently, the Assessing Officer received information from Additional DIT (Investigation), Agra that one M/s Ashok Gupta & Co., Delhi has provided bogus entries of sale proceeds of shares through its bank account in Bank of India, Delhi. On the basis of enquiry conducted by Additional DIT(Investigation), Agra, it was found that there were no genuine transactions of sale and purchase of shares has taken place through this bank account. The beneficiaries have taken entries by paying in cash an amount equivalent to the draft ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... k 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 initiated by issue of notice u/s 148 dt. 17.06.2005 are time barred and void ab-initio. The time limit for notice is provided in section 149 which reads as follows:- Time limit for notice : Sec. 149 [(1) No notice under section 148 shall be issued for the relevant assessment year:- (a) If four years have elapsed from the end of the relevant assessment year, unless the case falls under clause (b); (b) If four years, but not more than six years, have elapsed from the end of the relevant assessment year unless the income chargeable to tax which has escaped assessment amounts to or is likely to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uartered. 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 the AO contended that notice under Section 148 which was originally issued on 24.3.2005 and on 28.3.2005 which were carried for service by the notice server as well as by the postman on the proper address of the assessee and were returned unserved with the remark that the assessee was ill and out for a treatment. The AO pleaded that the assessee intentionally and deliberately avoided the receipt of notice under Section 148. The Assessing Officer, therefore, contended that the reassessment has been completed on the basis of notice issued in March, 2005 and not being completed on the basis of notice dated 17.6.200 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 of the mandatory provisions, results in the relevant notice rendering itself bad in law. With regards to the second notice dated 28.3.2005 which, according to him, was issued by the AO after due receipt of necessary approval under Section 151(2) of the Act, on being satisfied on the reasons recorded by the AO under Section 148(2) within the prescribed time limit under Section 149 of the Act i.e. 31.3.2005, is a valid notice under Section 148. The second notice, according to him, confers necessary jurisdiction to frame the assessment in the present case under Section 147 of the Act. As per the procedural requ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ingh - 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 dated 29.6.2005 which he held to be beyond the limitation as provided u/s 148 of the Act. He accepted the contention of the assessee that the issuance of notice on 29.6.2005 was a fresh notice. According to him, there is no evidence on record from which it can be gathered that the assessee was having the knowledge of the proceedings before the service of notice on him. The learned JM fully justified the order of the CIT(A) and he did not find any merit in the appeal filed by the Revenue. That is how the difference cropped up in dealing with this appeal by the Division Bench. 12. The learned counsel for the ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ction 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. Under Section 148(1), before making an assessment, reassessment and computation u/s 147, the Assessing Officer is required to serve on the assessee a notice requiring him to furnish a return of income. Under Section 148(2), the AO, before issuing any notice u/s 148(1), is required to record his reasons for doing so. The provisions relating to the time limit for issuance of notice are set out in Section 149 which read as under:- "Time limit for notice. 149. [(1) No notice under section 148 shall be issued for the relevant assessment year, - [(a) if four years have elapsed from the end of the relevant assessment ye ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssued 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 matter but it is a condition precedent to the making of the order of assessment. The High Court, in our opinion, lost sight of the distinction and under a wrong basis felt bound by the judgment in Banarsi Debi v. ITO [1964] 53 ITR 100. As the Income-tax Officer had issued notice within limitation, the appeal is allowed and the order of the High Court is vacated." 17. It may be mentioned that Section 34(1) of the 1922 Act specifically provides time limit for service of notice for reassessment proceedings within which the reassessment notice had to be served in order that the initiation would be valid. In that state of law, i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 term is ordinarily construed as importing delivery to the proper person, or to the proper officer for service etc." 19. Again, in P.Ramanathan Aiyer's Law Lexicon, the word "issue" has been defined as follows:- "Issue. As a noun, the act of sending or causing to go forth; a moving out of any enclosed place; egress; the act of passing out; exit; egress or passage out (Worcester Dict.); the ultimate result or end. As a verb, 'To issue' means to send out, to send out officially; to send forth; to put forth; to deliver, for use, or unauthoritatively; to put into circulation; to emit; to go out (Burrill); to go fort ..... X X X X Extracts X X X X X X X X Extracts X X X X
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