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TMI Blog2012 (5) TMI 95X X X X Extracts X X X X X X X X Extracts X X X X ..... Mr. Abhishek Maratha, Sr. Standing Counsel. For Respondent: Ms. Anju Jain and Mr. Hitesh Sachar, Advocates. O R D E R Having heard learned counsel for the parties in these two appeals under Section 260A of the Income Tax Act, 1961 (Act, for short), which pertain to the assessment year 1995-96 and 1996-97, we formulate the following substantial question of law:- Whether the Income Tax Appellate Tribunal was right in quashing/setting aside the re-assessment proceedings under Section 147/148 of the Income Tax Act, 1961 on the ground that the original re-assessment proceedings had abated? 2. We have heard the learned counsel for the parties on the aforesaid question of law and proceed to dictate our decision. 3. The respondent-assessee is an individual. Additional Director of Income Tax (Investigation), Ambala on 17th October, 1996 had conducted survey under Section 133A at the business premises of Hindustan Agro Tech at Karnal and books of accounts pertaining to Gupta Gupta Agro Tech were impounded. The respondent-assessee is the proprietor of Gupta Gupta Agrotech. Statement of the respondent-assessee was also recorded by the Additional Director of Income Tax ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... argeable to tax has escaped assessment. In the present case, whatever information was available with the Assessing Officer was considered by him before issuing notice under sec. 148 on 21.1.1997 in both these assessment years. These assessments have been quashed by the ITAT on the ground that notice under sec. 143(2) of the Act was not issued upon the assessee within 12 months from the end of the month in which return was filed and, therefore, the Assessing Officer cannot scrutinize the return filed by the assessee in response to the notice issued under sec. 148 of the Act. Thus, the assessment reached at a finality. Assessing Officer may be within his realm of power to issue fresh notice under sec. 148 if he is able to lay his hands on any fresh material indicating the escapement of income. We have gone through the reasons recorded by the Assessing Officer which have been placed on record by the learned counsel for the assessee. In these reasons, there is no reference to any fresh information. The Assessing Officer again reiterated the stand which was taken by him while issuing the first notice for reopening of assessment. The second notices issued under sec.148 of the Act for reo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ome was not supported by any documents i.e. trading account, capital account and balance sheet etc. Notices under Section 143(2) and 142(1) were issued by the Deputy Commissioner of Income Tax, Special Range, Karnal, but as per the Revenue, the assessee did not cooperate and the assessment was completed under Section 144 of the Act. This order was confirmed in the first appeal, but the respondent-assessee succeeded in the second appeal before the tribunal, where it was held that the notice under Section 142(2) was required to be served within 12 months from the end of the month in which return was filed, but the Assessing Officer had failed to serve the notice. 9. Thereafter, the Assessing Officer recorded reasons to believe and issued notice under Section 147/148 of the Act and the said notice was served on the respondent-assessee. The respondent-assessee filed his return of income on 16th January, 2004 declaring income of Rs.55,000/-, again without trading account, profit and loss account, capital account and balance sheet etc. 10. The Assessing Officer completed assessment vide order dated 16th March, 2004 and the income of the respondent-assessee was assessed at Rs.17,50,30 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the same material in respect of the same item of income. However, in case some fresh material comes into the possession of the Assessing Officer subsequently suggesting escapement of income under the same head or some other head, we see no fetters on his power to issue a fresh notice under Section 148. Needless to emphasise that all such subsequent notices have to conform to the parameters prescribed under the law including the provision regarding limitation. 13. We may note here, the order passed by the Punjab and Haryana High Court in CWP No.16988/2002, Vishal Gupta Vs. Union of India and Others, which related to the assessment year 1995-96. The said writ petition was dismissed recording as under:- Challenge in this writ petition is to the notice dated 22.3.2002 issued by the Income Tax Officer, Karnal under Section 148 of the Income Tax Act (for short, the Act) seeking to re-assess the income for the assessment year 1995-96 which in his opinion has escaped assessment. After hearing counsel for the petitioner and having gone through the writ petition, we are satisfied that the Income Tax Officer had prima facie reasonable basis to believe that the income in the hands of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or where the officer was of the opinion that the assessment was incorrect or incomplete or the officer did not complete the assessment under Section 143(1), but wanted to make an inquiry, a notice under Section 143(2) was required to be issued to the assessee requiring him to produce evidence in support of his return. After considering the material and evidence produced and after making necessary inquiries, the officer had power to make assessment under Section 143(3). With effect from 1-4-1989, the provisions underwent substantial and material changes. A new scheme was introduced and the new substituted Section 143(1) prior to the subsequent substitution with effect from 1-6-1999, in clause (a), a provision was made that where a return was filed under Section 139 or in response to a notice under Section 142(1), and any tax or refund was found due on the basis of such return after adjustment of tax deducted at source, any advance tax or any amount paid otherwise by way of tax or interest, an intimation was to be sent without prejudice to the provisions of Section 143(2) to the assessee specifying the sum so payable and such intimation was deemed to be a notice of demand issued unde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tuted by the Finance Act, 1997, which was operative till 1-6-1999. The requirement was that an intimation was to be sent to the assessee whether or not any adjustment had been made under the first proviso to Section 143(1) and notwithstanding that no tax or interest was found due from the assessee concerned. Between 1-4-1998 and 31-5-1999, sending of an intimation under Section 143(1)(a) was mandatory. Thus, the legislative intent is very clear from the use of the word intimation as substituted for assessment that two different concepts emerged. While making an assessment, the assessing officer is free to make any addition after grant of opportunity to the assessee. By making adjustments under the first proviso to Section 143(1)(a), no addition which is impermissible by the information given in the return could be made by the assessing officer. The reason is that under Section 143(1)(a) no opportunity is granted to the assessee and the assessing officer proceeds on his opinion on the basis of the return filed by the assessee. The very fact that no opportunity of being heard is given under Section 143(1)(a) indicates that the assessing officer has to proceed accepting the return ..... X X X X Extracts X X X X X X X X Extracts X X X X
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