Rajasthan H.C : The assessment made by the ITO was not an assessment made under s. 143(3) on the basis of the return filed by the assessee on 30th Aug., 1978, under s. 139(4) and whether the provisions of s. 292B were attracted

Counsel Appeared

G.S. Bapna, for the Revenue

BY THE COURT :

The Tribunal has referred the following question of law under s. 256(1) of the IT Act, 1961, arising out of its order dt. 23rd Oct., 1980, in respect of the asst. yr. 1977-78 :

“Whether, on the facts and in the circumstances of the case, when the ITO had no jurisdiction to issue notice under s. 148 and the same being superfluous whether the Tribunal was right in holding that the assessment made by the ITO was not an assessment made under s. 143(3) on the basis of the return filed by the assessee on 30th Aug., 1978, under s. 139(4) and whether the provisions of s. 292B were attracted ?”

2. The brief facts of the case are that the assessment of the assessee-firm was made upto the asst. yr. 1971-72 and, according to the ITO, no returns were filed for the asst. yrs. 1972-73 and 1973-74. The return for year in dispute i.e., 1977-78, was filed on 30th Aug., 1978, declaring an income of Rs. 23,490. A notice under s. 148 was issued on 31st March, 1979. Subsequently, the ITO issued a notice under s. 143(2) of the Act and in the course of proceedings the documents which were not filed along with the return were filed after a notice was issued under s. 143(2) of the Act. Assessment was framed under s. 143(3)/148 of the Act. Against this assessment order, an appeal was preferred to the AAC where it was contended that the notice issued under s. 148 is invalid and, consequently, the assessment order passed by the ITO is illegal. The AAC has held that the return of income was filed on 30th Aug., 1978, under s. 139(4) of the Act and there was no necessity for the ITO to issue the notice under s. 148 and since the assessee has not filed any return in compliance with the notice issued under s. 148, the assessment could have been framed under s. 144. It was observed that, because, subsequently, the notice under s. 143(2) of the Act was issued, the ITO was legally competent to issue such a notice on the basis of the return filed and the assessment was accordingly completed under s. 143(3) of the Act and, therefore, the action of the ITO was in accordance with law. The matter was challenged by the assessee before the Tribunal with regard to the validity of the assessment order framed on the basis of the notice issued under s. 148. The Tribunal has observed that the AAC was not justified in recording the reasoning that the ITO has not acted under s. 148 when the proceedings were initiated under s. 148. The Tribunal came to the conclusion that the order of assessment clearly mentioned that the assessment has been passed under s. 143(3) r/w s. 148 and the words “s. 148 cannot be considered superfluous and not protected under s. 292B”, the view of the Tribunal was that the provisions of s. 292B cannot be invoked to wash out the illegalities committed by the ITO and since the proceedings were under s. 148, the assessment framed has to be quashed.

3. The submission of learned counsel for the Revenue is that the order of the Tribunal is not in accordance with law, inasmuch as, even if the notice under s. 148 was issued, the same stands superseded by another notice issued under s. 143(2) of the Act and the assessment was in fact framed under s. 143(3) of the Act in pursuance of the notice issued under s. 143(3) of the Act. No provisions of s. 148 could have been invoked when no return was submitted or there was escapement of assessment which are not the facts of the present case and, therefore, no notice under s. 148 could have been issued. The ITO, after issuing the notice under s. 148, has issued another notice under s. 143(2) and that notice could have been issued when a return has been submitted under s. 139 of the Act. In fact, in the present case, the return was submitted under s. 139 and, therefore, the ITO had jurisdiction to issue the notice under s. 143(2) of the Act. The notice which has been issued under s. 143(2) of the Act has resulted in the final assessment and simply because a notice was issued earlier under s. 148 for which the conditions precedent were not in existence, it cannot be deemed that the assessment has been framed under s. 148. Though the provisions of s. 292B cannot be invoked in the present case because it was not a case of mistake, defect or omission in a notice issued it is a case where a notice was wrongly issued and subsequently, the correct notice was issued. On issuing the correct notice subsequently, the effect of issue of the earlier notice is obliterated and the AAC was not right in coming to this, conclusion inasmuch as, after issue of notice under s. 148, no return was submitted and the assessment was not framed under s. 144 on account of non-compliance with the notice issued under s. 148. It was on account of the issue of notice under s. 143(3) that the information/statement which was not submitted along with the return were subsequently submitted and, therefore, the assessment was framed under s. 143(3). Mere writing of s. 148 “will not escape the assessee of the liability” to pay tax in accordance with the return which was submitted by him. The view which has been taken by the Tribunal is not in accordance with law and the Tribunal has gone on technicalities which is not sustainable under law. In these circumstances, we are of the view that the Tribunal was not justified in coming to the conclusion that the assessment was framed under s. 148 and was not framed under s. 143(3).

4. Accordingly, the reference is answered in favour of the Revenue and against the assessee.

No order as to costs.

[Citation : 203 ITR 627]