TaxTMI 
TaxTMI 
2007 (10) TMI 344
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..... 4. Briefly stated, the facts of the case are that the assessee company filed its return of income on 28th Nov., 1997 declaring a loss of Rs. 30,000. The assessee has also filed Form No. 30 along with the return of income whereby request for refund of Rs. 1,72,000 was made. The AD has processed the return dt. 28th Nov., 1997 under s. 143(1) of the IT Act, 1961 on 15th Nov., 1999 at returned loss of Rs. 30,000. However, the AD issued notice under s. 148 of the Act dt. 27th May, 1999 after recording following reasons on same day: "27th May, 1999-From the perusal of assessment record for the asst. yr. 1986-87, it is found that as per ITNS-150 dt. 10th March, 1997, interest under s. 244 amounting to Rs. 24,60,225 was allowed to the assessee and the same was adjusted along with other refund against the demand for asst. yr. 1988-89. The intimation of interest allowed was sent to the assessee in Form No. 7 which was served on the assessee on 19th March, 1997. Accordingly, the interest amount of Rs. 24,60,225 should have been shown in the return of income for asst. yr. 1997-98, which the assessee has not shown. I have, therefore, reason to believe that by reason of omission or failu....
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....lowed interest claimed at Rs. 6,81,703 stating that no proof has been submitted that this interest has been paid against the loan borrowed from the Government for construction of rented building. Accordingly, the AO determined the taxable income at Rs. 30,47,828. 5. Aggrieved by the order of the AO, the assessee carried the matter in appeal before the CIT(A). As regards the validity of the proceedings initiated under s. 147 of the Act, the CIT(A) held that the AO was justified in invoking the provisions of s. 147 of the IT Act, 1961 and notice under s. 148 of the IT Act, 1961 was valid in law. 6. Now the assessee is in second appeal before this Bench of the Tribunal. 7. Before us, Shri Pradeep Seth, learned counsel for the assessee submitted that return has been filed on 28th Nov., 1997 and the said return has been processed only on 15th Nov., 1999. The reasons for issuing notice under s. 148 have been recorded on 27th May, 1999 and notice under s. 148 was issued on said date. Thus, notice for reassessment under s. 147 has been issued while original return and claim for refund i.e. proceedings under s. 237 of the IT Act were still pending for disposal and hence, there coul....
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.... In view of the above, Shri Anadi Verma, senior Departmental Representative, submitted that the notice issued under s. 148 of the IT Act is valid in law. He also relied on the following decisions: (i) A. Pusalal vs. CIT (1987) 65 CTR (AP) 151 : (1988) 169 ITR 215 (AP), wherein it has been held that the reassessment proceedings under s. 148 were not vitiated merely because the AO failed to invoke the power to correct the assessment already completed under s. 143(1) by issuing a notice under s. 143(2). (ii) Ranchi Club Ltd. vs. CIT (1995) 129 CTR (Pat) 385 : (1995) 214 ITR 643 (Pat), wherein it has been held that in view of the provisions contained in s. 147 of the IT Act, 1961, and Expln. 2(b) thereto, even if assessment for the asst. yr. 1991-92 had not been made in terms of s. 143 and only intimation had been sent to the assessee in response to the return filed by him, notice could be issued under s. 148. (iii) Punjab Tractors Ltd. vs. Jt. CIT (2002) 173 CTR (P&H) 84 : (2002) 254 ITR 242 (P&H) wherein it has been held that the notice under s. 147/148 issued to the petitioner was riot vitiated merely for the reason that notice under s. 143(2) had not been issued to it. ....
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....oceedings were pending when the notice under s. 148 was issued. Shri Pradeep Seth. learned counsel for the assessee submitted that the assessment proceedings commenced under this Act when the voluntary return is filed under sub-s. (i) of s. 139 or individual notice under sub-s. (2) of s. 139 is served. According to him. in the present case when the original return was filed by the assessee on 28th Nov., 1997, the assessment proceedings had commenced. Therefore, no reassessment proceedings could be taken until the said proceedings terminated as held by the Supreme Court in the case reported in (2000) 159 CTR (SC) 114 : (2000) 242 ITR 381 (SC). Shri Pradeep Seth, learned counsel for the assessee also referred to the decision of Hon'ble Allahabad High Court in the case of S.P. Kochhar vs. ITO (1983) 37 CTR (All) 49 : (1984) 145 ITR 255 (All) wherein it has been held that income cannot be said to have escaped assessment within the meaning of this section of assessment proceedings in respect of that income which are still pending and not yet have terminated in a final order. Therefore, in respect of pending assessment, initiation of reassessment proceedings under s. 147 for assessing in....
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....p; (See rule 41) Claim for refund of tax I, A.K. Gupta, Director of Handloom Intensive Dev. Project (Bijnore) Ltd. do hereby state that my total income computed in accordance with the provisions of the IT Act, 1961, during the year ending on 31st March, 1997 being the previous year for the assessment year commending on the 1st April, 1997 amounted to Rs. 30,000 loss that the total income-tax chargeable in respect of such total income is Rs. Nil and that the total amount of income-tax paid, or treated as paid under s. 199, is Rs. 1,72,000. I, therefore, request for a refund of Rs. 1,72,000. Sd. (A K. Gupta) &....
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.... case of Trustees of H.E.H. The Nizam's Supplemental Family Trust, it has been held as under: "It is settled law that unless the return of income already filed is disposed of, notice for reassessment under s. 148 of the IT Act, 1961, cannot be issued, i.e. no reassessment proceedings can be initiated so long as assessment proceedings pending on the basis of the return already filed are not terminated. A return, of income filed in the form prescribed along with an application for refund under s. 237 of the Act is a valid return. Filing of return in the form prescribed under s. 139 of the Act along with the application for refund is not an empty formality. It assumes importance if such return had not been filed earlier." 12. The Hon'ble Supreme Court at p. 391 of the report held as under: "We are, thus, of the opinion that during the pendency of the return filed under s. 139 of the Act along with the refund application under s. 237 of the Act, action could not have been taken under s. 147/148 of the Act." 13. In the instant case also, the return was filed under s. 139 of the Act along with the refund application under s. 237 of the Act, action could not have been taken un....
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....presentative referred to Expln. 2(b) to s. 147 of the Act, which says that where a return of income has been furnished by the assessee but no assessment has been made land it is noticed by the AO that the assessee has understated the income or has claimed excessive loss, deduction, loans or relief in the return shall also be deemed to be case where income chargeable to tax has escaped assessment. We find that the learned author Acharya Suklendra in his book "Law of Income-tax, Third Edition p. 4049, has stated that the proposition that no notice under s. 148 can be issued against the assessee so long as a return validly filed by him remains pending and not disposed of, is not affected by cl. (b) of Expln. 2 to amended s. 147. One of the contentions of learned Departmental Representative was that no proceedings were pending when the notice under s. 148 was issued. At this stage, a useful reference can be made to the commentary by Kanga and Palkiwala, 8th Edition, Vol.-I p. 1101 where the learned authors have categorically opined that the assessment proceedings commence under this Act when the voluntary return is filed under sub-s. (1) of s. 139 or individual notice under sub-s. (2) ....