TaxTMI 
TaxTMI 
2006 (9) TMI 228
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....High Court in R.L. Narang vs. CIT (1982) 136 ITR 108 (Del). 3. Holding that the claim of the assessee of Rs. 12.17 lakhs was revenue expenditure as against capital expenditure as held by the AO, especially ignoring the decision in the case of Shree Digvijay Cement Co. Ltd. vs. CIT (1982) 26 CTR (Guj) 184 : (1982) 138 ITR 45 (Guj), CIT vs. Vummidi Bangaru Chetty & Company 168 ITR 453 (sic). 4. In allowing deduction under s. 80-I to the assessee without deducting carry forward losses without properly appreciating the facts of the case, ignoring the provision of s. 80B(5) and especially ignoring the decision in the case of Cambay Electric Supply Industrial Co. Ltd. vs. CIT 1978 CTR (SC) 50 : (1978) 113 ITR 84 (SC) and CIT vs. Canara Workshops (P) Ltd. (1986) 58 CTR (SC) 108 : (1986) 161 ITR 320 (SC)." 3. In the cross-objection of the assessee, the following effective grounds have been raised: "1. The learned CIT(A) was justified in holding that reopening of assessment was not proper. 2. The learned CIT(A) was justified in holding that reopening of assessment at the instance of audit party is not permissible under the law and is against the judici....
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....,56,810/- and deduction under s. 80-I was allowed after reducing the amount of deduction under s. 80HH of the IT Act. The assessee preferred an appeal before CIT(A). Jabalpur. The CIT(A) directed to allow deduction under s. 80-I on gross income vide his order dt. 7th Feb., 1995. (2) On perusal of record shows that the assessee company has debited in P&L a/c at Rs. 12.17 lakhs on account of expenditure of issue of right shares. This expenditure is not allowable being of capital nature. Further it has also been noticed that the positive income of Rs. 8,85,59,094/- was offered from Unit IT on which deduction under s. 80HH at Rs. 1,77,11,819/- and s. 80-I at Rs. 2,21,39,774/- totalling Rs. 3,98,51,597/- was allowed without reducing earlier years, losses amounting to Rs. .... This resulted in excess allowance of deduction under ss. 80HH and 80-I at Rs. 1,75,44,375/- (Rs. 77,97,500/- + Rs. 97,46,875/-) with short levy of tax Rs. 90,79,214/-. 6. The AO, therefore, concluded that the income had been underassessed to the tune of Rs. 1,87,61,375/- (Rs. 12,17,000/- + Rs. 1,75,44,375/-) within the meaning of s. 147(a) of the IT Act. It was argued by the representative of the assess....
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....ved by it which should have been traced out by it and compliance to it should have been made. It is, therefore, clear that it was not the mistake of the Department but of the assessee who failed to trace out the notice under s. 148 from its record." 8. From the above, it appears that the AO did not try to bring out on record as to on whom and when the notice was effectively served. It was only the presumption of the AO that since the notice was issued, it must have been received by the assessee. However, it was not a correct legal position. It was the onus of the AO to bring out in the assessment order as to whom and when the notice was effectively served upon the assessee. Even in his parawise comments dt. 8th Aug., 2002 the AO has only commented that the notice under s. 148 was sent to the assessee on 23rd Oct., 2000 by registered post, but it is silent so far as its service upon the assessee is concerned. Even .the acknowledgement card of the Postal Department is not available to verify as to whom this notice was served or who was the person who received this notice on behalf of the assessee company. Learned CIT(A) thus opined that apparently under the circumstances, it canno....
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....er of the expressions 'give' or 'send' or any other expression is used, then unless a different intention appears, the service shall be deemed to be effected by properly addressing, pre-paying and posting by registered post, a letter containing the document and, unless the contrary is proved, to have been effected at the time at which the letter would be delivered in the ordinary course of post." 12. Since the expression by post implies service by registered post so sending notice by registered post is valid service and s. 27 of General Clauses Act, 1897, creates rebuttable presumption that service shall be deemed to be effective by properly addressing, posting by registered post at the time at which the letter would be ordinarily delivered. The presumption can be rebutted by stating on oath that the notice was never tendered as held by Hon'ble Supreme Court in the case of R.K. Vashisth vs. Union of India (1993) Supp (1) SCC 431. In this case the assessee has not disputed the address given in the notice and otherwise also it is a case of a company which has magnitude of crores of turnover every year and has not disputed the address of registered office as giv....
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....re the matter back to the file of the AO with the direction to adopt the procedure as laid down by the Hon'ble Supreme Court before proceeding in the matter. We hold and direct accordingly. 15. Since order of authorities below is set aside on this legal issue, therefore, other grounds raised and agitated in the appeal of the Revenue and cross-objection of the assessee are not being discussed or considered. 16. As a result, the appeal and cross-objection of the assessee are disposed of accordingly. P.K. BANSAL, A.M.: 16th March, 2006 17. After going through the proposed order and having discussion with my learned Brother, it is not possible for me to agree with the proposed order drafted by him in ITA No. 288/Jab/2002 and in CO No. 6/Jab/2003. Accordingly, I decided to write a separate order. Although my learned Brother has stated the brief facts of the case but in my opinion it is necessary to lay down the facts at the cost of repetition and to decide the issues involved in these appeals. 18. The brief facts of the case as gathered from the order of the AO and the CIT(A) are that the assessee a public limited company claimed the deduction of right issue expens....
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....5/-) with short levy of tax Rs. 90,79,214/-. 3. I have thus reason to believe that the income-tax been underassessed to the tune of Rs. 1,87,61,375/- (Rs. 12,17,000/- + 1,75,44,375/-) within the meaning of s. 147(c) of the Act. It is therefore. requested that permission to issue notice under s. 148 of the IT Act be accorded." 22. When the case was selected for scrutiny and notice under s. 142(1) was issued, the assessee vide letter dt. 11th Jan., 2002 stated that it had not received notice under s. 148 and therefore requested for allowing the inspection, the AO gave a copy of the notice under s. 148 dt. 23rd Oct., 2000 to the assessee. The AO took the view that the notice was sent to the assessee on 23rd Oct., 2000 by registered post, therefore, the assessee should have traced out the notice from its record. The assessee also stated that the action under s. 147 was barred by limitation as no action under s. 147 can be taken after the expiry of four years from the end of the relevant assessment year unless income chargeable to tax has escaped assessment for such assessment year by reason of failure on the part of assessee to disclose fully and truly all material facts ne....
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....was not a correct/legal situation. It was the onus of the AO to bring out in the assessment order as to whom and when the notice was effectively served upon the assessee. Even in his parawise comments dt. 8th Aug., 2002 the AO has only commented that the notice under s. 148 was sent to the assessee on 23rd Oct., 2000 by registered post, but it is silent so far as its service upon the assessee is concerned. Even the acknowledgement card of the Postal Department is not available to verify as to whom this notice was served or who was the person who received this notice on behalf of the assessee company. Apparently under the circumstances, it cannot be said that there was any effective service of notice under s. 148 and, therefore, it renders, consequently, the entire assessment to be bad in law." 7. The relevant observations in respect of time barring of the assessment are given as under: "This is a case where the deductions under ss. 80HH and 80-I were allowed and similarly expenditure claimed on account of issue of right shares was also allowed after having examined the issues in detail and after discussing the same at length. This meant that there was proper application....
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....IT(A) deleted the additions made by the AO in respect of right issue expenses as well as deduction under s. 80-I. 25. The Revenue being aggrieved has come before us in appeal by taking the grounds as are produced by my learned Brother in para 2 of his proposed order. The assessee also filed the cross-objection by taking the effective grounds as are produced in para 3 by learned Brother in his proposed order. 26. Ground Nos. 1 and 2 relate to the validity of the reopening of the assessment as well as the validity of the service of the notice on the assessee. First, I would like to deal with the issue of the service of the notice. Learned Departmental Representative in this regard contended that the CIT(A) has ignored the decision of Delhi High Court in the case of R.L. Narang vs. CIT (1982) 136 ITR 108 (Del). The notice was sent through registered post after prepayment of the postal charges and address as given in the notice, this has not been challenged. Therefore, the presumption would be that the notice has been properly served. This is the case of the limited company having turnover in crores and having established registered office at the place mentioned in the notice. Th....
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....im or with his office. While issuing the notice action to be taken that is the service of notice has been explicitly mentioned in s. 148. The service of the notice is based on the cardinal principle of natural justice that if a notice is issued the parties who are going to affected must be given effective opportunity of hearing so that they can meet the requirement of the notice issued. Merely issuing the notice will not be sufficient for meeting the natural rule of law. Therefore, I am of the opinion that the service is imbued with the issue of the notice. The proceedings cannot be said to have been validly initiated unless and until the notice is served to the parties or handed over to the communicating agency so that it becomes difficult for the person who has issued it to withdraw it. I am of the opinion that the onus is on the party who required serving the notice to prove that the notice was served. There is a clear finding given by the CIT(A) that the AO did not try to bring out on record as to on whom and when the notice was effectively served. It was only the presumption of the AO that since the notice was issued it must have been received by the assessee. It was the onus ....
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....a service report nor any evidence to show the identity of persons on whom the service was effected, there is no proper service. Once the statement with regard to non-service of notice is accepted by the AAC and no affidavit denying service was asked for by the Tribunal, the lack of affidavit denying service is not material." 30. If we look at the facts of this case to appreciate the controversy involved in this case I am of the view that this case supports the finding given by the CIT(A). The facts of this case are that the AO issued show-cause notice on the assessee on 31st Jan., 1969 which was said to have been served on 3rd Feb., 1969 for showing cause why the penalty under s. 140A(3) be not imposed. Subsequently reminder was issued on 2nd April, 1969 under certificate of posting. On 12th June, 1969 the ex parte order under s. 140A(3) was passed by the AO. Before the first appellate authority, the assessee contended that no notice was served or received by the assessee. The AAC found that though the notice dt. 31st Jan., 1969 had been served through process server on someone signing for the assessee, there was nothing on record to indicate the identity of the person ....
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....e IT Act. The AO noticed that a mistake of law has occurred in allowing the deduction to the assessee under s. 80-I as well as treating the expenditure incurred on the issue of right shares to be revenue expenditure. The AO while allowing this deduction has not applied his mind and the deduction was allowed merely on the basis of the computation statement filed by the assessee. It is a case where there was failure on the part of the assessee to disclose fully and truly all material facts. Therefore, the assessment could have been reopened beyond the period of 4 years. Hence, the order of the CIT(A) must be reversed. At the most the matter may be restored to the file of the AO with the direction that the AO should dispose of the objections raised by the assessee by passing a speaking order in view of the clear-cut law laid down by the Hon'ble Supreme Court in the case of GKN Driveshafts (India) Ltd. vs. ITO & Ors. (2003) 179 CTR (SC) 11 : (2003) 259 ITR 19 (SC). 33. Learned Authorised Representative relied on the order of the CIT(A) and reiterated the submissions made before the CIT(A). It was contended that the notice issued under s. 148 was invalid. The proviso to s. 147 wa....
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.... conclusion on such primary facts, he cannot exercise power under s. 147 to review his judgment or conclusion and to correct the erroneous finding by taking recourse to the provisions of s. 147. Reliance was heavily placed on the decision of Hon'ble Madhya Pradesh High Court in the case of H.H. Maharaja Martand Singh Ju Deo vs. WTO (1997) 141 CTR (MP) 228 : (2000) 242 ITR 229 (MP). Our attention was drawn towards the reasons recorded by the AO. Reliance was placed on the following cases as well as the case law relied before the CIT(A): (i) Calcutta Discount Co. Ltd. vs. ITO (1961) 41 ITR 191 (SC); (ii) ITO vs. Lakhmani Mewaldas 1976 CTR (SC) 220 : (1976) 103 ITR 437 (SC); (iii) CIT vs. Hindustan Metal Works (1993) 112 CTR (All) 193 : (1993) 69 Taxman 269 (All); (iv) Parshuram Pottery Works Co. Ltd. vs. ITO 1977 CTR (SC) 32 : (1977) 106 ITR 1 (SC); (v) Indian Oil Corporation vs. ITO (1986) 58 CTR (SC) 83 : (1986) 159 ITR 956 (SC); (vi) Raymond Woollen Mills Ltd. vs. ITO (1994) 207 ITR 929 (Bom); (vii) Avani Corporation vs. ITO (1999) 155 CTR (Guj) 548 : (1999) 238 ITR 407 (Guj); (viii) Meghdoot Leminart (P) ....
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....reated as illegal and invalid? Issue No. (i) 35. I find from the assessment order that the assessee has objected before the AO about the legality of the proceedings initiated under s. 147. It was contended that the proceedings were barred by limitation and it could not be initiated after the expiry of 4 years. The ground relating to the non-service of the notice as per the provision of s. 148 was also taken. The ground that the conditions as stipulated under s. 147 for the initiation of the proceedings are not satisfied was also taken. The issue that on the same basis the proceedings were taken by the CIT under s. 263 was also taken. All these objections of the assessee were related to the validity of the proceedings initiated under s. 147. The AO has disposed of all of these contentions in the impugned order rejecting all the pleas of the assessee and held that the proceedings under s. 147 have been legally initiated. 36. I have also gone through the judgment of the Hon'ble Supreme Court in the case of GKN Driveshafts (India) Ltd. vs. ITO & Ors. In this case the validity of notice under s. 148 and subsequent notice of hearing issued under s. 143(2) were challenged by ....
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....ue for obtaining the direction for the restoration of the order to the file of the AO. From the judgment of the Hon'ble Supreme Court, I noticed that the assessee has challenged the validity of the issue of notice under s. 148 by way of writ petition before Hon'ble High Court. The Hon'ble Supreme Court confirmed the order of the Hon'ble High Court directing the assessee to take the entire objections before the AO. When the matter was pending before the Hon'ble Supreme Court in two of the assessment years, the assessments were completed and the details were filed before the CIT(A). Hon'ble Supreme Court has not directed the CIT(A) to restore the order of these two assessment years to the file of the AO and directed the CIT(A) for these two assessment years to dispose of the objections of the assessee regarding the validity of the issuance of the notice under s. 147. From these directions of the Hon'ble Supreme Court to the CIT(A) where the matters were in appeals, I am of the view that if the objections relating to the issuance of the notice and the validity of the proceedings have been raised by the assessee in appellate proceedings before us, this Tribu....
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....L a/c. This means that the assessee has disclosed the fact about the claim made by the assessee in respect of expenditure incurred on right issue as well as the claim made for deduction under s. 80-I. I have also gone through the computation statement and the P&L a/c filed by the assessee along with the return. In the computation statement the assessee has clearly disclosed how the deduction under ss. 80-I and 80HH has been computed by him in respect of Unit Nos. 1 and 2. The expenses incurred on the issue of right shares are duly debited to the P&L a/c. From para 2 of the so-called notice issued by the CIT while initiating the proceedings under s. 263 it is apparently clear that the assessee had made full disclosure in respect of expenses claimed on the right issue as well as the deduction claimed under s. 80-I of the IT Act. Thus, I am of the firm view that the assessee has made the full disclosure of the relevant facts, after going through the entire materials on record and the orders of the Departmental authorities. 39. In the case of CIT vs. A.R. Enterprises (P) Ltd. (2002) 255 ITR 121 (Raj), the Hon'ble Rajasthan High Court has explained the meaning of expression "mate....
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.... and fully. Issue No. (iii) 43. For deciding this issue which relates to the time barring of the proceedings, we find that the proviso to s. 147 lays down as under: "Provided that where an assessment under sub-s. (3) of s. 143 or this section has been made for the relevant assessment year, no action shall be taken under this section after the expiry of four years from the end of the relevant assessment year, unless any income chargeable to tax has escaped assessment for such assessment year by reason of the failure on the part of the assessee to make a return under s. 139 or in response to a notice issued under sub-s. (1) of s. 142 or s. 148 or to disclose fully and truly all material facts necessary for his assessment for that assessment year." 44. In view of the aforesaid specific provision under s. 147 there cannot be two opinions that in case the assessment has been completed under s. 143(3), no action can be taken under s. 147 after the expiry of four years from the end of the relevant assessment year unless the income chargeable to tax has escaped for such assessment year due to the failure on the part of the assessee to disclose fully and truly all the mate....
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....4 on these very issues were also dropped. No further material or change in law was brought to his notice or came to his notice for initiating the assessment proceedings. Even the reasons also do not speak of the same. Thus the notice issued under s. 148 cannot be considered to be a valid notice. The assessment framed on the basis of time barred initiation is invalid and must be annulled. 46. I have already held that the proceedings initiated were barred by limitation as the notice in this case was not issued within 4 years from the end of the assessment year in respect of which the AO has issued notice under s. 148 in view of the specific limitation provided in the proviso to s. 147 as the assessee had not failed to disclose all the material facts relating to the assessment year fully and truly. I am of the view that when the notice issued under s. 147 itself is barred by limitation, the proceedings initiated are void ab initio. If any assessment is framed in consequence of the illegally initiated proceedings, the assessment so framed is non est in eyes of law and is bound to be cancelled. I accordingly, quash the order passed by the AO as being void and illegal. 47. Since th....
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....Court in GKN Driveshafts (India) Ltd. vs. ITO & Ors. (2003) 179 CTR (SC) 11 : (2003) 259 ITR 19 (SC) or the Hon'ble AM was justified in holding that as there was no failure on the part of the assessee to disclose fully and truly all material facts necessary for the purpose of assessment, the reopening of assessment beyond the period of four years was contrary to the proviso to s. 147." 51. The learned Departmental Representative has no objection to the modification of the question as proposed by the learned counsel. On the other hand, he also agreed that the basic dispute raised in this Revenue's appeal is against finding of the CIT(A) holding the reopening of assessment under s. 147 of the Act to be bad in law. The learned AM has upheld the order of the CIT(A) while the learned JM has set aside the matter back to the file of the AO. Therefore, the question as proposed by the assessee correctly brings out the controversy in the conflicting orders of the learned Members. 52. In view of the above submissions of both the parties, I replace question Nos. 2 and 3 by the following question and it is numbered as question No. 2: "2. Whether on the facts and in the ci....
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....otice upon the assessee is essential. The onus is upon the Revenue to prove that the notice was served on the assessee. He further stated that the decision of Hon'ble Delhi High Court relied upon by the learned Departmental Representative is, in fact, in favour of the assessee. He, therefore, submitted that the order of the learned AM should be upheld. 55. During the rejoinder, the learned Departmental Representative was asked to produce the evidence, if any, with regard to the posting of the notice by RPAD, either in the form of dispatch register or the receipt issued by the postal authorities. The learned Departmental Representative stated that the notice was issued by the office of Jt. CIT (Asstt.), Spl. Range, Jabalpur. Now the case is being assessed by Asstt. CIT, Circle Satna. Moreover, the post of Jt. CIT (Asstt.), Spl. Range, Jabalpur has been abolished and, therefore, the dispatch register or the receipt for the posting of the notice by registered post could not be found out. He, however, produced the copy of the notice issued under s. 148 and pointed out that in the notice at the top RPAD is mentioned while at the bottom 'issued on 23rd Oct., 2000' is menti....
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....or relief in the return; (c) where an assessment has been made, but- (i) income chargeable to tax has been underassessed; or (ii) such income has been assessed at too low a rate; or (iii) such income has been made the subject of excessive relief under this Act; or (iv) excessive loss or depreciation allowance or any other allowance under this Act has been computed 148. (1) Before making the assessment, reassessment or recomputation under s. 147, the AO shall serve on the assessee a notice requiring him to furnish within such period, as may be specified in the notice, a return of his income or the income of any other person in respect of which he is assessable under this Act during the previous year corresponding to the relevant assessment year, in the prescribed form and verified in the prescribed manner and setting forth such other particulars as may be prescribed; and the provisions of this Act shall, so far as may be, apply accordingly as if such return were a return required to be furnished under s. 139. (2) The AO shall, before issuing any notice under this section, record his reasons for doing so. 149. (1....
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....rom this, whenever any Dak is sent by RPAD, the postal authorities give the receipt for receiving such Dak. The Revenue is unable to produce either the acknowledgement of the service of the notice upon the assessee or even the receipt issued by the postal authorities proving the sending of the notice by RPAD. The learned Departmental Representative was also asked to produce the despatch register wherein the sending of the notice to the assessee is recorded. However, he expressed his inability to do so on the ground that the notice was issued by Jt CIT (Asstt.), Spl. Range, Jabalpur which post is now abolished and, therefore, such register is not traceable. The learned Departmental Representative has relied upon the decision of Hon'ble Delhi High Court in the case of R.L. Narang vs. CIT. I find that in this case the dispute was with regard to service of notice upon the assessee under s. 140A(3). Their Lordships accepted the assessee's contention that the notice was not properly served upon the assessee. The relevant observation in this regard reads as under: "6. Coming to the next question of service by post, the provisions of s. 27 of the General Clauses Act, 1897,....
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....ched by registered post. In the case before me, the Revenue has not brought any evidence with regard to above ingredients which would amount to deemed service of notice under s. 27 of the General Clauses Act. Only evidence furnished before me is the copy of the notice issued under s. 148, the address thereupon reads as under: "M/s Vindhya Tele Links (P) Ltd., Rewa." Whether this address is full and correct address is doubtful because Rewa is a District place and no address of the office of the company is mentioned in this notice. In the memo of appeal filed by the Revenue, at col. No. 11 which provides the address to which the notice may be sent to the respondent, the Revenue has given the address of the assessee as under: "M/s Vindhya Telelink Ltd., Udyog Vihar, Rewa (MP)" Thus, in the notice under s. 148 in the address of the assessee "Udyog Vihar" is missing. Therefore, it cannot be said that the notice was correctly addressed. Moreover, no evidence is furnished for the properly stamping of the envelope and also despatch of the said envelope. I also find that during the course of assessment proceedings, the assessee vide its letter dt. 11th Jan., 2002 has stated that....
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....t "Even the proof of sending the notice through registered post AD was not filed before the Tribunal so as to prove that the notice was sent through registered post at the address of the assessee company." Thus, there was difference amongst the learned Members even with regard to the factual finding of the sending of the notice by registered post. Therefore, the question with the presumption that the notice was sent by RPAD does not bring out the correct factual finding reached by both the learned Members. Accordingly, I modify question No. 1 as under: "Whether, on the facts and in the circumstances of the case, notice under s. 148 was properly served upon the assessee?" 62. I have already discussed the rival contentions with regard to the service of the notice upon the assessee and for the detailed reasons in para 8 to para 11 of this order. I answer the question in negative and hold that the notice was not properly served upon the assessee. 63. Regarding question No. 2, it is submitted by the learned Departmental Representative that as per the decision of Hon'ble apex Court in the case of GKN Driveshafts (India) Ltd. vs. ITO (2003) 179 CTR (SC) 11 : (2003) 259 ....
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....212 ITR 650 (SC); (viii) R.K. Upadhyaya vs. Shanabhai P. Patel (1987) 62 CTR (SC) 17 : (1987) 166 ITR 163 (SC); (ix) CIT vs. Miss Eather P. Carvalho (1999) 153 CTR (Bom) 272 : (1999) 237 ITR 549 (Bom); (x) Phool Chand Bajrang Lal vs. ITO (1993) 113 CTR (SC) 436 : (1993) 203 ITR 456 (SC); (xi) Zohar Siraj Lokhandwala vs. M.C. Kamat, Asstt. CIT (1994) 121 CTR (Bom) 283 : (1994) 210 ITR 956 (Bom). In view of the above, it is submitted by the learned Departmental Representative that the reopening of assessment was valid and the same should be upheld. 64. The learned counsel for the assessee, on the other hand, stated that the assessee is manufacturing insulated cable. In the original assessment the AO has considered the issue of computation of deduction under s. 80-I and, in fact, he allowed less deduction than what was claimed by the assessee. During the course of assessment proceedings, when the copy of reasons recorded for reopening of assessment was supplied to the assessee, the assessee has raised the objection against the reopening of assessment. The AO recorded his finding in p. 5 as well as p. 7 of the assessment order and arrived at th....
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....the sides and perused the material placed before me. The first issue to be decided is whether the AO has considered and decided the assessee's objection against the validity of the reopening of assessment. I find that at p. 5 of the assessment order the AO has recorded the following finding: "As regards legality of initiation of proceedings is concerned the action under s. 147 can be initiated even after expiry of four years subject to the conditions laid down in ss. 149 and 151 of the IT Act. Since the conditions laid down in these sections were satisfied the initiation of proceedings under s. 147 was correct." At p. 7 of the assessment order, again he reiterated that the assessee's contention against the initiation of the proceedings under s. 147 is not accepted. Thus, the AO has disposed of the assessee's objection against the reopening of assessment under s. 147. 66. The Hon'ble apex Court in the case of GKN Driveshafts (India) Ltd. held as under: "When a notice under s. 148 of the IT Act, 1961, is issued, the proper course of action for the noticee is to file the return and, if he so desires, to seek reasons for issuing the notices. The ....
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....ce thereof. At the same time, it is also well-settled that mere availability of an alternative relief can be no bar for exercise of a writ jurisdiction when the authorities seek to assume jurisdiction which they do not possess or act in totally arbitrary manner. The decision in GKN's case certainly reminds the assessee that when a notice under s. 148 is issued, the proper course of action is to file a reply with his objections including those in relation to the absence of jurisdiction. However, it does not lay down the law to the effect that when such an objection is in relation to absence of jurisdiction and the same is revealed ex facie or apparent on the face of a notice or reasons in support thereof, the assessee has compulsorily to invite an order from the AO in relation to the absence of jurisdiction." 67. Let us examine the facts of the assessee's case in the light of the ratio laid down by the Hon'ble apex Court as well as Mumbai High Court. In the case of GKN Driveshafts (India) Ltd., the Hon'ble apex Court has held that after the issue of notice, the assessee should first file the return of income and thereafter seek reasons for issuance of the notice. ....
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....of failure on the part of the assessee to make a return of income or to disclose fully and truly all material facts necessary for his assessment. Admittedly, in this case, the original assessment was completed under s. 143(3) and 4 years have expired from the end of relevant assessment year. It is also admitted position that there was no failure on the part of the assessee to furnish the return of income under s. 139. Therefore, the assessment can be reopened only if there was failure on the part of the assessee to disclose fully and truly all material facts necessary for his assessment. The AO has recorded the reasons for reopening of assessment, which are given at p. 3 of his order and it is reproduced below for ready reference: "The reasons recorded under s. 148(2) were as under: 1. Original assessment was completed under s. 143(3) on 23rd Nov., 1994 at an income of Rs. 8,24,56,810/- and deduction under s. 80-I was allowed after reducing the amount of deduction under s. 80HH of the IT Act. The assessee preferred an appeal before CIT(A), Jabalpur. The CIT(A) directed to allow deduction under s. 80-I on gross income vide order dt. 7th Feb., 1995. 2. On perusal....
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....ly and truly all material facts. I have gone through those decisions and found that facts in all those cases were quite distinguishable than the facts in the assessee's case and, therefore, they are not applicable to the case under consideration before me. Moreover, whether the assessee has failed to disclose all material facts or not would depend on the facts of each case. After considering the facts in the assessee's case, I find that there was no failure on the part of the assessee to disclose any material facts which were necessary for the purpose of its assessment. Accordingly, with regard to question No. 2, I agree with the finding of the learned AM that there was no failure on the part of the assessee to disclose fully and truly all material facts and, therefore, reopening of assessment after 4 years from the end of relevant assessment year was not valid. 70. The matter will now go to the regular Bench for announcing the majority view. DINESH K. AGARWAL, J.M.: 22nd Sept., 2006 71. On a difference of opinion between the Members who originally heard the appeal and the cross-objection, the following three questions were referred for the opinion of the Hon....