High Court Of Madhya Pradesh : Indore Bench
Inder Narayan Jhalani vs. Union Of India & Anr.
Sections 143(1)(a), 147, Expln. 2(b), 148
Asst. Year 1992-93
A.M. Sapre, J.
Writ Petn. No. 1093 of 1995
7th February, 2002
Counsel Appeared
S.C. Bagdiya i/b Ajay Bagdiya, for the Petitioner : A.P. Patankar, for the Respondent
JUDGMENT
A.M. SAPRE, J. :
By filing this writ under Art. 226/227 of the Constitution of India, the petitioner seeks to assail the notice dt. 23rd Aug., 1994 (annexure A/1), issued under s. 148 of the IT Act, 1961 (for brevity called “the Act”) by the ITO, respondent No. 2. The facts of the case lie in a narrow compass. They need mention to appreciate the issue involved and urged.
2. The petitioner is an assessee, as defined under s. 2(7) of the Act. He is assessed as an individual in respect of his income earned from business as also from other sources. The petitioner filed his return (annexure A) for the asst. yr. 1992-93, i.e., for the period 1st April, 1991 to 31st March, 1992. In the return, the petitioner claimed several deductions such as under ss. 80L, 80CCB, 80CCA, 80HHC and 80D in addition to other claims. The AO processed the return of the petitioner under s. 143(1)(a) ibid and made prima facie adjustment insofar as the deduction claimed by the petitioner under s. 80HHC ibid was concerned by his order dt. 6th April, 1993 (annexure B at p. 12 of the petition). The petitioner then on receipt of the said order felt aggrieved by the said adjustment and sought its rectification under s. 154 of the Act. The AO rejected the application seeking rectification by his order dt. 9th July, 1993 (annexure D). The petitioner then filed an appeal to the CIT(A). By order dt. 12th April, 1994, the CIT(A) allowed the appeal and set aside the order of the AO, by which he had made prima facie adjustment. The Revenue then felt aggrieved by the order passed by the CIT(A) and filed a second appeal to the Tribunal. The Tribunal (the ITAT) dismissed the appeal and upheld the order of the CIT(A). The Revenue then sought reference under s. 256(1) ibid to this Court which having been declined by the Tribunal, the Revenue came to the High Court under s. 256(2) of the Act. It is now pending.
On 23rd Aug., 1994, the AO invoked the provisions of s. 147, Expln. 2(b) of the Act and issued notice under s. 148 ibid (annexure H). The notice was followed by the reasons as to why it is being sent. In the reasons, the AO said that he had reasons to believe that assessee has underestimated his income by claiming excessive deductions under s. 80HHE. It is this notice which is impugned in this writ. Heard Shri S.C. Bagdiya, the learned senior advocate, assisted by Shri Ajay Bagdiya, learned counsel for the petitioner; and Shri Patankar, learned counsel for the respondent.
The submission of learned counsel for the petitioner was that once the prima facie adjustment made in s. 143(1)(a) of the Act by the AO in relation to deductions under s. 80HHC are held to be bad right up to the Tribunal, then, in such circumstance, no notice under s. 147/148 ibid for the same cause could be issued by the AO. In other words, the submission was when the issue in question for which the impugned notice is sent was debated in s. 143(1)(a) proceedings and the same having been decided in favour of the assessee (petitioner) by the CIT(A) and then by the Tribunal, then the same issue cannot be raised by the AO again by sending notice under s. 148 ibid. It is essentially this submission which was pressed into service by learned counsel for the petitioner in assailing the legality and propriety of the impugned notice.
In reply learned counsel for the Revenue supported the issuance of the impugned notice and urged for its upholding and dismissal of the writ.
Having heard learned counsel for the parties and having perused the record of the case, I find no substance in the writ. In other words, the impugned notice under s. 148 deserves to be upheld resulting in dismissal of the writ.
In my considered opinion, the scope of proceedings under s. 143(1)(a) of the Act are entirely different than that of proceedings under s. 148 of the Act. In other words merely because the action of the AO while exercising the powers under s. 143(1)(a) are held to be not in conformity with s. 143(1)(a) is no ground to hold that the AO cannot then exercise powers under s. 148 of the Act. When the AO decides to resort to the provisions of s. 143(1)(a), he has to see whether a particular claim can be dealt with prima facie and without calling upon the assessee to explain it. In other words, while making any adjustment under s. 143(1)(a), the AO is mainly concerned as to whether he can do adjustment of any claim prima facie on the basis of material on record in the return. In case if the AO feels that particular adjustment in relation to any claim is prima facie permissible then he after making the same shall intimate the assessee. In case the AO feels that it is not so prima facie possible then the AO has to issue notice to the assessee before making the adjustment of that particular claim for which he was contemplating to exercise his powers under s. 143(1)(a) ibid.
In the present case, once it was held that the AO was not justified under s. 143(1)(a) while making adjustment pertaining to deduction claimed by the petitioner under s. 80HHC, then the AO is entitled to issue notice under s. 148 ibid to the petitioner in respect of the same deduction with a view to find out whether it is rightly claimed by the petitioner or not. Indeed, it is a case which squarely falls under s. 147, Expln. 2(b), ibid wherein it is clearly provided that when a return of income has been furnished by an assessee but no assessment has been made and if it is noticed by the AO that the assessee has understated the income or has claimed excessive loss, deduction, allowance and relief in the return then it is deemed to be a case where income chargeable to tax has escaped assessment. If a case under s. 147 is made out then certainly a notice under s. 148 can be served on the petitioner for examining the issue as to whether the petitioner has rightly claimed the deduction under s. 80HHC in the return or not. Since, in this case the assessment has not yet been made of the year in question, the AO was perfectly justified in invoking s. 147, Expln. 2(b) for issuing a notice under s. 148 ibid which as stated supra applies to cases prior to the assessment order and by deeming fiction makes out a case of escaped assessment. I, therefore, do not find any merit in the writ. It fails and is accordingly, dismissed. As a result all interim stay granted stands vacated. The AO is free to pursue and complete the proceedings initiated against the petitioner under s. 148 ibid. No costs.
[Citation : 254 ITR 663]
