TaxTMI 
TaxTMI 
2009 (12) TMI 559
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....ax Act, 1961, service of notice under section 143(2) of the said Act beyond a period of 12 months from the end of the month in which the return was filed would render the reassessment proceedings invalid? 2. Though the above questions framed have been sought to be reformulated by the appellants at the hearing we did not find any substantial difference in the questions as framed by the court and those suggested on behalf of the appellants. We, therefore, proceed to consider the appeals on the questions of law already framed, as noticed above. 3. The brief facts that will be required to be noticed for an effective adjudication of the issues arising in the two appeals may now be stated. 4. For the assessment years 1999-2000 and 2000-01, on receipt of notices issued under section 148 of the Income-tax Act, 1961 (hereinafter referred to as "the Act"), return of income was filed by the assessee onJanuary 24, 2003. OnFebruary 5, 2004notices under section 142(1) of the Act were issued to the assessee for production of the documents mentioned therein. It appears that on behalf of the assessee an elaborate reply was filed for each of the assessment years. The represen....
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....earned counsel for the respondent-assessee, has submitted that the power of the Tribunal under section 254 of the Act read with rule 11 of the Income-tax (Appellate Tribunal) Rules is very wide. An appeal can be disposed of by the learned Tribunal on any ground urged in the memo of an appeal or on a ground taken with the leave of the Tribunal or on any other ground. According to Dr. Saraf, the proviso to rule 11 of the Income-tax (Appellate Tribunal) Rules deals with the third category of cases, i.e., where the learned Tribunal proceeds to consider the appeal on any other ground. It is only in such a situation, according to Dr.Saraf, that the proviso stipulating the requirement of opportunity will operate. 7. Dr. Saraf has also argued that under the scheme contemplated by Chapter XIV of the Act the provisions of section 142 deal with a return prior to assessment of the income returned therein. The notice under section 142(1) of the Act, therefore, is a pre-assessment notice. A return filed by an assessee, on receipt of which notice under section 142(1) is issued or even when no such notice is issued, can be finalized under sec-tion 143(1) by means of an intimation of the ta....
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.... whichever is later. This means that the Department must serve the said notice on the assessee within this period, if a case is picked up for scrutiny. It follows that if an assessee, after furnishing the return of income does not receive a notice under section 143(2) from the Department within the aforesaid period, he can take it that the return filed by him has become final and no scrutiny proceedings are to be started in respect of that return." (emphasis is ours), 9. Dr. Saraf has also placed before the court a decision of the Punjab and Haryana High Court reported in Vipan Khanna v. CIT [2002] 255 ITR 220 (P & H) wherein the following view has been taken (page 233) : "The returns filed in response to notices under section 148 of the Act were the same as filed originally. The Assessing Officer had the option to issue a notice under section 143(2) of the Act requiring the assessee to produce evidence in support of the returns if he con-sidered it necessary to ensure that the assessee had not understated the income or had not computed excessive loss or had not underpaid the tax in any manner. Such a notice could be issued only within twelve months from the end of ....
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.... specified in the notice or such particulars on which the assessee relies in support of the claim made. Thereafter, on the appointed day, the Assessing Officer after considering such evidence and particulars as the assessee may produce is required to finalise the assessment and determine the sum payable, if any, by the assessee under section 143(3). This is the scheme of assessment that is con-templated by sections 142 and 143 of the Act. 13. The above scheme makes it abundantly clear that on receipt of the return that may be filed by an assessee after receipt of the notice under sec-tion 148 the Assessing Officer has an option of proceeding either under section 143(1) or if he so considers it necessary under section 143(2). In the event the Assessing Officer proceeds under section 143(1), upon determination of the amount of tax and interest payable or refund due for which an intimation is to be sent to the assessee the return gets finalized, though under the provisions of the Act, as amended by the Direct Tax Laws (Amendment) Act, 1987 no assessment order is passed at that stage. If, however, the Assessing Officer on consideration of the return does not 'proceed under sect....