PRINCIPAL COMMISSIONER OF INCOME TAX vs. MESSERS THE ARCHDIOCESAN BOARD OF

Heard Shri.E.I.Sanmathi, learned standing counsel for the Revenue and Shri.B.R.Sudheendra, learned Advocate for the assessee.

Undisputed facts of the case are, assessee filed return of income for the Assessment Year2 2008-09 on 30.09.2008. Assessment under Section 143(3) of the Income Tax Act, 19613 was completed on 12.05.2010. The Assessing Officer4 issued notice under Section 148 of 2 'A.Y.' for short 3 the 'Act' for short 4 'AO' for short

Second notice was issued under Section 148 of the Act on 31.03.2015. The assessee contested the said notice and assessment order has been passed under Section 143 r/w Section 147 of the Act, wherein the AO has disallowed some exemptions. The Commissioner of Income Tax (Appeals)5 has confirmed AO's order and ITAT has set aside the AO’s order and allowed the appeal.

Shri.Sanmathi assailing ITAT's order submitted that pursuant to first notice dated 18.04.2013 issued under Section 148 of the Act, the last date to complete the assessment was 31.12.2014. No action was taken pursuant to said notice because assessee did not file his return of income. The AO has rightly issued second notice within six years from the date of end of A.Y. and no parallel proceedings were neither pending nor initiated. 5 'CIT(A)' for short

Shri.Sudheendra adverting to Section 153(2) of the Act, as it stood prior to amendment relevant for A.Y. 2008-09, pointed out that the time limit expires on 31.03.2015. The AO has neither withdrawn the first notice nor completed the proceedings before the expiry of time. Therefore, second notice was unsustainable in law.

We have carefully considered the rival contentions and perused the records.

Sub-section (2) of Section 153 of the Act as it stood prior to amendment, relevant to A.Y. 2008-09 reads as under: "(2) No order of assessment, reassessment or recomputation shall be made under section 147 after the expiry of one year from the end of the financial year in which the notice under section 148 was served:"

Thus, no assessment order could be passed after expiry of one year from the end of Financial Year6. In the case on hand, the notice has been issued on 18.04.2013. The end of F.Y. shall be 31.03.2014 and one year there-from would expire on 31.03.2015. Thus, the AO had time till 31.03.2015 to complete the proceedings.

The ITAT relying upon the decision of Hon’ble Gujarat High Court rendered in MARWADI SHARES & FINANCE LTD., Vs. DCIT7 has allowed the appeal. The Hon’ble Gujarat High Court has held in the said case that when the first notice of reopening of the assessment is not withdrawn, there is no scope in law to issue a fresh notice to reopen.

It is not in dispute that no action has been taken pursuant to notice under Section 148 of the Act dated 18.04.2013. According to the Revenue, time would expire to complete the assessment proceedings pursuant 6 'F.Y.' for shot 7 [2018] 94 Taxmann.com 398 (Guj) [para 17 and 18]

To a pointed question by the Court as to whether the Revenue has challenged the judgment in MARWADI SHARES & FINANCE LTD.,8 rendered by the Gujarat High Court, learned standing counsel pointed out that as per his research in the data base of the Supreme Court, he could not find any information. Thus, Revenue has accepted the view taken by the Gujarat High Court and we are in respectful agreement with the same. Hence, second notice dated 31.03.2015 is unsustainable in law.

In the light of above discussion, the following: ORDER (1) Appeal filed by the Revenue is dismissed. 8 [2018] 94 Taxmann.com 398 (Guj) [para 17 and 18]