TaxTMI 
TaxTMI 
2025 (10) TMI 233
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....tomers outside India. The petitioner is thus, in a contract with foreign client. The petitioner undertakes software designing and executes offshore part of the contract. Certain parts of the contract, according to the averment in the petition, require execution physically at the customers site i.e., onshore/onsite part of the work is sub-contracted to its Associated Enterprises (for short 'Enterprises'). For the said purpose, the petitioner enters into agreements with its Enterprises for provision of onsite software development. Since payments are made to the Enterprises they were not chargeable to tax in India. On an application made by the petitioner, the Additional Commissioner of International Taxation is said to have passed an order under Section 195(2) of the Act approving remittances of payments to the Enterprises without deducting tax at source. 2.2. Things standing thus, during the financial year 2011-12 relevant to the assessment year 2012-13, the petitioner made payments to its Enterprises for provision of services in the nature of on-site development of software to the extent of Rs. 3,30,23,97,000/- and an amount of Rs. 24,04,78,000/- for services in respect of marke....
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.... of selling commission. The proceedings are yet to be concluded. 2.4. When things stood thus, for the assessment year 2012-13 the Assessing Officer holding jurisdiction over the Company issues a notice on 23-03-2018 under Section 148 of the Act holding that there were reasons to believe that the income of the petitioner chargeable to tax for the assessment year 2012-13 had escaped assessment and proposing to re-assess the income of the petitioner. The petitioner was called upon to file its return of income for the said assessment year. The petitioner responded to the notice on 10-04-2018 contending that no income had escaped assessment and under protest submitted return of income filed on 30-11-2012. The petitioner then requested for reasons recorded for reopening the assessment under Section 147 of the Act, as also sanction granted in terms of Section 151 of the Act. The petitioner does not receive any response from the Assessing Officer. A year thereafter, the petitioner receives another notice dated 29-03-2019 again under Section 148 of the Act proposing to reassess the petitioner for the assessment year 2012-13 under Section 147 of the Act. Once again, the petitioner was cal....
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.... Raviraj appearing for the revenue would seek to dispute the position by contending that the petitioner on earlier orders passed is before the Commissioner (Appeals). There is no bar for the Assessing Officer to reopen the assessment if income has escaped assessment at the time when Section 143(3) proceedings were taken up. The Assessing officer has clearly held what are the reasons to believe as obtaining under Section 147 of the Act. He would further contend that the assessing officer issued first notice, but later found material and therefore, issued the second notice. He would admit the fact that the first notice is not withdrawn, but is only abandoned. He would, but submit the petition be dismissed, leaving open to the petitioner to avail all the remedy available in law. 8. I have given my anxious consideration to the submissions made by the respective learned counsel and have perused the material on record. 9. The afore-narrated facts, link in the chain of events and dates are all a matter of record. In furtherance of the submissions made, what is necessary to be noticed is, whether reopening of assessment under Section 148 of the Act is beyond limitation, for which, th....
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....ed to be furnished under this Act to substantiate such entry has not been so furnished; or (iii) in respect of a deduction, where such deduction exceeds specified statutory limit which may have been expressed as monetary amount or percentage or ratio or fraction; (b) the acknowledgement of the return shall be deemed to be the intimation in a case where no sum is payable by, or refundable to, the assessee under clause (c), and where no adjustment has been made under clause (a). (1A) For the purposes of processing of returns under sub-section (1), the Board may make a scheme for centralised processing of returns with a view to expeditiously determining the tax payable by, or the refund due to, the assessee as required under the said sub-section. (1B) Save as otherwise expressly provided, for the purpose of giving effect to the scheme made under sub-section (1A), the Central Government may, by notification in the Official Gazette, direct that any of the provisions of this Act relating to processing of returns shall not apply or shall apply with such exceptions, modifications and adaptations as may be specified in that notification; so, however, that....
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....use (ii) of sub-section (2), or as soon afterwards as may be, after hearing such evidence as the assessee may produce and such other evidence as the Assessing Officer may require on specified points, and after taking into account all relevant material which he has gathered, the Assessing Officer shall, by an order in writing, make an assessment of the total income or loss of the assessee, and determine the sum payable by him or refund of any amount due to him on the basis of such assessment: Provided that in the case of a- (a) research association] referred to in clause (21) of section 10; (b) news agency referred to in clause (22B) of section 10; (c) association or institution referred to in clause (23A) of section 10; (d) institution referred to in clause (23B) of section 10; (e) fund or institution referred to in sub-clause (iv) or trust or institution referred to in sub-clause (v) or any university or other educational institution referred to in sub-clause (vi) or any hospital or other medical institution referred to in sub-clause (via) of clause (23C) of section 10, which is required to furnish the return of income....
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.... in such previous year, whether or not the approval granted to such trust or institution or notification issued in respect of such trust or institution has been withdrawn or rescinded. (4) Where a regular assessment under sub-section (3) of this section or section 144 is made,- (a) any tax or interest paid by the assessee under sub-section (1) shall be deemed to have been paid towards such regular assessment ; (b) if no refund is due on regular assessment or the amount refunded under sub-section (1) exceeds the amount refundable on regular assessment, the whole or the excess amount so refunded shall be deemed to be tax payable by the assessee and the provisions of this Act shall apply accordingly. (5) Omitted by the Finance Act, 1999, w.e.f. 1-6-1999. .... .... .... 147. Income escaping assessment:- If the Assessing Officer has reason to believe that any income chargeable to tax has escaped assessment for any assessment year, he may, subject to the provisions of sections 148 to 153, assess or reassess such income and also any other income chargeable to tax which has escaped assessment and which comes to his notice subsequently i....
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....tion, allowance or relief in the return ; (ba) where the assessee has failed to furnish a report in respect of any international transaction which he was so required under section 92E; (c) where an assessment has been made, but- (i) income chargeable to tax has been underassessed ; or (ii) such income has been assessed at too low a rate ; or (iii) such income has been made the subject of excessive relief under this Act ; or (iv) excessive loss or depreciation allowance or any other allowance under this Act has been computed;] (d) where a person is found to have any asset (including financial interest in any entity) located outside India. Explanation 3.-For the purpose of assessment or reassessment under this section, the Assessing Officer may assess or reassess the income in respect of any issue, which has escaped assessment, and such issue comes to his notice subsequently in the course of the proceedings under this section, notwithstanding that the reasons for such issue have not been included in the reasons recorded under sub-section (2) of section 148. Explanation 4.-For the removal of doubts, it is....
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....lanation.-For the removal of doubts, it is hereby declared that nothing contained in the first proviso or the second proviso shall apply to any return which has been furnished on or after the 1st day of October, 2005 in response to a notice served under this section. (2) The Assessing Officer shall, before issuing any notice under this section, record his reasons for doing so. (Emphasis supplied) Proviso to Section 147 mandates that, where a scrutiny assessment has been completed under Section 143(3), such assessment can be reopened only after the period of four years from the end of the relevant assessment year, if there is failure on the part of the assessee to make full and true disclosure on all primary facts, failing which reopening of assessment is impermissible in law. 10. Therefore, it becomes necessary to notice the show cause notice issued by the Assessing Officer on 23-03-2018. It reads as follows: "PAN:AAACB6820C Dated: 23/03/2018 To, The Principal Officer/Managing Director, M/s Mphasis Ltd., Bagmane World Technology Centre, WTC-3 Block B, 1st Floor K R Puram Marathahalli Outer Ring Road Doddanekkun....
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....o render market services in overseas countries and due to marketing efforts of the AEs, if a contract is won by ML, a certain percentage of contract value is paid as selling commission to the AEs for the services rendered. The details of total payments made to the AEs for AY 2012-13 is as under. Software Development Marketing Services Total 330,23,97,435/- 6,74,38,638 336,98,35,977/- 3. Assessee was required to deduct tax at source on the payments made to the AEs. But no tax had been deducted by the assessee thereon either at the time of crediting or subsequently. As per the Act the liability to deduct tax on payment to the AEs rest on assessee. Hence, non-compliance to TDS provisions results in a direct gain to the ML, as it is able to enhance its profits by not deducting tax at source, assessee has thus failed to discharge its duty which results in loss to the exchequer. It is a fact that no application was tendered by it u/s 195(2) especially in where huge remittances to non-residents were involved with massive tax effect and also, when such payments are not explicitly declared exempt by the provisions of the IT Act. Since these payments made by assess....
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....rises. • The Assessing Officer while passing the assessment order incorporated the adjustment made by the Transfer Pricing Officer. It is not in dispute that deduction was claimed by the petitioner under Section 10AA of the Act. While so claiming the payments made to the Enterprises were also examined by the Assessing Officer. After having so done for the year 2013, it was not open to the Assessing Officer to have reopened the assessment beyond four years, as obtaining under Section 147 of the Act. 13. The Apex Court in the case of CALCUTTA DISCOUNT COMPANY LIMITED v. INCOME TAX OFFICER (1961) 41 ITR 191 (SC) has held as follows: "..... .... .... 5. The only point raised before us is that the courts below were wrong in holding that the first ground that the notices were issued without the existence of the necessary conditions precedent which confers jurisdiction under Section 34 had not been made out. As it is no longer disputed that Section 34 as amended in 1948 applies to the present case we have to consider the section as it stood after the amendment in 1948, in deciding this question of jurisdiction. The relevant portion of the section was i....
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.... this sub-section shall have effect as if for the periods of eight years and four years a period of one year was substituted. Explanation.- Production before the Income Tax Officer of account-books or other evidence from which material facts could with due diligence have been discovered by the Income Tax Officer will not necessarily amount to disclosure within the meaning of this section." 6. To confer jurisdiction under this section to issue notice in respect of assessments beyond the period of four years, but within a period of eight years, from the end of the relevant year two conditions have therefore to be satisfied. The first is that the Income Tax Officer must have reason to believe that income, profits or gains chargeable to income tax have been under-assessed. The second is that he must have also reason to believe that such "underassessment" has occurred by reason of either (i) omission or failure on the part of an assessee to make a return of his income under Section 22, or (ii) omission or failure on the part of an assessee to disclose fully and truly all material facts necessary for his assessment for that year. Both these conditions are conditions pre....
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....ority has to draw the proper legal inferences, and ascertain on a correct interpretation of the taxing enactment, the proper tax leviable. Thus, when a question arises whether certain income received by an assessee is capital receipt, or revenue receipt, the assessing authority has to find out what primary facts have been proved, what other facts can be inferred from them, and taking all these together, to decide what the legal inference should be. 9. There can be no doubt that the duty of disclosing all the primary facts relevant to the decision of the question before the assessing authority lies on the assessee. To meet a possible contention that when some account books or other evidence has been produced, there is no duty on the assessee to disclose further facts, which on due diligence, the Income Tax Officer might have discovered, the legislature has put in the Explanation, which has been set out above. In view of the Explanation, it will not be open to the assessee to say, for example - "I have produced the account books and the documents : You, the assessing officer examine them, and find out the facts necessary for your purpose : My duty is done with disclosing the....
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....on the ground that with due diligence the Income Tax Officer could have discovered them from the facts actually disclosed. The Explanation has not the effect of enlarging the section, by casting a duty on the assessee to disclose "inferences" to draw the proper inferences being the duty imposed on the Income Tax Officer. 13. We have therefore come to the conclusion that while the duty of the assessee is to disclose fully and truly all primary relevant facts, it does not extend beyond this. 14. The position therefore is that if there were in fact some reasonable grounds for thinking that there had been any non-disclosure as regards any primary fact, which could have a material bearing on the question of "underassessment" that would be sufficient to give jurisdiction to the Income Tax Officer to issue the notices under Section 34. Whether these grounds were adequate or not for arriving at the conclusion that there was a non-disclosure of material facts would not be open for the court's investigation. In other words, all that is necessary to give this special jurisdiction is that the Income Tax Officer had when he assumed jurisdiction some prima facie grounds for thi....
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.... his assessment, for that assessment year: xxx" Accordingly, the jurisdiction to re-open the assessment is only if there is statement of income filed by the petitioner failing to fully and truly disclose all material facts necessary for assessment. 27. The law laid down by the Constitution Bench of the Apex Court in Calcutta Discount Company Ltd. v. Income Tax Officer,[(1961) 41 ITR 191 (SC)] on the above aspect regarding disclosure requires to be noticed. The validity of notice under Section 34 of Indian Income Tax I.T. Act, 1922 (corresponding to Section 147 of the Income Tax Act, 1961), whereby re-assessment proceedings was sought to be initiated was called in question by the assessee on the ground that the said notice was issued without the existence of necessary condition precedent which confers jurisdiction under Section 34 of Indian Income Tax I.T. Act, 1922. The relevant observations are as follows:- "8. Before we proceed to consider the materials on record to see whether the appellant has succeeded in showing that the Income Tax Officer could have no reason, on the materials before him, to believe that there had been any omission to disc....
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.... which are relevant, amount to "omission to disclose fully and truly all material facts necessary for his assessment". Nor will he be able to contend successfully that by disclosing certain evidence, he should be deemed to have disclosed other evidence, which might have been discovered by the assessing authority if he had pursued investigation on the basis of what has been disclosed. The Explanation to the section, gives a quietus to all such contentions; and the position remains that so far as primary facts are concerned, it is the assessee's duty to disclose all of them-including particular entries in account books, particular portions of documents and documents, and other evidence, which could have been discovered by the assessing authority, from the documents and other evidence disclosed. 10. Does the duty however extend beyond the full and truthful disclosure of all primary facts? In our opinion, the answer to this question must be in the negative. Once all the primary facts are before the assessing authority, he requires no further assistance by way of disclosure. It is for him to decide what inferences of facts can be reasonably drawn and what legal inferences have ....
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....gible for deduction under Section 10A of the I.T. Act which has been claimed by the petitioner, at the same time profits derived from business of rendering technical services outside India are eligible for deduction under section 80HHE of the I.T. Act. 30. Further, in terms of Explanation-2 to Section 10A(iv), the term export turnover excludes "... expenses, if any incurred in foreign exchange in providing the technical services outside India". Section 80HHE provides for deductions in respect of profits from export of computer software where the business entity provides technical services outside India in connection with developments or production of computer software. Hence, the aspect of deduction under Section 10A or under Section 80HHE of the I.T. Act as the case may be, has been a subject matter of litigation between the petitioner and the Revenue. Whether the petitioner is eligible for deduction under Section 10A under the head of 'Profits' derived from export of computer software or under the head of 'rendering technical services outside India' and having a nexus with export outside India of computer software is an unresolved issue between the petitioner and the Rev....
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....ur Road Yeshwanthpur, Bangalore-560 022. Digital Globalsoft Limited 93A, Industrial Suburb, Yeshwanthpur II Stage Bangalore-560 022. Digital GlobalSoft Limited 3rd floor, Khanija Bavan, 49, Race Course Road, Bangalore-560 001. Digital GlobalSoft Limited Plot No. 39/40, Electronics City Hosur Road, Bangalore-560100 Digital Globalsoft Limited Plot No. 39/40, Electronics City Hosur Road, Bangalore-560 100 Digital Globalsoft Limited "Surya Park", Electronics City Hosur Road Bangalore-560100 Nature of Business of the undertaking Development of Computer software and software services Development of Computer software and software services Development of Computer software and software services Development of Computer software and software services IT Enabled Services (Technical Support) Date of Initial Registration in FTZ/EPZ/SEZ October 21, 1992 April 22, 1996 December 18, 1997 March 10, 2000 March 22, 2002 Date of commencement of Manufacture or production September 13, 1993 September 1, 1996 September 1, 1998 March 10, 2000 June 30, 2002 Number of consecutive years of which deduction is claimed Note 1 Nine Seven ....
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....ich are group companies. Therefore all these services rendered by the company are of the nature of technical services and therefore expenditure incurred in providing these services amounting to Rs. 263,01,80,361/- are required to be reduced from the export turn over as per the definition of export turn over contained in the provisions of Section 10A of the I.T. Act." 33. Accordingly, it is clear that there has been declaration including of expenditure relating to providing technical services. Once such primary facts have been declared and the assessee had made the declaration and claimed deduction under Section 10A of the I.T. Act, there was no further obligation on the assessee. If the Assessing Officer was of the view that details furnished would fall within Section 80HHE and not under Section 10A of the I.T. Act and accordingly, assessee was not entitled to claim such expenditure under Section 10A of the I.T. Act, the non-drawing of such legal inference by the assessing officer at the relevant point of time cannot result in holding that there is no true and full disclosure of primary facts." (Emphasis supplied) In the light of the judgment of the Constitutio....
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....ere is "tangible material" to come to the conclusion that there is escapement of income from assessment. Reasons must have a live link with the formation of the belief. Our view gets support from the changes made to Section 147 of the Act, as quoted hereinabove. Under the Direct Tax Laws (Amendment) Act, 1987, Parliament not only deleted the words "reason to believe" but also inserted the word "opinion" in Section 147 of the Act. However, on receipt of representations from the companies against omission of the words "reason to believe", Parliament reintroduced the said expression and deleted the word "opinion" on the ground that it would vest arbitrary powers in the assessing officer. 8. We quote hereinbelow the relevant portion of Circular No. 549 dated 31-10-1989, which reads as follows: "7.2. Amendment made by the Amending Act, 1989, to reintroduce the expression 'reason to believe' in Section 147.-A number of representations were received against the omission of the words 'reason to believe' from Section 147 and their substitution by the 'opinion' of the Assessing Officer. It was pointed out that the meaning of the expression, 'reason to believe' had been expl....
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....cal services in context of export of computer software having been examined and a decision based on legal appreciation having been arrived at, cannot be reconsidered subsequently in reassessment proceedings, as it is impermissible to reopen assessment on the basis of "mere change of opinion". 37. The Apex Court in Commissioner of Income Tax, Delhi v. Kelvinator of India Ltd, [(2010) 2 SCC 703] [Kelvinator] has reiterated the settled position that mere change of opinion cannot be a ground for re-opening concluded assessments. The observations made at paras-5, 6, 7 and 8 are extracted as herein below: "5. On going through the changes, quoted above, made to Section 147 of the Act, we find that, prior to the Direct Tax Laws (Amendment) Act, 1987, reopening could be done under the above two conditions and fulfillment of the said conditions alone conferred jurisdiction on the assessing officer to make a back assessment, but in Section 147 of the Act (with effect from 1-4 1989), they are given a go-by and only one condition has remained viz. that where the assessing officer has reason to believe that income has escaped assessment, confers jurisdiction to reopen the asses....
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....allay these fears, the Amending Act, 1989, has again amended Section 147 to reintroduce the expression 'has reason to believe' in the place of the words 'for reasons to be recorded by him in writing, is of the opinion'. Other provisions of the new Section 147, however, remain the same." (Emphasis supplied) 43. It is clear that the Assessing Officer excluding the expenditure incurred by the assessee in connection with the provision of technical services outside India and specifically expenditure involved relating to Company's employees visit to client's location to provide software development services to the clients have been excluded [see para 10]. If that were to be so, revisiting the decision arrived at once again to further reduce the eligible deduction under Section 10A of the I.T. Act would amount to a review on the ground of change of opinion which is impermissible. 44. Though in Kelvinator (supra), the observation is that where there is tangible material to come to the conclusion that there is escapement of income from assessment, in the present case, the tangible material as asserted by the Revenue is itself not complete. 45. A perusal o....
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....he said three questions are as under: "1. Whether the Division Bench judgment in the case of CIT v. Rinku Chakraborthy (2011) 242 CTR (Karn) 425 lays down good law ? 2. Whether the judgment in the Rinku Chakraborthy (supra) is per incurium in view of the fact that it relies upon the judgment of the apex court in the case of Kalyanji Mavji and Co. v. CIT [1976] 102 ITR 287 (SC); [1976] CTR 85 (SC), which has been specifically overruled by the apex court in the case of Indian and Eastern Newspaper Society v. CIT [1979] 119 ITR 996 (SC)? 3. Whether 'reason to believe' in the context of section 147 of the Income-tax Act, 1961 can be based on mere 'change of opinion' of the Assessing Officer?" The Full Bench answers the issues in the following manner: "16. At this stage, we may make a useful reference to a subsequent decision of the apex court in the case of CIT v. Kelvinator of India Ltd. (supra). It is a decision of the Bench of three hon'ble judges. In paragraphs 3.1 and 3.2 of the said decision, the apex court has quoted section 147 which existed prior to April 1, 1989 and after April 1, 1989. Paragraphs 3.1 and 3.2 of the said decision read th....
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....he assessment. Therefore, post-April 1, 1989, power to reopen is much wider. However, one needs to give a schematic interpretation to the words 'reason to believe' failing which, we are afraid, section 147 would give arbitrary powers to the Assessing Officer to reopen assessments on the basis of 'mere change of opinion', which cannot be per se reason to reopen. We must also keep in mind the conceptual difference between power toreview and power to reassess. The Assessing Officer has no power to review; he has the power to reassess. But reassessment has to be based on fulfilment of certain precondition and if the concept of 'change of opinion' is removed, as contended on behalf of the Department, then, in the garb of reopening the assessment, review would take place. One must treat the concept of 'change of opinion' as an in-built test to check abuse of power by the Assessing Officer. Hence, after April 1, 1989, Assessing Officer has power to reopen, provided there is 'tangible material' to come to the conclusion that there is escapement of income from assessment. Reasons must have a live link with the formation of the belief. Our view gets support from the changes made to section 1....
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....ight, inadvertence or mistake of the Assessing Officer or error discovered by him on the reconsideration of the same material does not give him power to reopen a concluded assessment. It was expressly held that the decision in the case of Kalyanji Mavji and Company (supra), on this aspect does not lay down the correct law. The decision in the case of Rinku Chakraborthy (supra) is based solely on the decision of the apex court in the case of Kalyanji Mavji and Company (supra) and in particular what is held in clause (2) of paragraph 13. The said part is held as not a good law by a subsequent decision of the apex court in the case of Indian and Eastern Newspaper Society (supra). 19. Therefore, in the light of law laid down in the case of Indian and Eastern Newspaper Society (supra), the first question will have to be answered in the negative by holding that the decision in the case of Rinku Chakraborthy does not lay down correct position of law to the extent to which it follows what is held in clause (2) of paragraph 13 of the decision of the apex court in the case of Kalyanji Mavji and Company (supra). The second question will have to be answered in the affirmative. In view....
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....s, there was no scope for giving further notices under section 148 of the Act when no assessment had been made on the basis of the subsequent returns filed by the petitioner, in compliance with the earlier notices dated February 11, 1983. In support of such contention, Dr. Pal relies upon a Supreme Court decision in the case of CIT v. S. Raman Chettiar [1965] 55 ITR 630. This application is opposed by the income-tax authority and Mr. Mitra, learned counsel appearing on behalf of the Revenue, has opposed the aforesaid two contentions raised by Dr. Pal. Mr. Mitra contends that the first two notices dated February 11, 1983, were patently illegal, inasmuch as, by those notices the Income-tax Officer tried to reopen assessments made more than four years earlier without taking the required satisfaction of the Commissioner of Income-tax/Central Board of Revenue. Mr. Mitra contends, in view of such mistake, the Income-tax Officer concerned after taking satisfaction from the aforesaid authority issued the subsequent two notices dated March 29, 1983. According to Mr. Mitra, if any return is submitted by the petitioner in obedience to the earlier notice dated February 11, 19....
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....eated as a return within the meaning of section 22(3) of the 1922 Act. Applying the aforesaid principles to the facts of the case, it is clear that when the petitioner filed returns in compliance with the invalid notice dated February 11, 1983, under section 148 of the 1961 Act, those returns should be treated as "returns" and as such before making assessment on the basis of those returns, no further notice under section 148 of the Act could be passed. I now propose to deal with the two decisions cited by Mr. Mitra. In the case of Sukhlal Ice and Cold Storage Co. [1993] 199 ITR 129 (All), for re-assessment, the Income-tax Officer issued a notice under section 148 of the Income-tax Act, 1961, for the assessment year 1982-83 but the Tribunal held that the notice was illegal because the reason for the issue of the notice was not on record. Subsequently, the Income-tax Officer issued another notice under section 147 of the Act for the same assessment year by setting out the necessary reason and after removal of defects pointed out earlier. In such a case, it was held that since the Tribunal had recorded a finding to the effect that the very initiation of the proceedin....
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....partment previously issued a notice dated March 31, 2015. We have reproduced the reasons recorded by the Assessing Officer for issuing such notice. This notice was challenged by the petitioner before this court. After some discussion at the bar, counsel for the Revenue, under instructions, stated that the notice of reopening of the assessment would be withdrawn by the Assessing Officer with a view to issuing a fresh notice after recording fresh reasons. Thereupon, fresh notice came to be issued on March 29, 2017. We have also reproduced reasons recorded by the Assessing Officer for issuance of such notice. In the previous notice, the reasons recorded merely stated that the information was received by the office in response to fictitious losses created by some broker by misusing client code modifications facility. The petitioner M/s. Marwadi Shares and Finance Ltd. was reported to be one of the beneficiaries of misuse of such facility. Such fictitious losses had been adjusted by the assessee against the profits of other years. Thus, it could be argued that the Assessing Officer had merely proceeded on the information received by him. His approach was therefore possible of being faul....
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....sment for the same assessment year, however, on the basis of independent reasons possibly upon availability of fresh material. This second notice of reopening was challenged on various grounds including on the ground that in face of the pendency of the first notice of reopening, there could not be successive second reopening of the assessment. The court held and observed as under: "7. There cannot be two parallel assessments based on two notices. As long as first assessment is not completed, question of reassessment would not arise. Once a notice is issued under section 148 of the Act, it triggers initiation of proceedings for assessment or reassessment of income which may have escaped assessment earlier. During such assessment, any income which may come to the notice of Assessing Officer may also be brought to tax. Till this assessment is not completed, it would not be possible for him to form a belief that income chargeable to tax had escaped assessment. Until the assessment, be it original or reopened, is pending before the Assessing Officer, the question of issuing notice for reopening would not arise. As noted, in the case of CIT v. Ranchhoddas Karsondas [195....
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....it cannot be stated that income chargeable to tax had escaped assessment. 9. To this conclusion, we may however add a caveat. In a given case, if it is found that the notice itself is invalid being non est or ab initio void, it would be no valid notice in eye of law, pursuant to which any valid assessment proceedings would initiate. For example, if the notice is issued by an authority who was simply not competent or was issued without the sanction of the Commissioner when so required, the notice would be void, non est and having no effect in eye of law. Such a notice would not reopen an assessment, would not commence assessment proceedings and whenever so declared, such a declaration would relate back to the original issuance thereof. In such a situation, if the Revenue has issued a second notice for reopening, the same would not be rendered invalid. In this context we may recall, the Supreme Court in the case of CIT v. RanchhoddasKarsondas (1959) 36 ITR 569 (SC), in the context of notice of reopening issued pending a return of nil income filed by the assessee linked the validity of the notice to the validity of the return observing that if the return filed by the assessee....