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Income Tax Appellate Tribunal, IN THE INCOME TAX APPELLATE TRIBUNAL,
Before: SHRI CHANDRA MOHAN GARG, JUDICIAL & ARUN KHODPIA & ARUN KHODPIA & ARUN KHODPIA
IN THE INCOME TAX APPELLATE TRIBUNAL, IN THE INCOME TAX APPELLATE TRIBUNAL, IN THE INCOME TAX APPELLATE TRIBUNAL, ‘D’ CHENNAI BENCH, CHENNAI BEFORE S/SHRI SHRI CHANDRA MOHAN GARG, JUDICIAL JUDICIAL MEMBER AND ARUN KHODPIA, ACCOUNTANT MEMBER AND ARUN KHODPIA, ACCOUNTANT MEMBER AND ARUN KHODPIA, ACCOUNTANT MEMBER Assessment Year : 2009-2010 The Income Tax Officer, The Income Tax Officer, Vs. Shri J.Durairaj, M/s. Thangam Shri J.Durairaj, M/s. Thangam Ward-1, Tuticorin 1, Tuticorin Finance, Finance, No.28 No.28-A, Chetti Pillaimar Street, Eral, Tuticorin Pillaimar Street, Eral, Tuticorin District PAN/GIR No.AJUPD 7674 F AJUPD 7674 F (Appellant) (Appellant .. ( Respondent Respondent) Assessee by : None Revenue by : Shri G.Johnson, Addl CIT ( CIT (DR) Date of Hearing : 25 /2/ 2022 2 Date of Pronouncement : 31/3/20 /2022 O R D E R Per C.M.Garg, JM , JM
This is an appeal filed by the revenue an appeal filed by the revenue against the order of the CIT(A) der of the CIT(A) -1, Maduria, dated 20.4.2017 1, Maduria, dated 20.4.2017 for the assessment year 2009- -2010.
Grounds of appeal raised by the revenue are as under: Grounds of appeal raised by the revenue are as under: Grounds of appeal raised by the revenue are as under:
“1. The order of the CIT(A) is opposed to law, on the facts and in the “1. The order of the CIT(A) is opposed to law, on the facts and in the “1. The order of the CIT(A) is opposed to law, on the facts and in the circumstances of the case. circumstances of the case.
2. The CIT(A) erred in holding that the reassessment proceedings 2. The CIT(A) erred in holding that the reassessment proceedings 2. The CIT(A) erred in holding that the reassessment proceedings initiated u/s.148 on 19.4.2011, during the course of pendency of nitiated u/s.148 on 19.4.2011, during the course of pendency of nitiated u/s.148 on 19.4.2011, during the course of pendency of regular assessment proceedings, is invalid. regular assessment proceedings, is invalid.
3. The CIT(A) ought to have seen that the AO had issued notice 3. The CIT(A) ought to have seen that the AO had issued notice 3. The CIT(A) ought to have seen that the AO had issued notice u/s.142(1) since the assessee had failed to furnish his return of u/s.142(1) since the assessee had failed to furnish his return of u/s.142(1) since the assessee had failed to furnish his return of P a g e 1 | 7
income within the time allowed under section 139 and once the assessee furnishes the return, the proceedings thus initiated u/s.142(1) ends and no further proceedings are pending. 4. The CIT(A) ought to have seen that the AO had issued notice u/s.148 to bring to tax income which would otherwise escape assessment since the time allowed under section 139 to furnish the return had expired.”
When the matter was called for hearing, no one appeared on behalf of the assessee nor any application for adjournment has been filed despite the fact that the notice of hearing was displayed in the notice board as well as in ITAT website. On perusal of appeal records, we are of the considered view that this appeal of the revenue can be decided exparte-qua-assessee after hearing the arguments advanced by ld Sr. DR. Therefore, we proceed to hear the appeal.
Ld Sr DR vehemently relying on the assessment order submitted that the Assessing Officer initiated reassessment proceedings by way of issuing notice u/s.148 of the Act after assuming valid jurisdiction to initiate reassessment proceedings and ld CIT(A) was not correct in holding that the impugned reassessment order is barred by limitation and reassessment proceedings initiated by issuing notice u/s.148 dated 9.4.2011 during the course of pendency of regular assessment proceedings is invalid.
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From the relevant operating para 4.1 of the CIT(A) order, we observe that the ld CIT(A) has granted relief to the assessee on legal grounds with the following observations:
“4.1From the above the undisputed fact is that the appellant did not file the return of income within the due date allowed u/s.139(1). The AO initiated assessment proceedings by issuing notice u/s.142(1) on 12.8.2010. The appellant filed his return of income on 4.4.2011 in response to the above notice u/s.142(1). Thus, the AO initiated assessment proceedings by issuing notice u/s 142(1) on 12.08.2010 and the assessment should have been completed on or before 31.03.2012 for which the appellant filed the return on 04.04.2011 itself. However, the Assessing Officer during the pendency of assessment proceedings initiated by notice u/s 142(1), issued another notice u/s 148 on 19.04.2011 on the ground that the return of income filed by the appellant on 04.04.2011 was invalid. The Assessing Officer found that the above return was filed after one year from the end of the assessment year and, therefore, it was invalid u/s 139(5). The stand of the Assessing Officer could have been correct if he had not issued notice u/s 142(1) on 12.08.2010. The Assessing Officer confused with the section 139(5) without noticing that in this case the assessment proceedings were already pending by issuing notice u/s 142(1). In such case when the assessment proceedings were initiated on 12.08.2010, the Assessing Officer should have completed the assessment proceedings within the time limit of two years from the end of the assessment year i.e. 31.03.2012 or 31.12.2011, if the time limit was restricted to December. However, the Assessing Officer wrongly held that the return filed on 04.04.2011 was invalid as the same was filed after one year from the end of the assessment year. From the above, I find that the notice u/s 148 issued on 19.04.2011 itself is invalid as the same could not have been issued during the course of pendency of regular assessment proceedings initiated by issuing notice u/s 142(1) on 12.08.2010. It is settled law that when the regular assessment proceedings is pending, the Assessing Officer cannot issue notice u/s 148 without completing the regular assessment proceedings. It was held by the Hon'ble Kerala High Court in the case of Nilofer Hameed vs ITO [235 ITR 161] after referring to a number of judgments of the High Courts, that when assessment is pending either by way of original assessment or by way of reassessment proceedings, the Assessing Officer cannot issue a notice u/s 148. The above decision was arrived at based on the authority of the Apex Court in the case of Shri S.B. Jain, Income Tax Officer, Nagpur vs Mahendra [83 ITR 104]. Accordingly, it is settled law that during the course of pendency of regular assessment, notice u/s 148 cannot be issued. Accordingly, the impugned reassessment proceedings are invalid and the same is cancelled. Even otherwise the impugned order is time barred if the notice u/s 148 is ignored as the same is not valid. The Assessing Officer calculated the time limit with P a g e 3 | 7 reference to notice u/s 148 which was invalid and completed the assessment on 28.03.2013 whereas it should have been completed on or before 31.03.2012 based on the notice u/s 142(1) issued on 12.08.2010. The Assessing Officer in the report dated 30.06.2016 and in the report dated 24.01.2017 simply stated that the notice u/s 148 was issued within the time limit and the return of income filed by the appellant was lodged as the same was filed belatedly. However, the Assessing Officer has not mentioned as to why during the course of pendency of regular assessment proceedings initiated by issue of notice u/s 142(1), another notice u/s 148 was issued which is not permissible in law. Since I find that the notice u/s 148 was issued during the course of pendency of regular assessment proceedings initiated by notice u/s 142(1), the reassessment proceedings are not valid. Further, the regular assessment proceedings initiated by notice u/s 142(1) should have been completed on or before 31.03.2012 whereas the impugned order was passed only on 28.03.2013. In the circumstances, I cancel the impugned order on the ground that the issue of notice u/s 148 on 19.04.2011 was not valid and if the time limit is computed with reference to notice u/s 142(1), the same is barred by limitation. Even if the notice u/s 142(1) dated 12.08.2010 issued for the purpose of compelling the assessee to file the return is treated as notice u/s 148, then the Assessing Officer should have completed the assessment on or before 31.3.2012 i.e. one year from the end of the financial year in which the above notice was issued. Accordingly, viewed from any angle, the impugned order is barred by limitation and reassessment proceedings initiated u/s.148 on 19.4.2011 during the course of pendency of regular assessment proceedings is invalid. Accordingly, I cancel the impugned order.”
From the materials available on record, it is clearly discernible that undisputedly, the assessee did not file return of income within the due date allowed as per the provisions of section 139 of the Act and the AO initiated assessment proceedings by issuing notice u/s.142(1) vide dated 12.8.2010 and in response to notice, the assessee filed his return of income on 4.4.2011. In view of above, the assessment proceedings by issuing notice u/s.142(1) of the Act on 12.8.2010 could have been completed by the end of next financial year i.e. on or before 31.3.2012 for which return was filed on 4.4.2011 for present assessment year 2009-10.
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It is also not in dispute that during pendency of assessment proceedings initiated by the AO by issuing notice u/s 142(1) vide dated 12.8.2010 wa pending and the AO issued another notice u/s.148 of the Act on 9.4.2011 on the ground that the return of income filed by the assessee on 4,.4.2011 was invalid as the same was filed after lapse of one year from the end of relevant assessment year and, therefore, under section 139(5), the same has to be held as invalid,. In such a situation, the AO has issued notice u/.s.142(1) and in response to same, the assessee files return of income on 4.4.2011, then the AO should have completed the assessment proceeding within the time limited of two years from the end of assessment year on 31.3.2012. In our humble opinion, the AO took an invalid stand to allege that the return of income as invalid u/s.139(5) of the Act examining the fact that the assessment proceedings were already pending before him and he could not have initiated reassessment proceedings when the original assessment has not reached to completion and assessment order has not been passed.
In the case of Nilofer Hameed vs ITO, 235 ITR 161 (Ker), the Hon’ble Kerala High Court after considering a number of judgments, Their Lordships speaking for Kerala High Court also referred to the judgment of Hon’ble Supreme Court in the case of S.B.Jain vs Mahendra, 83 ITR 104 (SC) held that when assessment is pending either by way of original assessment or by P a g e 5 | 7 way of reassessment proceedings, the AO cannot issue a notice u/s.148 of the Act.
In view of above, we have no hesitation to hold that it is settled law that during pendency of assessment proceedings, notice u/s.148 of the Act cannot be issued. Accordingly, ld CIT(A) was right in holding that impugned reassessment proceedings are invalid and same is cancelled. Ld CIT(A) allowed the AO to explain on which basis, he initiated reassessment proceedings and issued notice u/s.148 of the Act during pendency of assessment proceedings, which was supported by way of issue of notice u/s.142(1) on 12.8.2010 but the AO failed to furnish any plausible reply to support his action to initiate reassessment proceedings by issuing notice u/s.148 of the Act on 9.4.2011.
Ld Sr DR could not controvert the factual position that regular assessment proceedings initiated by the AO by issuing notice u/s.142(1) of the Act on 12.8.2010 could have been completed on or before 31.3.2012 whereas the impugned reassessment order was passed on 28.3.2013 and the ld CIT(A) cancelled the impugned reassessment order on two counts i.e. that the notice u/s.148 of the Act dated 9.4.2011 was not valid and (ii) if the time limit is computed with reference to notice u/s.142(1), then the assessment order or reassessment order should have been passed on or before 31.3.2012 but the same was passed on 28.3.2013 and hence, the same is barred by limitation. Ld Sr DR also could not controvert the legal P a g e 6 | 7 position as observed by ld CIT(A) while granting relief to the assessee. Therefore, we see no valid reason to interfere with the order of ld CIT(A), which is hereby confirmed.
In the result, appeal of the revenue is dismissed.
Order pronounced u/r, 34(4) of I.T.Rules, 1963 on 31/3/2022.