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TMI Blog1972 (11) TMI 16X X X X Extracts X X X X X X X X Extracts X X X X ..... ent year 1966-67. Both these notices were sent per registered post acknowledgment due in one envelope. The envelope was returned to the Income-tax Officer with the endorsement "Refused to take". On 21st June, 1967, fresh notices were issued under section 142(1) of the Act. Again, the registered cover was returned with an endorsement about the refusal of the same. On 17th September, 1967, fresh notices under section 142 of the Act were sent calling upon the appellant to produce his account on 27th September, 1967. The appellant refused to take delivery of this also. In view of the non-co-operative attitude of the appellant, the Income-tax Officer, by his order dated 14th August, 1968, made assessment under section 144 of the Act with regard to both these years. According to the information received by the department as a result of the inquiries, the income of the appellant from his dealings in food grains and money-lending business was about Rs. 8,400 per year. According to the report of the inspector, the appellant had constructed a house during the year 1961 at an estimated cost of Rs. 22,200. For the assessment year 1962-63 this amount was added to the estimated income of Rs. 8 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... made under section 147- (a) where the assessment, reassessment or recomputation is to be made under clause (a) of that section, after the expiry of four years from the end of the assessment year in which the notice under section 148 was served ; (b) where the assessment, reassessment or recomputation is to be made under clause (b) of that section, after- (i) the expiry of four years from the end of the assessment year in which the income was first assessable, or (ii) the expiry of one year from the date of service of the notice under section 148, whichever is later ........" In the impugned order of assessment made by the Income-tax Officer (annexure "A"), after the mention of the name of the dealer, the status, business and the assessment year in dispute, what is stated is as follows: "S. 144. Income-tax Act, 1961" The simple argument of the learned counsel for the appellant was that the impugned order being one under section 144, the limitation applicable would be that given in sub-section (1) of section 153 of the Act. It was not disputed before us, though it was urged to the contrary before the learned single judge on behalf of the department, that clause (c) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ow proceed to examine the correctness of the contention of the department. Chapter XIV of the Act deals with the procedure for assessment and this Chapter begins with section 139 relating to "return of income". Sub-section (1) of this section imposes a duty on every person to furnish "return of his income", inter alia, if his total income during the previous year exceeded the maximum amount which is not chargeable to income-tax. This section, therefore, imposes a general duty on every one who falls within the purview of this sub-section to furnish a return, without specifically being called upon to do so. Sub-section (2) of this section provides that where, in the opinion of the Income-tax Officer, any person is assessable under this Act, the Income-tax Officer may "before the end of the relevant assessment year" serve a notice upon him requiring him to furnish, within thirty days from the date of service of the notice, a return of his income. Sub-section (5) of this section provides that if any person having furnished a return either under sub-section (1) or under sub-section (2), discovers any omission or any wrong statement therein, he may furnish a revised return at any time ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he can go ahead to make an assessment on the basis of the return. According to sub-section (2), if the Income-tax Officer is not so satisfied with the return, then he can serve a notice on the assessee to produce evidence as may be required by him and under sub-section (3), after such evidence has been produced, he can proceed to make the assessment. As provided under sub-section (3) of section 142, reproduced above, in a case like this the Income-tax Officer is bound to give an opportunity to the assessee to be heard in respect of the material that has been gathered by him on his own, under sub-section (2) of section 142. Thus, section 143 of the Act provides for the procedure that has to be followed by the Income-tax Officer to make an assessment where the assessee fully co-operates with the department not only in filing the return but also in furnishing the information as desired subsequently either by virtue of sub-section (1) of section 142 or by virtue of sub-section (2) of section 143. Section 144 of the Act deals with the procedure for assessment in a case where the assessee : (i) fails to file a return altogether even after notice under sub-section (2) of section 139 or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the assessee, the Income-tax Officer has in consequence of information in his possession reason to believe that income chargeable to tax has escaped assessment for any assessment year, he may, subject to the provisions of sections 148 to 153, assess or reassess such income or recompute the loss or the depreciation allowance, as the case may be, for the assessment year concerned (hereafter in sections 148 to 153 referred to as the relevant assessment year)..........." This section, therefore, deals with three different ways in which the income can escape assessment. If no return has been filed and, consequently, no assessment made, then there is the total escapement of the income. Then there may be partial escapement of the income either because the assessee has made an incorrect return or because of any other reason, other than the default of the assessee. If this happens and the Income-tax Officer, on the basis of the information received by him, comes to the conclusion that the income had so escaped assessment either in whole or in part, then he is empowered to make an assessment of the income which has so escaped or to recompute the loss or the depreciation allowance, as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessment can be made in terms of section 144. It was, therefore, urged on behalf of the department that the Income-tax Officer, while making an assessment under section 147, is governed by the same rules of procedure as provided under sub-section (1) of section 142 and section 143 or 144, as the case may be, and, consequently, an assessment made by the Income-tax Officer would correctly be treated to be an assessment under section 147 read with section 144 of the Act. All the same it is not an assessment under section 144, pure and simple, because an assessment under this section, in terms, can only be an assessment where a return is filed in pursuance of a notice under sub-section (2) of section 139 and not in pursuance of a notice under section 148, although the form of the notice may be the same. Section 149 lays down the time limit within which a notice under section 148 can be given and the case before us admittedly falls under sub-clause (i) of clause (a) of section 149(1), which is to the following effect: "(1) No notice under section 148 shall be issued,- (a) in cases falling under clause (a) of section 147- (i) for the relevant assessment year, if eight years hav ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2-63. In other words, a notice under section 148, if given on or before 31st March, 1971, would have been well within time. Supposing within a month of the notice under section 148, given in 1966, the assessment is completed. If the argument of the learned counsel for the appellant is accepted that it is sub-section (1) of section 153 which governed this case, then that assessment would be barred by time. In fact, any assessment made, in pursuance of a notice given, four years after the end of the assessment year for which the income has escaped would, according to this argument, be barred by time. This would lead to the absurd result that although a notice under section 148 issued by the Income-tax Officer in respect of the escaped income within eight years of the end of the relevant assessment year would be well within time, yet any assessment made beyond four years of the end of the assessment year, though made in pursuance of a valid notice under section 148, would be invalid being barred by time. If we read section 153 along with the other sections beginning from section 139, as discussed above, the conclusion is irresistible that sub-section (1) of section 153 deals with a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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