High Court Of Punjab & Haryana
Punjab Tractors Ltd. vs. JCIT
Sections 147, 148
Asst. Year 1999-2000
Jawahar Lal Gupta & Ashutosh Mohunta, JJ.
Civil Writ Petn. No. 17524 of 2001
9th November, 2001
Counsel Appeared
G.C. Sharma with A.K. Mittal & Akshay Bhan, for the Petitioner
JUDGMENT
JAWAHAR LAL GUPTA, J. :
Is the action of the respondent-Jt. CIT, Special Range, Patiala, in issuing notice dt. 29th March, 2001, under s. 148 of the IT Act, 1961, rendered illegal merely for the reason that notice under s. 143(2) had not been issued to the petitioner? This is the short question that arises for consideration in this petition under Art. 226 of the Constitution. A few facts may be noticed. On 24th Dec., 1999, the petitioner filed its return of income for the asst. yr. 1999-2000. It declared an income of Rs. 1,45,26,10,930. On 23rd May, 2000, the respondent informed the petitioner that after adjusting the tax already paid, it was liable to pay an amount of Rs. 1,46,88,952. A copy of this ‘intimation’ is at Annexure P.2 with the writ petition. The petitioner filed an appeal claiming that the amount of Rs. 1,70,20,247 charged by way of interest under s. 234C was not leviable. Vide order dt. 23rd Nov., 2000, the CIT(A) accepted the petitioner’s claim. On 25th Feb., 2001, the AO issued notice under s. 154/155 for amendment of the intimation under s. 143(1). On 8th March, 2001, the petitioner filed its reply. It also filed a revised return of income on 19th March, 2001. On 31st March, 2001, the petitioner received a notice dt. 29th March, 2001, under s. 148 of the Act. A copy of this notice is at Annexure P. 3 with the writ petition. The petitioner filed its reply on 28th April, 2001. Thereafter, on 17th May, 2001, the petitioner requested the respondent to disclose the reasons for reopening of the assessment under s. 148 of the Act. A copy of this communication is at Annexure P. 4 with the writ petition. The reasons were supplied by the respondent with letter dt. 31st July, 2001. A copy has been produced as Annexure P. 5 with the writ petition. Having received the communication, the petitioner submitted an application dt. 6th Sept., 2001, to the respondent that the proceedings be dropped. The petitioner alleges that no reply has been received. Thus, it has filed the present writ petition.
The petitioner alleges that the initiation of proceedings by issuance of “notice under s. 147/148 suffers from ….. legal infirmities.” It is inter alia, alleged that if the AO felt that there was “any understatement of income in the return submitted and wanted to verify its correctness, it was obligatory on his part to issue a notice under s. 143(2) of the Act ….”. Having failed to do so, “he cannot now say that income should be deemed to have escaped assessment and issue a notice under s. 147/148 after the expiry of twelve months from the end of the month in which first return was submitted.” Various other grounds have also been raised. It has been further alleged that if the respondent is to “make an assessment under s. 143(3) after issuing notice under s. 143(2), the period for making assessment available will be upto 19th March, 2002, whereas if he is allowed to make an assessment under s. 147/148, the period of limitation will be upto 31st March, 2003. Such a discriminatory device cannot legitimately be permitted to be adopted by the respondent so as to extend the period of limitation.” On these premises, the petitioner prays that the notice dt. 29th March, 2001, a copy of which has been produced as Annexure P. 3, be quashed.
We have heard Mr. G.C. Sharma, learned counsel for the petitioner. The solitary contention raised by the learned counsel is that the assessment having not been finalised and no notice under s. 143(2) having been issued, the impugned notice cannot be sustained. Learned counsel has referred to the decisions in Kamal Textlies & Ors. vs. ITO & Ors. (1991) 95 CTR (MP) 1274 : (1991) 189 ITR 339 (MP) : TC 10R.299, Pradeep Kumar Har Saran Lal vs. AO (1997) 141 CTR (All) 37 : (1998) 229 ITR 46 (All) : TC S51.4046 and Mahanagar Telephone Nigam Ltd. vs. Chairman, CBDT & Anr. (2000) 162 CTR (Del) 554 : (2000) 246 ITR 173 (Del).
4. The short question that arises for consideration is—Has the respondent erred in initiating proceedings under s. 147/148? A perusal of s. 147 shows that “if the AO has reason to believe that any income chargeable to tax has escaped assessment for any assessment year,” he can proceed to “assess or reassess such income.” This power has to be exercised subject to the provisions of ss. 148 to 153. Thus, the condition precedent for proceeding under s. 147/148 is that the AO should have reason to believe that income has escaped assessment. Nothing more. It is not necessary that assessment should have been finalised under s. 143(3) before it can be reopened.
5. Mr. Sharma contended that income can be said to have escaped levy of tax only when the assessment has been made. Not otherwise.
6. ‘Escape’ in its ordinary sense means to elude; to succeed in avoiding. As observed by their Lordships of the Supreme Court in Tax Officer-cum-Regional Transport Officer, Raipur & Ors. vs. Durg Transport Co. (P) Ltd. (1972) 85 ITR 156 (SC) : TC 51R.365, “the term ‘escaped assessment’ includes both non-assessment as well as underassessment. When a person is not assessed to tax, though he is liable to be taxed the tax escapes assessment.” However, before proceeding to consider this matter in its strictly technical sense, the factual position deserves to be noticed. It is the admitted position that after the filing of the return, an intimation was sent to the petitioner under s. 143(1) of the IT Act on 23rd May, 2000. A copy of this document is at Annexure P. 2. The petitioner had filed an appeal to challenge the levy of interest under s. 234C. Still further, even notice under s. 154 had been given to the petitioner and a reply had been filed. Thereafter, the notice under s. 140 was served on the petitioner. It had filed a reply. The petitioner had then asked for reasons. These were supplied. Thereafter, an application dt. 6th Sept., 2001, was submitted by the petitioner to the respondent. A copy is at Annexure P. 6. This application opens with the following words : “Our assessment for asst. yr. 1999-2000 was completed by your honour vide intimation under s. 143(1), dt. 23rd May, 2000.” [Emphasis, italicised in print, supplied] The petitioner’s statement is clear and categorical. It completely belies the suggestion that there was no assessment.
7. Mr. Sharma referred to three decisions to contend that proceedings under s. 147/148 could not be initiated unless notice under s. 143(2) has been issued to the assessee. First of all, the counsel referred to the decision of the Madhya Pradesh High Court in the case of Kamal Textiles (supra). In this case, the petitioner was aggrieved by the issue of notice under s. 143(2). It was contended that the intimation under s. 143(1) being “a notice of demand of tax under s. 156 of the Act, the proceedings for assessment should be taken as complete in all respects, subject of course to the assessment being reopened in terms of s. 147.” This contention was rejected with the observation that the purpose of the fiction under s. 143(1) being limited, it was “difficult to accept the contention that on issuance of such intimation, the assessment proceedings can be reopened only in terms of s. 147 and the authority is not entitled to proceed under sub-s. (2) of s. 143.” This decision, in our view, does not support the petitioner’s contention in any way whatsoever.
8. In Pradeep Kumar’s case (supra), it was categorically observed at p. 47 that “the only requirement of s. 147 is that the AO must have good reason to believe that some income had escaped assessment. Once this belief is well- founded, recourse to reassessment proceedings cannot be said to be illegal. So long as the ingredients of s. 147 are fulfilled, the AO is free to initiate reassessment proceedings and failure to take steps under s. 143(2) will not render the AO powerless to initiate the reassessment proceedings.” In our view, the decision clearly militates against the contention raised by the learned counsel for the petitioner. Similarly, in the case of Mahanaqar Telephone Nigam Ltd. (supra), Hon’ble the Chief Justice Mr. Arijit Pasayat (as his Lordship then was), was pleased to observe as under : “So long as the ingredients of s. 147 are fulfilled, the AO is free to initiate proceedings under s. 147 and failure to take steps under s. 143(3) will not render the AO powerless to initiate reassessment proceedings even when intimation under s. 143(1) had been issued.” The decision does not support the petitioner’s claim. In fact, their Lordships have categorically sustained the Department’s action in a similar situation.
9. Mr. Sharma was at pains to point out that till the assessment is finalised, notice for reassessment under s. 148 of the Act could not have been issued. He referred to the observations of their Lordships of the Supreme Court in Trustees of H.E.H. The Nizam’s Supplemental Family Trust vs. CIT (2000) 159 CTR (SC) 114 : (2000) 242 ITR 381 (SC). In this case, it was held by their Lordships that “unless the return of income already filed is disposed of, notice for reassessment under s. 148 of the IT Act, 1961, cannot be issued, i.e., no reassessment proceedings can be initiated so long as assessment proceedings pending on the basis of the return already filed are not terminated.” There is no quarrel with this proposition. However, in the present case, as noticed above, it is the petitioner’s own case as pleaded in its representation to the respondent that the assessment for the year 1999-2000 “was completed by your honour vide intimation under s. 143(1), dt. 23rd May 2000.” Still further, even an appeal was filed against this order. In this situation, it cannot be said that the assessment had not been made. Factually, even interest under s. 234C was levied. The petitioner’s liability to pay tax and interest was determined. A demand was raised and an appeal was filed. In this situation, it cannot be said that the return of income had not been “disposed of”. In our view, the intimation under s. 143(1) operates as an order of assessment unless the authority proceeds to give notice under s. 143(2) and passes an order under s. 143(3). Furthermore, if the competent authority has reason to believe that income had escaped assessment while issuing intimation under s. 143(1), it can proceed under s. 148. The absence of order under s. 143(3) is no bar.
10. Mr. Sharma submitted ,that the petitioner had filed a revised return of income on 19th March, 2001. It is undoubtedly so. However, it is the petitioner’s own case that in response to the notice under s. 148, it had filed a reply “asking the respondent to take revised return……..as return of income against notice under s. 148.” This statement clearly appears at p. 4 of the List of Events. Still further, in the representation dt. 6th Sept., 2001, it has been stated that “we had duly filed a reply to the notice under s. 148 vide our letter dt. 28th April, 2001, categorically stating that the revised return of income filed by us on 19th March, 2001, should be taken as the revised return in compliance to notice under s. 148.” In view of this factual position, it cannot be said that the return of income as originally filed by the petitioner had not been disposed of.
11. There is another aspect of the matter. The proviso to s. 147 inter alia, provides that “no action shall be taken under this section after the expiry of four years from the end of. the relevant assessment year” in a case “where an assessment under sub-s. (3) of s. 143 ……. has been made for the relevant assessment year.” This provision is clearly indicative of the legislative intent. It shows that the provision of s. 147 can be invoked not only after the order has been passed under s. 143(3) but even otherwise. A faint attempt was made to contend that by proceeding under s. 147/148, the period of limitation would be extended.
We are unable to accept this contention. Firstly, it is the petitioner’s own case that the assessment under s. 143(3) could be made upto 19th March, 2002. In the present case, the impugned notice was issued to the petitioner on 29th March, 2001. It was almost a year before the date on which an order could be passed under s. 143(3). The notice having been given well in advance, it cannot be said that any prejudice had been caused to the petitioner. Secondly, we find that the reasons were conveyed. It has not been suggested by the counsel that these were not relevant. There is no injustice. We find no ground to interfere under Art. 226.
In view of the-above, we answer the question posed at the outset against the petitioner. It is held that the notice under s. 147/148 issued to the petitioner is not vitiated merely for the reason that notice under s. 143(2) had not been issued to it.
No other point was raised.
In view of the above, we find no merit in this petition. It is, consequently, dismissed in limine.
[Citation : 254 ITR 242]