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Income Tax Appellate Tribunal, GAUHATI ‘VIRTUAL’COURT, ATKOLKATA
Before: SHRI A. T. VARKEY, JM &DR. A.L.SAINI, AM
आदेश / O R D E R Per Dr. A. L. Saini:
The captioned appeal filed by the assessee, pertaining to assessment year 2016-17, is directed against the order passed by the Commissioner of Income Tax (Appeal) —Shillong, in appeal no. CIT(A)/SHG/10189/2018-19, dated 07.08.2019, which in turn arises out of an assessment order passed by the Assessing Officer u/s 143(3) /147 of the Income Tax Act, 1961 (in short the ‘Act’) dated 26.02.2019.
2 Namita Malla Sarkar ITA No.426/Gau/2019 Assessment Year:2016-17
Although, in this appeal, the assessee has raised multiple grounds of appeal on merits but at the time of hearing, the solitary grievance of the assessee has been confined to the issue that reassessment proceedings initiated by the Assessing Officer u/s 147/ 148 was bad in law.At the outset the ld. Counsel for the assessee, Shri Rahul Jain, drew our attention to the legal issue raised by the assessee wherein the assessee has challenged the validity of reassessment proceedings under section 147/148 of the Act. The ld Counsel prays the Bench to adjudicate the said legal issue since it goes to the root of the matter. The legal issue raised before us is that the Assessing Officer erred in issuing notice under section 148 of the Act, before the expiry of the time limit prescribed u/s 143(2) of the Act. Since the facts necessary to adjudicate this legal issue is available from the orders of the authorities below and since the issue is purely legal therefore we rely on the decision of the Hon’ble Supreme Court in the case of National Thermal Power Co. Ltd. vs Commissioner of Income Tax on, 4th December, 1996 reported in (1998) 229 ITR 383 (SC) wherein it was held that legal issue can be raised at any stage of the appeal. We are inclined to admit the legal issue and proceed to decide the said legal issue.
3.We heard both the parties and carefully gone through the submission put forth on behalf of the assessee along with the documents furnished and the case laws relied upon, and perused the fact of the case including the findings of the ld CIT(A) and other materials brought on record.Brief facts pertaining to legal issue are that the assessment order under consideration is relating to assessment year 2016-17. The due date of filing the Return of Incomeunder section 139(1) was 30.09.2016. The last date of filing of return of income u/s 139(4) (belated Return of Income) of the Act was 31.03.2018.The assessee under consideration had filed the return of income on 27.02.2018 (within the time limit prescribed under section 139 (4) of the Act- belated return). The time limit for the Assessing
3 Namita Malla Sarkar ITA No.426/Gau/2019 Assessment Year:2016-17 Officer to issue notice u/s 143(2) of the Act was on or before 30.09.2018. However, in the assessee`s case, the Assessing Officer issued notice under section 148 of the Act on 10.05.2018, before the expiry of time limit u/s 143(2) of the Act. This action of the Assessing Officer, according to the assessee, is illegal and therefore the reassessment framed by the assessing officer under section 147/148 of the Act is bad in law.For this proposition of law, Ld Counsel relied on the judgment of Hon’ble Bombay High Court, at Nagpur Bench, dated 12.07.2017 in the case of Smt. SumanVs.ITO, Income Tax Appeal No. 72 of 2003, order dated 12.07.2017 wherein the facts of the case are that assessee filed return of income on 14.12.1999, which was processed by the Department under section 143(1) of the Act on 07.01.2000. However, notice u/s 148 of the Act for reopening was issued on 25.01.2000 (before the expiry of time to issue notice under section 143(2) of the Act). The Hon’ble High Court framed the question of law as under:
“Whether Assessing Officer can proceeds with extraordinary power u/s 147, particularly when normal procedure of assessment of income u/s 143(3) are available which are otherwise within time?”
The Hon’ble Bombay High Court of Nagpur Bench in the case of Smt. Suman vs. ITO(supra) answered the question of law in favour of assessee as follows:
"12. Reliance is placed upon the decision of the Apex Court in Rajesh Jhaveri (supra) by the Revenue and in particular upon paragraph 18 thereof which reads as under:- "18. So long as the ingredients of section 147 are fulfilled, the Assessing Officer is free to initiate proceeding under section 147 and failure to take steps under section 143(3) will not render the Assessing Officer powerless to initiate reassessment proceedings even when intimation under section 143(1) had been issued." The aforesaid observation by the Apex Court is made in the context of the contention of the assessee that an Assessing officer cannot initiate reassessment proceedings, where intimation under Section 143(1) has been issued and the
4 Namita Malla Sarkar ITA No.426/Gau/2019 Assessment Year:2016-17 Revenue failed to take steps to issue notice under Section 143(2) and complete assessment under Section 143(3) of the Act. The aforesaid contention was negatived in the above referred para on the ground that in the context of the facts before it, the time to issue notice under Section 143(3) of the Act had expired. It is only thereafter that the Assessing Officer could have reason to believe that the income chargeable to tax has escaped assessment. It is in such cases that the Assessing Officer would not be prohibited under Section 147/148 of the Act from seeking to recover tax on income which has escaped assessment. It is clear that no reassessment proceedings can be initiated so long assessment proceedings on the basis of return of income filed by the assessee is pending. The assessment proceedings would cease to be pending either by passing of an order under Section 143(3) of the Act or by expiry of time to issue a notice under Section 143(2) of the Act, to complete an assessment under Section 143(3) of the Act. So long as the above event has not passed, the Assessing Officer cannot render the provision of Section 143(2) of the Act redundant/otiose by issuing a notice for reopening an assessment under Section 147/148 of the Act.”
Thus, in the light of the above judgment of the Hon’ble Bombay High Court of Nagpur Bench in the case of Smt. Suman vs. ITO(supra), it is abundantly clear that no reassessment proceedings can be initiated so long assessment proceedings on the basis of return of income filed by the assessee is pending. The assessment proceedings would seize to be pending either by passing an order u/s 143(3) of the Act or by expiry of time to issue a notice u/s 143(2) to complete the assessment proceedings u/s 143(3) of the Act. So long as the above event, has not passed, the Assessing Officer cannot render the provision of section 143(2) of the Act redundant / otiose by issuing a notice for reopening u/s 147 / 148 of the Act. Therefore, in our view, the reassessment proceedings initiated in the case of assessee under consideration is bad in law.
Now, we deal with main grievance of the ld DR for the Revenue. The learned DR argued before us that so long as the ingredients of section 147 are fulfilled, the Assessing Officer is free to initiate proceeding under section 147 and failure to take steps under section 143(3) will not render the Assessing Officer powerless to initiate reassessment proceedings under section 147 of the Act. Therefore,
5 Namita Malla Sarkar ITA No.426/Gau/2019 Assessment Year:2016-17 ldDR relied on the judgment of the Hon`ble Supreme Court in the case of Rajesh Jhaveri Stock Brokers (P) Ltd 291 ITR 500 (SC), to support the action of the Assessing Officer to issue notice under section 148 of the Act before expiry of time limit to issue notice under section 143(2) of the Act. The above cited judgment by ld DR in the case of Rajesh Jhaveri in (2007) 291 ITR 500 (SC) is reproduced below for ready reference : “17. The scope and effect of section 147 as substituted with effect from April 1, 1989, as also sections 148 to 152 are substantially different from the provisions as they stood prior to such substitution. Under the old provisions of section 147, separate clauses (a) and (b) laid down the circumstances under which income escaping assessment for the past assessment years could be assessed or reassessed. To confer jurisdiction under section 147(a) two conditions were required to be satisfied firstly the Assessing Officer must have reason to believe that income profits or gains chargeable to income tax have escaped assessment, and secondly he must also have reason to believe that such escapement has occurred by reason of either (i) omission or failure on the part of the assessee to disclose fully or truly all material facts necessary for his assessment of that year. Both these conditions were conditions precedent to be satisfied before the Assessing Officer could have jurisdiction to issue notice under section 148 read with section 147(a). But under the substituted section 147 existence of only the first condition suffices. In other words if the Assessing Officer for whatever reason has reason to believe that income has escaped assessment it confers jurisdiction to reopen the assessment. It is however to be noted that both the conditions must be fulfilled if the case falls within the ambit of the proviso to section 147. The case at hand is covered by the main provision and not the proviso. 18. So long as the ingredients of section 147 are fulfilled, the Assessing Officer is free to initiate proceeding under section 147 and failure to take steps under section 143(3) will not render the Assessing Officer powerless to initiate reassessment proceedings even when intimation under section 143(1) had been issued.”
Thus, with help of the above cited judgment in the case of Rajesh Jhaveri (supra), the ld DR contended that assessing officer can issue notice under section 148 of the Act before expiry of time limit to issue notice under section 143(2) of the Act.
6 Namita Malla Sarkar ITA No.426/Gau/2019 Assessment Year:2016-17 5. However, we do not agree with the above arguments and contention of the ld DR for the Revenue.We note that Hon`ble Supreme Court in the case of Rajesh Jhaveri Stock Brokers (P) Ltd (Supra) has dealt with the contention of the assessee that an Assessing officer cannot initiate reassessment proceedings, where intimation under Section 143(1) has been issued and the Revenue failed to take steps to issue notice under Section 143(2) and complete assessment under Section 143(3) of the Act.In the case of Rajesh JhaveriStock Brokers (P) Ltd (Supra) the time limit to issue notice under section 143(2) was expired therefore, the assessing officer could issue notice under section 148 of the Act. Whereas, in assessee`s case under consideration the time limit to issue notice under section 143(2) was not expired therefore assessing officer cannot issue the notice under section 148 to make the reassessment under section 147 of the Act. Therefore, we do not agree with the argument of ld DR to the effect that the Assessing Officer is free to initiate proceeding under section 147 and failure to take steps under section 143(3) will not render the Assessing Officer powerless to initiate reassessment proceedings under section 147 of the Act.
6.Having heard both the parties, we note that this legal issue raised by the assessee, before us, is no longer res integra. We note similar issue cropped up before the Hon’ble Bombay High Court at Nagpur Bench dated 12.07.2017 in the case of Smt. Suman (Supra).Respectfully following the judgment of the Hon’ble Bombay High Court at Nagpur Bench dated 12.07.2017 in the case of Smt. Suman (Supra), we quash the reassessment proceedings initiated by the assessing officer under section 147/148 of the Act. Thus, we allow the legal issue raised by the assessee.
7 Namita Malla Sarkar ITA No.426/Gau/2019 Assessment Year:2016-17 7. Since we have allowed the appeal of the assessee on legal issue therefore the other grounds raised by the assessee on merits become academic and do not require adjudication.
In the result, the appeal of the assessee is allowed.
Order pronounced in the Court on 09.10.2020
Sd/- Sd/- (A.T. VARKEY) (A.L.SAINI) �या�यकसद�य / JUDICIAL MEMBER लेखासद�य / ACCOUNTANT MEMBER
�दनांक/ Date: 09/10/2020 (SB, Sr.PS)
Copy of the order forwarded to: 1. Namita Malla Sarkar 2. ITO, Ward-Udaipur, Tripura 3. C.I.T(A)- 4. C.I.T.- Guwahati. 5. CIT(DR), GauhatiBench, Guwahati. 6. Guard File.