TaxTMI 
TaxTMI 
2017 (8) TMI 942
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....ised by the assessee were also rejected on 12.12.2011 and proceedings were initiated for assessing the above undisclosed income. The assessee objected that above disclosure was given under pressure and therefore, does not bind him. Ld Assessing Officer rejected the contention of the assessee and passed order u/s 143(3) read with section 147 of the Act on 29.12.2011 at Rs. 15575312/-. The assessee objected the above assessment before the ld CIT(A) who confirmed the order of the ld Assessing Officer and dismissed the appeal of the assessee, hence, this appeal. 4. Before us the assessee submitted a letter dated 25.09.2014 raising additional ground of appeal wherein, the main ground raised in as under 'that since proceedings u/s 142(1)/ 143(2) of the Act were already pending, the proceedings initiated u/s 147 of the Act during the pendency of proceedings u/s 142(1)/ 143 of the Act is without jurisdiction and therefore, deserves to be quashed. 5. The assessee submitted that the additional ground is legal in nature and goes to the root of the matter and therefore, required to be admitted. He submitted that no new facts are required to be investigated. He relied upon the decision of NTP....
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....;ble Delhi High Court in 292 ITR 49 holding that initiation of proceeding u/s 147 under such situation is irregular and illegal as under :- "11. In our opinion section 147/148 cannot be interpreted in isolation of the other provisions of Chapter-XIV of the Income-tax Act which is the fasciculus dealing with the procedure for assessment. Section 139 makes it mandatory for every person whose total income exceeds the maximum amount which is not chargeable to Income-tax, to furnish a return of income by the due date. Section 142 deals with the inquiry before assessment. The first sub-section thereof empowers the Assessing Officer to issue a notice to any person to file a return or to produce its accounts or any documents or to provide any information as the Assessing Officer may require. Sub-section (2) empowers the Assessing Officer to make any inquiry he considers necessary. Sub-section (3) incorporates the audi alteram partem rule of natural justice viz., providing to the affected party an opportunity of being heard. Section 143 deals with the dispatch of intimations specifying the sum payable as tax or interest that has been found by the Assessing Officer to be due on the basis o....
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....ss since the Assessing Officer is avowedly not reassessing or recomputing the income presented by the assessee for taxation in the form of its return. It is trite that the words assess, reassess or recompute are not synonymous with each other. It seems to us that an assessment must entail a conscious and concerted calculation carried out by the concerned officer with a view to determine the amount of tax payable by any person. The exercise commencing with section 139 and ending at section 145A cannot be interpreted as identical to or overlapping section 147/148/149. They are predicated on different circumstances and operate in disparate dimensions. The Income-tax Act makes it incumbent upon every person whose total income exceeds the maximum amount which is not chargeable to income- tax to file a return of income in order to kick-start the normal assessment procedure. However, it may happen that a person fails to file a return of income, say for the assessment year 2000-01, even though he is liable to pay tax. It could also happen that a person may file a return of income incorrectly offering for purposes of taxation a sum lower than the correctly calculated income. Both these situ....
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....nt) [1992] 198 ITR 47, wherein it has been observed that (page 52) : " the power that can be exercised under section 143(2) to correct the assessment made under section 143(1) does not exclude the power of the Assessing Officer to reopen the assessment under section 147 if the ingredients of section 147 are satisfied. It is open to the Assessing Officer to invoke the jurisdiction under section 147, notwithstanding the fact that there are other remedies open to him under the Act. It cannot, therefore, be accepted that the reassessment under section 147 is vitiated because the Assessing Officer failed to invoke his power to correct the assessment already completed under section 143(1) by issuing a notice under section 143(2) of the Act". However, in the present case since inquiries had been initiated under section 143(2), it became mandatory that they should have culminated in an order under section 143(3). 14. In Trustees of H. E. H. the Nizam' s Supplemental Family Trust v. CIT [2000] 242 ITR 381 the apex court has observed that it is (page 387) " settled law that unless the return of income already filed is disposed of, notice for reassessment under section 148 of the Incom....
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....an order, it is imperative that such an order be com municated to the assessee. Had the Income-tax Officer passed any final order, it would have been communicated to the assessee within a reasonable period. In any case, what we find is that the note dated November 10, 1965, is merely an internal endorsement on the file without there being an indication if the refund application has been finally rejected. By merely recording that in his opinion, no credit for tax deducted at source is to be allowed, the Income-tax Officer cannot be said to have closed the proceedings finally. The decisions referred to by the Revenue are of no help in the present case. We are, thus, of the opinion that during the pendency of the return filed under section 139 of the Act along with the refund application under section 237 of the Act, action could not have been taken under section 147/148 of the Act. Our answer to the question, therefore, is in the negative, i.e., against the Revenue." 15. We would arrive at this very destination even if we were to traverse along a different dialectic, namely, if we were to analyse the circumstances in which section 147 of the Income-tax Act could be invoked. There i....
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....r tax due from the assessee, it is necessary to know all the facts which help the assessing authority in coming to the correct conclusion. From the primary facts in his possession, whether on disclosure by the assessee, or dis covered by him on the basis of the facts disclosed, or otherwise, the assessing authority has to draw inferences as to certain other facts. But on the primary facts, it is for the taxing authority to draw infer ences. It is not necessary for the assessee to draw inferences for him. See, in this connection, the observations in Calcutta Discount [1961] 41 ITR 191 (SC)". 16. The Full Bench of this court in CIT v. Kelvinator of India Ltd. [2002] 256 ITR 1 had opined that the amendments introduced into section 147 with effect from April 1, 1989, have not altered the position that a mere change of opinion of the Assessing Officer was not sufficient ground for embarking on a reassessment. Calcutta Discount Co. Ltd. [1961] 41 ITR 191 (SC) was duly considered and applied by the Full Bench. The Full Bench further observed that an order of assessment must be presumed to have been passed by the Assessing Officer concerned after due and proper application of mind. In t....
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....ngineering Works P. Ltd. [1992] 198 ITR 297 (SC). It was held that " in the reassessment proceedings, it is not open to an assessee to seek a review of the concluded item, unconnected with the escapement of income, for the purpose of computation of the income escaping assessment ; and, therefore, the Tribunal was right in holding that the respondent was not entitled to reagitate the question of the set-off of losses in the reassessment proceedings". In other words, reassessment must invariably be preceded by conclusion of the original proceedings. The decision of the Supreme Court in Esthuri Aswathiah v. ITO [1961] 41 ITR 539; [1961] 2 SCR 911 was applied by the Division Bench of the Madras High Court in M. Ct. Muthuraman v. CIT [1963] 50 ITR 656, in reaching the conclusion that for the assessment years 1953-54 and 1954-55 the proceedings were lawfully terminated by the remark " N.A." on the assessment file and notices under section 34 of the Indian Income-tax Act, 1922 were not invalid. With regard to the assessment years 1950-51 and 1951-52 the assessment proceedings had not been closed in any manner and as they were pending, the notices under section 34 were invalid. Finally,....