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TMI Blog2013 (10) TMI 782X X X X Extracts X X X X X X X X Extracts X X X X ..... y the Revenue. Dismissing the appeal, that the Tribunal was right in holding that notice under section 148 of the Act could not be issued for making an assessment under section 147 of the Act, when time limit was available for issue of notice under section 143(2) of the Act for making an assessment under section 143(3) of the Act - Following decision of COMMISSIONER OF INCOME-TAX Versus TCP LTD. [2009 (4) TMI 396 - MADRAS HIGH COURT] - Decided in favour of assessee. - ITA No. 1489/Hyd/2012 - - - Dated:- 11-10-2013 - Shri Chandra Poojari And Shri Saktijit Dey,JJ. For the Appellant : Shri P. Murali Mohan Rao For the Respondent : Shri Mallikarjun ORDER Per Saktijit Dey, J. M. This appeal preferred by the assessee is directed against the order of the CIT(A)-II, Hyderabad, dated 31/07/2012 for the assessment year 2008-09. 2. Briefly the facts of the case are, during the course of assessment proceedings, the AO noticed that the assessee sold land with old survey No. 45 and new survey No. 45/1 measuring one acre 32 guntas with 0.06 guntas kharab land situated at Heggadadevanpural village, Dasanapura Hobli, Bangalore, North Taluk Nelamanga Taluk, Bangalore. The asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... CIT(A) ought to have appreciated the fact that the issuance of notice u/s 148 of the Act is not valid when the time limit for issuing the notice u/s 143(2) is available. 15. In this regard, reliance is placed on the decision of Hyderabad ITAT in the case of Eenadu Relief Fund Vs. DDIT(E) - II vide ITA No. 434/Hyd/2010 by order dated 13/01/2011. 16. The CIT(A) II ought to have appreciated the fact that the AO has erred in reopening of assessment u/s 147 without there being any 'new tangible material'. 17. The CIT(A) II ought to have appreciated the fact that the AO has erred in not issuing reasons for reopening for the assessment made u/s 147 of the Act." 6. As the additional grounds are on purely legal issues, which goes to the root of the matter and does not involve any further/additional investigation into facts other than which are already on record, relying on the decision of Hon'ble Supreme Court in the case National Thermal Power Corporation Ltd. Vs. CIT, 229 ITR 383 (SC). 7. So far as the additional grounds are concerned, the learned AR confined his arguments only to Ground No. 14 and submitted that in the present case notice u/s 148 of the Act for reopening the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mediately after the return was filed by the assessee. Therefore, it appears from the record that action u/s 147 of the Act was initiated by issuing notice u/s 148 of the Act before the expiry of time limit for issuance of notice u/s 143(2) of the Act. Even on a specific query made by the Bench in course of hearing, the learned DR could not controvert this factual position. Therefore, in the aforesaid factual backdrop, we have to examine the issue whether the issuance of notice u/s 148 of the Act before the expiry of time limit prescribed u/s 143(2) of the Act, is legally valid or not. 10. The Hon'ble Madras High Court in the case of CIT vs. K.M. Pachayappan (supra) upheld the order of the Tribunal wherein it was held that notice u/s 148 of the Act cannot be issued when the time for issuance of notice u/s 143(2) had not been expired. The aforesaid view was again reiterated by Hon'ble Madras High Court in the case of CIT vs. Qatalys Software Technologies (supra). When identical issue came up for consideration before a division bench of Income-tax Appellate Tribunal, Chennai Bench in case of Super Spinning Mills Ltd. Vs. ACIT (supra), there was divergent view on the issue. While Hon ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... termed as escapement and he cannot resort to proceedings under section 147. In that event he will have to issue notice under section 143(2) of the Act. In a nutshell, as per the principles laid down by the Supreme Court in several cases, (a) the proceedings are said to have commenced once the return is filed, and (b) the proceedings terminate when, (i) The return is processed u/s 143(1) and the time to issue notice under section 143(2 is over, (ii) Assessment is made under section 143(3) or, (iii) The assessment is no longer possible under section 143(3), proceedings under section 147 can be initiated only after the earlier proceedings have terminated as mentioned in (b) above." 11. The Hon'ble third Member following the decision of CIT vs. Rajesh Javeri Stock Brokers (P) Ltd. (291 ITR 500) further held as under:- "Now we deal with certain observations of the learned Judicial Member de in his order. In paragraph 6 of the order, it has been observed that re is no bar for issuing notice under section 148 before expiry of the time . able for issuing notice under section 143(2) of the Income-tax Act, 1, if the other conditions for reopening of the assessment and initiatio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ve read the said judgment more once. Unfortunately, I have not found anywhere in the judgment the above observation made by the court either directly or indirectly. Nowhere in the judgment is there any reference about the time limit of notice to be under section 143(2) of the Act. Coming to the three decisions of the jurisdictional High Court, there is indeed a divergence of opinion in the two judgments, viz..one in the of ITO v. K. M. Pachiappan [2009] 311 ITR 31 (Mad)and Qatalys Software Technologies Ltd. [2009] 308 ITR 249 in which the decision in the case K.M. Pachayappan [2008] 304 ITR 264 (Mad) has been followed. I am view that in such a situation, the decision which appeals to one's science more should be followed. The decision in the case of Qatalys Software Technologies Ltd. [2009] 308 ITR 249 is in consonance with Supreme Court judgments on the issue including the one in the case of Asst. ClT v. Rajesh Jhaveri Stock Brokers P. Ltd. reported in [200 ITR 500. Therefore, I am inclined to follow the said decision." 12. It would be worth mentioning here that the 3 rd member decision of Income-tax Appellate Tribunal has the same binding force as the Special Bench decision o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Limited (supra) may not be any assistance to the revenue. A similar view was taken by the Agra Bench of the Tribunal in Subhash Chandra Goyal (2005) 4 SOT 405 (Agra) and Mumbai Bench of the Tribunal in Fateh International (2007) 104 ITD 305 (Mum.). In view of the above discussion, by respectfully following the judgments of Apex Court in the case of Rajesh Jhaveri Stock Brokers Pvt. Ltd., and in the case of Trustees of HEH the Nizarn's Supplemental Family Trust (supra), and the decision of Special Bench of the Tribunal in the case of Motorola Inc. (supra), we hold that issue of notice under section 148 of the Act during the pendency of proceedings under section 143(2) of the Act is invalid and consequently all the orders passed by the assessing officer in pursuance of notice under section 148 of the Act cannot stand and accordingly the same are quashed. In view of the above decision it may not be necessary for this Tribunal to go into the merits of the case. " 13. Similar view has also been expressed by the Hon'ble Delhi High Court in case of CIT Vs. Ved Co and the Hon'ble Madras High Court in case of CIT Vs. TCP Ltd. (supra). The ITAT, Hyderabad Bench in case of M/s Eenadu Rel ..... 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