TaxTMI 
TaxTMI 
2019 (7) TMI 2036
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.... 2. Grounds relating to issue of second notice under section 148 dated 31.03.2015 Tax Effect : 1,35,59,450 2.1. The learned AO has erred issuing second notice under section 148 dated 31.03.2015 when proceedings initiated by first notice under section 148 dated 18.04.2013 were still pending as on 31.03.2015. On facts and circumstances of the case and law applicable, the said notice is bad in law and liable to be quashed. Consequently, the re-assessment order dated 29.03.2016 is invalid, bad in law and liable to be quashed. 2.2. The learned CIT (A) has erred in concluding that the learned AO had issued a valid notice under section 148 dated 31.03.2015 even after acknowledging the fact that the learned AO had committed a mistake by not dropping the re-assessment proceedings initiated through notice under section 148 dated 18.04.2013. On facts and circumstances of the case and law applicable, the second notice under section 148 dated 31.03.2015 is bad in law and liable to be quashed. Consequently, the re-assessment order dated 29.03.2016 is invalid, bad in law and liable to be quashed. 2.3. The learned CIT (A) has erred in concluding that the ac....
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....ssessment year - Tax Effect : 1,35,59,450 6.1. The learned AO has erred in issuing second notice under section 148 dated 31.03.2015 after the expiry of four years from the end of the assessment year. On facts and circumstances of the case and law applicable, the said notice issued and the re-assessment order passed under section 143(3) dated 29.03.2016, after the expiry of four years from the end of the assessment year is contrary to the first proviso to section 147 and thus bad in law and liable to be quashed. 6.2. The learned AO has erred in not appreciating the fact that there is no failure on the part of the assessee to make a return or to disclose full and truly all material facts necessary for his assessment. On facts and circumstances of the case and law applicable, the said notice issued and the re-assessment order passed under section 143(3) dated 29.03.2016, after the expiry of four years from the end of the assessment year is contrary to the first proviso to section 147 and thus bad in law and liable to be quashed. 7. Grounds relating to reasons recorded for issue of notice under section 148 - Tax Effect : 1,35,59,450 7.1 The reassessm....
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.... consideration. 10. Ground relating to interest under section 234B 10.1. The learned AO has erred in levying interest under section 234B amounting to Rs. 1,28,98,609. On facts and circumstances of the case and law applicable, interest under section 234B is not leviable. The appellant denies its liability to pay interest under section 234B. 11. Prayer 11.1. In view of the above and other grounds to be adduced at the time of hearing, the appellant prays that the order passed by the learned CIT (A) be quashed or in the alternative a) Exemption be allowed under section 11 or under section 10(23C) (iiiad) or under section 10(23C) (vi), b) Interest levied under section 234B amounting to Rs. 1,28,98,609 is to be deleted. The appellant prays accordingly." 3. In course of hearing of the appeal, it was submitted by ld. AR of assessee that the original assessment order u/s. 143(3) was passed by the AO on 12.05.2010, copy of which is available on pages 100 and 101 of the paper book. Thereafter, he submitted that first notice u/s. 148 was issued by the AO on 18.04.2013 as per copy available on page 102 of the paper book....
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.... to the first notice issued by AO u/s. 148 on 18.04.2013 whereas in the case of Marwadi Shares & Finance Ltd. Vs. DCIT (supra), against the first notice issued by the AO u/s. 148 of IT Act, the assessee challenged such notice of reopening by filing Special Civil Application before Hon'ble Gujarat High Court which was disposed of by Hon'ble Gujarat High Court by an order dated 21.06.2016 and therefore, this judgment of Hon'ble Gujarat High Court is not applicable in the present case. He placed reliance on the judgment of Hon'ble Karnataka High Court rendered in the case of P. Dayananda Pai Vs. ACIT as reported in [2011] 15 taxmann.com 249 (Karnataka), copy available on pages 11 to 24 of the case law compilation filed by ld. DR of revenue. He submitted that when the judgment of Hon'ble Karnataka High Court is available, the same should be followed in preference to the judgment of any other High Court. He also placed reliance on the judgment of Hon'ble Apex Court rendered in the case of Comunidado of Chicalim Vs. ITO as reported in [2000] 113 Taxman 331 (SC), copy available on pages 1 and 2 of the case law compilation filed by ld. DR of revenue. He also placed reliance on one ....
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....rch was conducted in the premises of the appellant under Section 132 of the Act and thereafter, a declaration of income of Rs. 3 lakhs was made by the appellant. However, there was no return which was filed. Therefore, notice under Section 148 of the Act was issued on 14/12/1992, which was served on the assessee on 24/12/1992. Even prior to the service of notice in the interregnum, the assessee filed his return of income on 22/12/1992, declaring income of Rs. 3 lakhs. In the usual course, within a period of two years i.e., by 31/3/1995, the assessment had to be completed. However, assessment order in the instant case was passed on 27/3/1997 and another notice under Section 148 was issued on 24/11/1994 and a revised return was filed on 31/3/1995. The contention of the counsel for the appellant is that the second notice dated 24/11/94 is barred by limitation since the time limit for the conclusion of the assessment was 31/3/1995 and after that date, since by then, no assessment order had been passed, it must be deemed to have been concluded and hence, the assessment order dated 27/3/1997 is invalid. Before answering the points for consideration, it would be necessary to ref....
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....evision, which is chargeable to tax and has escaped assessment. 16. Having regard to the facts of the present, case, it becomes clear that in respect of the assessment year 1991-92, the appellant assessee had to file his return on or before 30.10.1991. The same was not done. Subsequently, a search was conducted in the premises of the appellant under Section 132 of the Act on 24.2.1992. A declaration of income of Rs. 3.00 lakh was made by the appellant but no return was filed till then. Since there was no return filed by the appellant notice under Section 148 of the Act was issued on 14.2.1992 as per Annexure-C which was served on the assessee on 24.12.1992. Therefore, when the notice under Section 148 of the Act was issued, the assessee had not filed his return of income only on 22.12.1992, the assessee filed his return declaring income of Rs. 3.00 lakh. If the appellant-assessee had filed his return in the usual course that is on or before 30.10.1991, then the assessment would have to be completed by 31.3.1994. But in the present case a return was filed only on 22.12.1992 after issuance of notice under Section 148 of the Act. The said return was therefore, filed....
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....an be issued by the Assessing Officer after perusal of the return filed by the assessee after a return is filed but no assessment has been made and the assessee is found to have under stated his income or claimed excessive loss or deduction in the return. This notice dated 24/11/1994 was in fact not objected to by the appellant, but was also responded to by filing a revised return on 20/10/1995. Therefore, the notice dated 24/12/1994 was validly issued after considering the return filed by the appellant on 22/12/1992. Point No. 1 is accordingly answered against the appellant." 8. From above para reproduced from this judgment of Hon'ble Karnataka High Court, we find that in that case, first notice u/s. 148 was issued by the AO on this basis that even after expiry of the time fixed for filing the return of income u/s. 139(1) of IT Act which was 30.10.1991 in that case, no return of income was filed by the assessee and in between, search took place in that case of assessee on 24.02.1992. It is also noted in that case that the assessee in that case declared income of Rs. 3 Lakhs in course of search but there was no return of income filed by the assessee and therefore, ....
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....ere issued for the same reason in the present case whereas in the case of P. Dayananda Pai Vs. ACIT (Supra), the first notice u/s 148 was issued for this reason that no return of income was filed by the assessee in spite of expiry of time allowed u/s 139 (1) and pursuant to search, a declaration of income of Rs. 3 Lacs was made but no return was filed. This is also a fact of that case that even before service of the first notice on 24.12.1992, the assessee filed return of income on 22.12.1992 declaring an income of Rs. 3 lacs and second notice in that case was issued by the AO for this reason that there is escarpment of income as per the AO as per the return filed on 22.12.1992. As per Para 17 of this judgment as reproduced above, it is categorically stated by Hon'ble Karnataka High Court that this judgment is having regard to peculiar facts of that case. These peculiar facts are these that the first notice was issued in view of non filing of return of income by the assessee even after expiry of time allowed u/s 139 (1) of I T Act and declaration of income of Rs. 3 lacs in course of search. This is also a fact of that case that even before the service of the first no....
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....nd notice was barred by time. On both these aspects, the matter was restored back by Hon'ble Apex Court to the Hon'ble Bombay High Court and therefore, this judgment does not render any help to revenue in the present case. 10. Now we examine the applicability of the second judgement of Hon'ble Apex Court rendered in the case of Tapan Kumar Datta Vs. CIT (supra). This judgment is not in respect of any notice u/s. 148 but this judgment is in respect of notice issued by the AO u/s. 158BD r.w.s. 158BC of IT Act. As per the facts of that case, it is noted by Hon'ble Apex Court that assessee was a partner in partnership firm by name "Nityakali Rice Mill" and on 06.11.1998, a search was conducted at the business premises of the firm by the department and several documents/books including a sum of Rs. 34 Lakhs were seized. It is also noted by Hon'ble Apex Court that on 09.09.1999, a notice was issued to the assessee by the AO u/s. 158BC of the IT Act. On the same date, a notice was issued by the AO to the said partnership firm also u/s. 158BC of the IT Act. On 20.11.2000, Block assessment order was passed by the AO in the case of the firm and in the same, it was held that in the ca....
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.... after recording fresh reasons. Subsequently the AO issued fresh notice of re-opening on 29.03.2017 after recording fresh reasons which are also reproduced by Hon'ble Gujarat High Court in that judgment. Against this second notice issued by the AO u/s. 148, Special Civil Application was filed by the assessee before Hon'ble Gujarat High Court and in this, the assessee challenged the validity of the fresh notice issued by the AO u/s. 148. Paras 17 and 18 of this judgment are relevant in respect of decision of Hon'ble Gujarat High Court on this aspect of the matter i.e. validity of the second notice issued by the AO u/s. 148 and therefore, these two paras from this judgment are reproduced hereinbelow. "17. When therefore in the present case the first notice of reopening of assessment was not withdrawn, there was no scope, nor permissible in law to issue fresh notice of reopening. Counsel for the Revenue, however, vehemently contended that such withdrawal of notice of reopening must be deduced from facts and attendant circumstances. His contention was that the Revenue had, all along, intended to withdraw the notice and the fact, that such notice was abandoned, was sufficient t....