TaxTMI 
TaxTMI 
2015 (1) TMI 570
X X X X Extracts X X X X
X X X X Extracts X X X X
....e chargeable to tax had escaped assessment, so as to confer jurisdiction on the 'Assessing Officer' to initiate proceedings under section 147 of the Act. 3. BECAUSE in any case before service of notice under section 148, the appellant had duly filed the 'return' under section 139 on 31.3.2006 which was a valid 'return' and during the pendency of valid 'return', the proceedings initiated under section 147 could not have been allowed to remain in force, so as to empower the Assessing Officer to pass the assessment order dated 29.12.2006 (in pursuance of action taken under section 147 of the Act.) 4. BECAUSE there existed a 'disharmony' between the 'person' in whose case the proceedings under section 147 had been initiated by issue of notice under section 148 dated 30.3.2006 and the "person" described as Artificial Juridical Person (AJP) on whom the assessment was made vide order dated 29.12.2006 and on a due consideration of this aspect of the matter, the CIT (A) should have held that assessment order dated 29.12.2006 was void ab-initio. WITHOUT PREJUDICE TO THE CONTENTION RAISED IN THE FOREGOING GROUNDS: 5. BECAUSE the appeal filed....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... before the completion of the assessment, whichever is earlier: Provided that where the return relates to a previous year relevant to the assessment year commencing on the 1st day of April, 1988, or any earlier assessment year, the reference to one year aforesaid shall be construed as a reference to two years from the end of the relevant assessment year." the "return" filed by the Parishad on 31.03.2006 was a valid return. Therefore/ it could not be held or said that any "income chargeable to tax" as envisaged in section 147/ had escaped assessment on 30.03.2006 where proceedings under section 147 were initiated by issue of notice under section 148. From this it follows that very initiation of proceedings under section 147, by 'recording reason' on 30.03.2006 and issuing notice under section 148 on that date is invalid. 6. Otherwise also, the "reasons recorded" are deficient as the same are not based on relevant material. As per specific dates given in the chronology of dates and events, the Hon'ble Tribunal had over ruled, by its order dated 25.07.2005 (Annexure - II) the CIT's view (taken by him in his order dated 29.09.2003) that the Parishad had been engaged ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....anga Saran and Sons P. Ltd. v. ITO [1981] 130 ITR 1. The expression "reason to believe" in section 147 does not mean purely subjective satisfaction on the part of the Assessing Officer. The belief must be held in good faith; it cannot be merely a pretence. It is open to the court to examine whether the reasons for the belief have a rational connection or a relevant bearing to the formation of the belief and are not extraneous or irrelevant to the purpose of the section. To this limited extent, the action of the Assessing Officer in starting proceedings under section 147 is open to challenge in a court of law as held in S. Narayanappa v. CIT [1967] 63 ITR 219 (SC); Kantamani Venkata Narayana and Sons v. First Additional ITO [1967] 63 ITR 638 (SC); Madhya Pradesh Industries Ltd. v. ITO [1970] 77 ITR 268 (SC); Sowdagar Ahmed Khan v. ITO [1968] 70 ITR 79 (SC); ITO v. Lakhmani Mewal Das [1976] 103 ITR 437 (SC); ITO v. Nawab Mir Barkat AH Khan Bahadur [1974] 97 ITR 239 (SC); CST v. Bhagwan Industries (P) Ltd. [1973] 31 STC 293 (SC) and State of Punjab v. Balbir Singh [1994] 3 SCC 299. The formation of the required opinion and belief by the Assessing Officer is a condition precedent. Wit....
X X X X Extracts X X X X
X X X X Extracts X X X X
....the authorities below. 5. We have considered the rival submissions. We find that this is undisputed fact that notice u/s 148 of the Act was issued by the Assessing Officer on 30/03/2006 and the same was duly served on the assessee on 30/03/2006 and the assessee has filed its return of income on 31/03/2006. These facts are noted by the Assessing Officer himself in Para No. 1 of the Assessing Officer. Now in the light of these facts, we examine as to whether it can be said that an income has escaped assessment on the date of issue of notice u/s 148 of the Act i.e. on 30/03/2006. The basis of the decision of the authorities below is that since the assessee has not filed any return of income by the due date u/s 139 (1), income has escaped assessment. We do not find any force in this stand taken by the authorities below. In our considered opinion, if the assessee does not file any return of income on or before the due date as prescribed u/s 139(1) of the Act, then the Assessing Officer may issue notice to the assessee for filing return of income u/s 142(1) of the Act. For the sake of ready reference, we reproduce the provisions of section 142(1)(i) as under: "142(1) (i) where such pe....