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TMI Blog2014 (3) TMI 580X X X X Extracts X X X X X X X X Extracts X X X X ..... cond notice for reopening of assessment on the same ground on which the previous notice was issued for the same purpose, but later on dropped not on technical but substantive grounds, was wholly impermissible – the notice is set aside – decided in favour of Assessee. - Special Civil Application No. 16347 of 2004 - - - Dated:- 3-3-2014 - Akil Kureshi And Sonia Gokani,JJ. For the Petitioner : Mr. Tushar P. Hemani, Advocate For the Respondent : Mrs. Mauna M. Bhatt, Advocate Date : 03/03/2014 JUDGMENT (Per : Honourable Mr. Justice Akil Kureshi) 1. The petitioner has challenged a notice dated March 08, 2004, issued by the Assessing Officer under section 148 of the Incometax Act, 1961 (hereinafter referred to as the Act ). 2. The brief facts are as under : 2.1 The petitioner is a company registered under the Companies Act. For the assessment year 19971998, the petitioner filed its return of income on November 27, 1997, declaring total income of Rs.22.91 lakh (rounded off). In the return so filed, the petitioner appended a note indicating that it had debited Rs.6.22 lakh (rounded off) on account of Keyman Insurance premium. The petitioner also in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f policy and invite attention to condition no.45 and 7 which lays down that unless insured pays premium for at least three years than only insurance policy carries value upon surrender and if insured fails to pay premium at least for 3 (three) years policies shall be having no surrender value since A.Y. 1995-96 and 1996-97 do not fall after date of commencement of any key man insurance policy hence question of right receive bonus within period of reassessment also arise. In view of aforesaid submissions we request you to cancel reassessment and oblige. 2.5 On March 11, 2002, the Assessing Officer passed two separate orders. The first order was with respect to the regular assessment under section 143(3) of the Act for the assessment year 199596. In this assessment order, he made no additions for the returns and bonuses under the Keyman s Insurance policy receivable by the petitioner. There was, however, no discussion on this issue in the order of assessment. On the same day, he passed the second order for the assessment year 1997-98, which reads as under : The proceedings initiated u/s.148 are hereby dropped. 2.6 Nearly two years later, the respondent issued a fres ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sed his order for the assessment year 1997-98 dropping the proceedings, it would demonstrate that he was convinced that no additions were justified on merits. 3.1 In support of his contentions, the counsel relied on the following decisions : (i) Decision of the learned Single Judge of Calcutta High Court in the case of Indian Tube Co. Ltd. v. Incometax Officer, reported in 272 ITR 439, in which the Assessing Officer had issued notices for reopening the assessment for the assessment years 1974-75 and 1975-76, in which it was mentioned that the notices were being issued after obtaining necessary satisfaction of the Commissioner of Incometax. However, such paragraph was deleted. Pursuant to such notice, the petitioner filed returns for the said years. Subsequently, the Incometax Officer issued fresh notices for the same assessment years. Declaring that such notices were issued after obtaining necessary satisfaction of the Commissioner of Incometax, the Court held that when the petitioner had filed returns in compliance with the invalid notice under section 148 of the Act, the same should be treated as returns and before making assessment on the basis of those returns, no furt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reopening of the assessment under section 147 of the Act, but also to any subsequent or successive proceedings. If an assessment, therefore, was completed or if an addition though proposed in reasons recorded was later on not made for any substantive reasons, the scope for reopening the same assessment on the same ground subsequently under section 147 of the Act would not be available. 6. In this context, we may revisit the facts of the case, which are rather peculiar in nature. Undoubtedly, the return of the assessee was accepted without a scrutiny. In that view of the matter, the Assessing Officer had reasonable latitude to proceed under section 147 of the Act, if he had prima facie reason to believe that income chargeable to tax for the assessment year in question had escaped the assessment. This is precisely what he did after issuing the first notice under section 148 of the Act on June 11, 1999. At this stage, we are not concerned with the petitioner s contention that the guaranteed addition and the bonus under Keyman s Insurance policy was not a taxable income of the petitioner for the said assessment year. We are prepared to proceed on the basis that the Assessing Officer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Assessing Officer dropped the proceedings of reassessment on a substantive ground of the additions not being sustainable, subsequently the same Assessing Officer or even his successor in office, in our opinion, could not have reviewed such a decision and come to a different conclusion to be able to issue a notice for reassessment on the same ground. Any other view would lead to anomalous situation. Post the decision in the case of GKN Driveshafts (India) Ltd. (supra), the assessee would have access to the reasons recorded for issuing the notice for reassessment. He would also have right to raise objections, which the Assessing Officer would have been duty bound to dispose of. If an Assessing Officer in a given case accepts such objections and drops the proceedings under section 148 of the Act, can later on another Assessing Officer who steps in his position, issue a fresh notice on the same ground expressing opinion that he did not agree with the approach of his predecessor and that since his predecessor had not completed assessment under section 143(3), it would be open for him to issue fresh notice of reopening ? This for obvious reasons would be wholly impermissible. 9.3 In ..... X X X X Extracts X X X X X X X X Extracts X X X X
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