TaxTMI 
TaxTMI 
2003 (6) TMI 163
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....are as under:- Asst. year Date of Notice Date of assessment order 1976-77 26-3-1985 28-2-1986 1977-78 26-3-1985 28-2-1986 1978-79 26-3-1985 6-5-1986 1979-80 26-3-1985  ....
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....sp; 12-5-1988 3.8 Thereafter the assessee filed a writ petition before the Hon'ble High Court at Allahabad and the proceedings were stayed as per order of the Hon'ble Allahabad High Court dated 20th March, 1990. 3.9 The assessee's writ petition was ultimately decided on 18-7-1996 where it was mentioned that "since the grounds raised here in this petition by the petitioner are available to be raised before the appropriate authority while issuing cost as asked for by the impugned notices it is not necessary to enter into the genesis of the case to consider the merits for issuance of the impugned notices, the disputed questions of fact will require to be gone into which cannot be done in writ jurisdiction". 3.10 The assessments in consequence upon fresh notices under section 148 issued on 29-3-1988 and 12-5-1988 were completed on 12-9-1996. 3.11 The assessee went in appeal before the CIT(A) who dismissed the assessee's appeals for all the aforesaid assessment years as per order dated 25-2-1997 which is under appeal before me. 4.1 The counsel for the assessee first of all submitted that since revenue's appeals were pending before the ITAT, the Assessing Officer had....
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....ived but condition relating to sanction of higher authorities could not be waived. He therefore, submitted that the notices for assessment years 1976-77 to 1979-80 having been issued without prior sanction of the Central Board of Direct Taxes were bad in law and consequently the assessments framed on 12-9-1996 were also bad in law. 5.1 The learned DR on the other hand, in addition to supporting the orders of CIT(A), has submitted that the assessment proceedings came to an end the moment the assessment orders were passed and, therefore, no assessment proceedings were pending on 29-3-1988 and 12-5-1988. In support of this, the learned DR relied on the decisions reported in S. Sankappa v. ITO [1968] 68 ITR 760 (SC), Nawal Kishore Khairati Lal v. CIT [1936] 4 ITR 287 (Lahore) and CIT v. T.S.P.L.P. Chidambaram Chettiar [1971] 80 ITR 467 (SC). 5.2 The learned DR further submitted that the observations of the CIT(A), while annulling the original assessments, were directions and the assessee having not gone in appeal against those directions, the same had become final. He, therefore, submitted that Assessing Officer had assumed proper jurisdiction to issue fresh notices in accordance....
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....al of CIT, Agra. 6.2 I am further of the opinion that to decide the issue relating to validity of the aforesaid notices under section 148, it is not only desirable but is necessary to answer various questions which cropped up as a result of submissions during the hearing of the appeals. (i) The first question to be answered relates to the scope of 1st order of the CIT(A) dated 25-5-1987 whereby the reassessments framed on 28-2-1986 (for assessment years 1976-77 and 1977-78) and on 6-5-1986 (for assessment year 1978-79) on 14-3-1986 (for assessment years 1979-80; 1981-82) and on 31-3-1986 (for assessment years 1980-81 and 1982-83) were annulled and the question is: "Can the observations of the CIT(A) in later part of para 30 of his order, which is reproduced hereunder, were findings or directions as envisaged in the provisions of section 150(1) of the Act so as to clothe the Assessing Officer to issue notices under section 148 of the Act without complying with the requirements of section 149 including section 151(1) of the Act?" "To my mind, a curable defect can be rectified at any stage by proper service of notice under section 148 and adherence to the required provisio....
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....r section 251(1) of the Act which were same, as at present are of the CIT(A). The Hon'ble High Court after analyzing the provisions of section 251 (1) of the Act at page 503 observed as under: "It is clear from the above provisions that the powers of the appellate authority are different in appeals against different type of orders, In an appeal against the order of assessment, he has the power to "affirm, reduce, enhance or annul the assessment" or to set aside the assessment and refer the case back to the Assessing Officer for making a fresh assessment according to the directions given by him, In the case of an appeal against the order of penalty, the power is to 'affirm or cancel such order' or vary it so as either to enhance or reduce the penalty, In other cases, he has power to pass such order as he thinks fit. It is clear from the above that in an appeal against the order of assessment, besides the power to reduce or enhance the assessment, he has the power to confirm or annul the assessment, or to set aside the same and refer the case back to the Assessing Officer for making a fresh assessment. There is no power to set aside the order in the case of penalty, In the case of....
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.... the observations of the CIT(A) has no specific directional effect i.e., could not be taken as directions envisaged in the provisions of section 150(1) of the Act. 7.2 Even otherwise, if we read the observations of the CIT(A) as a whole keeping in view of the intention behind these observations, it is quite clear that Assessing Officer was specifically directed to fulfil the requirements of sections 149 and 151 of the Act before proceeding to serve the notice under section 148 of the Act. In other words, even if it is assumed for the sake of argument on that, the observations of the CIT(A) were directions then also the directions were to comply with the requirements of sections 149 and 151 of the Act and not to do away with the same which otherwise means that the observations of the CIT(A), as already stated, were nothing but apprising the Assessing Officer of the legal provisions and not to give any specific direction. 7.3 In view of above discussions, answer to question No. 1 is that the observations of the CIT(A) in later part of para 30 of the appellate order were neither observations nor directions as envisaged by the provisions of section 150(1) of the Act. 8. For fi....
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....aid conditions have to be satisfied and in case the assessment is framed in violation of any of the conditions then the same is liable to be annulled. 10(i) 80 far as the conditions stipulated at 81. Nos. (i) to (iv) in para 8.1 are concerned, I am of the opinion that the law is clear and specific, however, there is a doubt with respect to condition No. (v), because, under the provisions relating to assessment/reassessment to be framed under section 147 of the Act, the Act provides for issuance of notice and not for service of notice under section 148 of the Act, but, can, in absence of such specific provisions in the Act, it be said that notice under section 148 of the Act once issued then irrespective of the limitation prescribed under section 149 of the Act and section 153(2) for issuance of the notice and completion of assessment/reassessment under section 147 respectively can be served at any time irrespective of the limitation prescribed under section 153(2) of the Act and requirement relating to sanction of higher authority prescribed under section 151 of the Act. My answer to this is "NO" and it is so because, notice under section 148 at the relevant time in consequence ....
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....the assessment year, provided it has been issued with the prior approval of the CBDT. (iv) But this will also create a difficulty because, the notice issued at the last day of the limitation period, if not served on that very day, will be rendered invalid. The second difficulty will be with respect to the notice issued at the last day of 3rd limitation i.e., on the last day when 16 years expires. In other words, if the notice issued on last day of first two limitation periods is not served on that very day the proceedings can be dropped and fresh notices after complying with the requirements for issuing notice within the next limitation period can be issued but in case of 3rd limitation, if the notice issued on last day, though with the approval of the CBDT, but if not served there is no recourse for making assessment or reassessment in consequence of such a notice for want of service and that cannot be the intention of the Legislature. 10.1 From the aforesaid provisions, it is quite clear that there were 3 limitations for issuing notice under section 148 in consequence upon initiation of proceedings under section 147(a) of the Act and they were that: (i) within the expiry....
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....made within a period of 4 years from the end of the year in which notice under section 148 has been served. 10.5 This objection or line of argument seems to be quite logical but I am of the opinion that this proposition, at the same time, nullifies the requirements of sections 149 and 151 of the Act. 10.6 If the limit for service of notice under section 148 is unearthed by keeping in view the provisions under section 153(2) of the Act, then the provisions of sections 149 and 151 of the Act have to be buried which do not seem to be the intention of the Legislature. 11. In view of above discussions, I am of the opinion that in absence of any specific provisions prescribing limitation for service of notice under section 148, the only limit which can be put is the same as for issuance of notice i.e., in case the notice has been issued before expiry of 4 years then it has to be served within that period. If the notice has been issued after expiry of 4 years, but before the expiry of 8 years, then it has to be served before expiry of 8 years, whereas, a notice issued after expiry of 8 years but before expiry of 16 years must be served before expiry of 16 years. 11.1 The doubt....
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....nion that the objection of the counsel for the assessee that revenue's reference being pending before the Allahabad High Court fresh notices under section 148 on the basis of same reasons could not be issued has no force, but this could be only if the proceedings based on earlier notices had been dropped/closed. My answer to question No. 3, therefore, is that the Assessing Officer could proceed to serve the notices under section 148 upon the assessee during the pendency of Revenue's Reference before the Hon'ble High Court. 13. So far as the question No.4 is concerned, it is well-settled that during the pendency of proceedings under section 147 having been initiated on the basis of escapement of a particular income, no second initiation for escapement of the same income can be resorted to i.e., once a notice under section 148 has been issued to assess or reassess a particular income then unless and until those proceedings are concluded by way of an valid order, fresh notice under section 148 to assess or reassess, the same income cannot be issued and if issued, it will be illegal and bad in law. I am therefore, of the opinion that answer to question No.4 should be that there is n....
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....sp; Was sanction of any year Could be served year Authority sought latest by 1976-77 26-3-1985 With CIT's sanction 31-3-1985 1977-78 26-3-1985 With CIT's sanction 31-3-1986 1978-79 26-3-1985 With CIT's sanction 31-3-1987 1979-80 26-3-1985  ....
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....hese facts. 16.5 If the totality of the facts and circumstances of the case are analysed, it is quite clear that: (i) Notices for assessment years 1976-77, 1977-78 and 1978-79 issued on 29-3-1988 were issued after the expiry of a period of 8 years but before the expiry of a period of 16 years from the relevant assessment year which were not valid notice because as per section 151 the notice for these years could be issued only with the prior sanction of the CBDT. Notices for these 3 years were therefore invalid and bad in law. (ii) So far as assessment year 1979-80 is concerned, the old notice being valid notice could be served on or before 31-3-1988 and if Assessing Officer was to issue fresh notice, then proceedings on the basis of old notice should have been dropped for want of service. (a) Admittedly, the Assessing Officer having not dropped the proceedings, the issuance of 2nd notice for assessment year 1979-80 on 29-3-1988 was not in accordance with law i.e. notice under section 148 for assessment year 1979-80 issued on 29-3-1988 was illegal and bad in law. (b) Even if it is taken that Assessing Officer could issue fresh notice then also the same having been is....