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TMI Blog2019 (7) TMI 2036X X X X Extracts X X X X X X X X Extracts X X X X ..... dgment of Hon ble Gujarat High Court is squarely applicable - we hold that the second notice of reassessment u/s. 148 issued by the AO on 31.03.2015 is invalid and therefore, the assessment framed by the AO pursuant to this notice of reassessment u/s. 148 is void-ab-initio. Assessee appeal allowed. - Shri Arun Kumar Garodia, Accountant Member And Shri Pavan Kumar Gadale, Judicial Member For the Assessee : Shri Padam Chand Khincha, CA. For the Revenue : Dr. P.V. Pradeep Kumar, Addl. CIT (DR). ORDER PER SHRI A.K. GARODIA, ACCOUNTANT MEMBER This appeal is filed by the assessee and the same is directed against the order of ld. CIT(A)-10, Bangalore dated 31.01.2019 for Assessment Year 2008-09. 2. The grounds raised by the assessee are as under. General Ground 1.1. The learned Deputy Commissioner of Income Tax (Exemptions), Circle-1, Bangalore ( AO ) has erred in passing the assessment order under section 143(3) of the Income Tax Act, 1961 (`the Act') in the manner passed by him and the Commissioner of Income Tax-(Appeals)-10(`CIT(A)') has erred in confirming the said assessment order. The said order being had in law is liable to be quashed. 2. Grounds relating to issue of seco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ffect : 1,35,59,450 4.1. The learned AO has erred in issuing second notice under section 148 dated 31.03.2015 consequent to mere change of opinion resulting from the directions of a higher authority, and considering the fact that assessment under section 143(3) had been completed. On facts and circumstances of the case and law applicable, the said notice is bad in law and liable to be quashed. Consequently, the re-assessment order dated 29.03.2016 is invalid, bad in law and liable to be quashed. 5. Grounds relating to reassessment made on the basis of audit objection- Tax Effect : 1.35,59,450 5 1. The learned AO has erred in issuing second notice under section 148 dated 31.03.2015 based on the objection raised by revenue audit party (RAP). On facts and circumstances of the case and law applicable, the said notice is bad in law and liable to be quashed. Consequently, the re-assessment order dated 29.03.2016 is invalid, bad in law and liable to be quashed. 6. Grounds relating to reassessment made after the expiry of 4 years from the end of the assessment year - Tax Effect : 1,35,59,450 6.1. The learned AO has erred in issuing second notice under section 148 dated 31.03.2015 after the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ble for exemption under section 11, the learned AO and CIT (A) have erred in not allowing exemption under section 10(23C) (iiiad) in respect of educational institutions with aggregate annual receipts not exceeding Rs. 1 crore. 9.3 Assuming without admitting that the appellant is not eligible for exemption under section 11, the learned AO and CIT (A) have erred in not allowing exemption under section 10(23C) (vi) as the educational institutions exists solely for educational purposes and not purposes of profit. Although registration under section 10(23C) (vi) was obtained in subsequent year, the benefit of the same has to be applied in the earlier assessment years, unless the registration granted earlier is cancelled or refused for specific reasons. 9.4 On facts and circumstances of the case and law applicable, exemption should be allowed either under section 11 or under section 10(23C) (iii ad) or under section 10(23C) (vi) for the year under consideration. 10. Ground relating to interest under section 234B 10.1. The learned AO has erred in levying interest under section 234B amounting to Rs. 1,28,98,609. On facts and circumstances of the case and law applicable, interest under sect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... quarely applicable. He submitted that in this case also, two notices were issued by the AO u/s. 148, out of which first notice was issued on 31.03.2015 and the second notice was issued by the AO u/s. 148 on 29.03.2017 and it was held by Hon ble Gujarat High Court in that case that there can be only one process of assessment or reassessment and pending any such assessment or reassessment, there cannot be a notice of reopening. It is also held that the law does not recognize two parallel assessments and in absence of withdrawal of the first notice of reassessment, the proceedings as per the subsequent notice of reopening are invalid. 4. As against this, the ld. DR of revenue submitted that this judgment of Hon ble Gujarat High Court is not applicable in the facts of present case because in the present case, the assessee has not filed return of income in pursuance to the first notice issued by AO u/s. 148 on 18.04.2013 whereas in the case of Marwadi Shares Finance Ltd. Vs. DCIT (supra), against the first notice issued by the AO u/s. 148 of IT Act, the assessee challenged such notice of reopening by filing Special Civil Application before Hon ble Gujarat High Court which was disposed o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d by ld. DR of revenue because if we find that this judgment of Hon'ble Karnataka High Court is applicable in the present case, then the judgment of any other High Court is not required to be considered because we are duty bound to follow the judgment of Hon'ble Karnataka High Court in preference to any judgment of any other High Court. 7. To examine the applicability of this judgment in the present case, we reproduce para nos. 12 to 17 of this judgment from pages 17 to 19 of case law compilation filed by ld. DR of revenue. These paras read as under. 12. From the material on record, it is noticed that in respect of the assessment year 1991-92, which is under consideration, the last, date for filing of the return was 30/10/1991. However, no such return was filed by the appellant before the said date. Subsequently, on 24/2/1992, a search was conducted in the premises of the appellant under Section 132 of the Act and thereafter, a declaration of income of Rs. 3 lakhs was made by the appellant. However, there was no return which was filed. Therefore, notice under Section 148 of the Act was issued on 14/12/1992, which was served on the assessee on 24/12/1992. Even prior to the s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... deemed to be cases of income escaping assessment are stated as follows: (a) where no return of income is furnished by an assessee, although total income is above the taxable limit; (b) where a return of income has been furnished, but no assessment has been made, and the assessee is found to have understated his income or claimed, excessive loss deduction, etc., in the return; and (c) where an assessment has been made, but income chargeable to tax has been under assessed or has been assessed at too low a rate or any excessive loss or relief or depreciation allowance or any other allowance under the Act has been allowed. 15. The Assessing Officer may assess or reassess such income, other than the income involving matters which are the subject matter of any appeal, reference or revision, which is chargeable to tax and has escaped assessment. 16. Having regard to the facts of the present, case, it becomes clear that in respect of the assessment year 1991-92, the appellant assessee had to file his return on or before 30.10.1991. The same was not done. Subsequently, a search was conducted in the premises of the appellant under Section 132 of the Act on 24.2.1992. A declaration of income ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... only on 20/10/1995 by filing a revised return therefore the (notice dated 24/11/1994 is in fact not a second notice , under Section 148 of the Act during the pendency of an earlier or first notice under Section 148 of the Act. The circumstances under which the two notices have been sent have to be borne in mind. The first notice dated 14/12/1992 was issued under Section 148 of the Act, when there was no return filed and the said notice was validly issued. When a return was filed on 22/12/1992, even before the service of the said notice the purpose of sending such a notice was fulfilled. However, there is no bar in law to send a notice under Section 148 of the Act after the return dated 22/12/1992 was filed by the appellant. Such a notice can be issued by the Assessing Officer after perusal of the return filed by the assessee after a return is filed but no assessment has been made and the assessee is found to have under stated his income or claimed excessive loss or deduction in the return. This notice dated 24/11/1994 was in fact not objected to by the appellant, but was also responded to by filing a revised return on 20/10/1995. Therefore, the notice dated 24/12/1994 was validly i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t, it is very important to consider that under which circumstances, two notices have been issued by the AO u/s. 148. In the present case, the reasons recorded by the AO for issuing the first notice u/s. 148 on 18.04.2013 are available on page 132 of the paper book and the reasons recorded by the AO for issuing the second notice u/s. 148 on 31.03.2015 are available on page 133 of the paper book. Both these reasons are identical as per which, this is stated by the AO that, the assessee is not registered u/s 12A and hence not eligible for exemption u/s 11 and the assessee is not eligible for exemption u/s 10 (23C) (vi) also and therefore, entire income of the assessee is taxable. These facts show that both notices u/s 148 were issued for the same reason in the present case whereas in the case of P. Dayananda Pai Vs. ACIT (Supra), the first notice u/s 148 was issued for this reason that no return of income was filed by the assessee in spite of expiry of time allowed u/s 139 (1) and pursuant to search, a declaration of income of Rs. 3 Lacs was made but no return was filed. This is also a fact of that case that even before service of the first notice on 24.12.1992, the assessee filed ret ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unicated. Against this judgment of Hon ble High Court, the appeal was filed by the assessee before Hon ble Apex Court and Hon ble Apex Court restored the matter back to the file of Hon ble Bombay High Court by observing that when an assessee challenges a notice to reopen under Section 147 on the ground that no reasons under Section 148 had been recorded or disclosed, the court must call for and examine the reasons. It was also held that Hon ble Bombay High Court did not appreciate that if the appellant had already been served with a notice under Section 148 and had complied therewith by filing a return, it was entitled to contend that no second notice lay and also to submit that, in any event, the second notice was barred by time. On both these aspects, the matter was restored back by Hon ble Apex Court to the Hon ble Bombay High Court and therefore, this judgment does not render any help to revenue in the present case. 10. Now we examine the applicability of the second judgement of Hon ble Apex Court rendered in the case of Tapan Kumar Datta Vs. CIT (supra). This judgment is not in respect of any notice u/s. 148 but this judgment is in respect of notice issued by the AO u/s. 158BD ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ility in F O segment on NSE during March 2010 and that assessee i.e. M/s. Marwadi Shares and Finance Ltd. is reported to be one of the beneficiaries of such fictitious losses by misuse of client code modification facility. The assessee in that case challenged he said notice of reopening by filing Special Civil Application before the Hon ble Gujarat High Court and as per the judgment dated 21.06.2016, it was held by Hon ble Gujarat High Court that it was submitted by ld. Counsel for the department that the respondent Assessing Officer would withdraw the impugned notice for re-opening of the assessment based on the reasons supplied to the petitioner, with a view to issuing a fresh notice after recording fresh reasons. Subsequently the AO issued fresh notice of re-opening on 29.03.2017 after recording fresh reasons which are also reproduced by Hon ble Gujarat High Court in that judgment. Against this second notice issued by the AO u/s. 148, Special Civil Application was filed by the assessee before Hon ble Gujarat High Court and in this, the assessee challenged the validity of the fresh notice issued by the AO u/s. 148. Paras 17 and 18 of this judgment are relevant in respect of decis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... technical reasons. Having succeeded on all other grounds, the Revenue may legitimately feel somewhat disappointed. Nevertheless, our duty is to give effect to the legal principles. The law does not recognize two parallel assessments. In absence of withdrawal of the first notice of reassessment, the proceedings would survive making the subsequent notice of reopening invalid. 12. From the above two paras reproduced from this judgement of Hon ble Gujarat High Court, it is seen that in that case, the second notice u/s. 148 was issued by the AO without withdrawing the first notice issued by the AO u/s. 148. This was held by Hon ble Gujarat High Court that the law does not recognize two parallel assessments. It was held that in the absence of withdrawal of the first notice of reassessment, the proceedings would survive making the subsequent notice of reopening invalid. In the present case, we have noted that second notice of reassessment was issued on 31.03.2015 whereas the assessment pursuant to first notice of reassessment u/s. 148 could have been made by the AO up to 31.03.2015 and therefore, it has to be accepted that second notice of re-opening u/s. 148 was issued during the penden ..... X X X X Extracts X X X X X X X X Extracts X X X X
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