Punjab-Haryana High Court
Commissioner Of Income Tax vs K.G. Madan on 7 October, 2004
Equivalent citations: (2005)193CTR(P&H)550, [2005]275ITR294(P&H)
Author: Ajay Kumar Mittal
Bench: Ajay Kumar Mittal
JUDGMENT Ajay Kumar Mittal, J.
1. This reference under Section 256(1) of the IT Act, 1961 (for short "the Act"), is at the instance of the Revenue. The Income-tax Appellate Tribunal, Delhi Bench "E" (hereinafter to be referred as the Tribunal), has referred the following question for the opinion of this Court:
"Whether, on the facts and circumstances of the case, the Tribunal was right in law in holding that the proceedings under Section 148 were not validly initiated ?"
2. The assessee, an individual, filed return of income on 28th Dec, 1984, for the asst. yr. 1981-82, wherein an income of Rs. 20,000 was declared. This return was beyond the time as allowed under Section 139 of the Act for filing of voluntary return. The AO thus, issued a notice under Section 148 of the Act. The assessee challenged the validity of the initiation of proceedings under Section 148 before the Commissioner of Income-tax (Appeals) [hereinafter to be referred to as "CIT(A)"]. The CIT(A) rejected the claim of the assessee. However, appeal of the assessee was allowed by the Tribunal and initiation of proceedings under Section 148 was held to be bad in law. Accordingly, the assessment made in pursuance to the notice issued thereunder was quashed.
3. Shri Rajesh Bindal, learned counsel appearing for the Revenue, submitted that the Tribunal has erred in quashing the assessment order and holding that proceedings under Section 148 of the Act had not been properly initiated.
4. We have thoughtfully considered the submissions of the learned counsel and have perused the paper book with his assistance. The Tribunal in para 2.2 of its order has held as under:
"We have carefully considered the arguments of both the sides. The notings of the AO on the order-sheet, as reproduced by the CIT(A) on p. 2, para 2 of his order are as under :
'25th Nov., 1985 Issue notice under Section 148
Sd/- ITO
25th Nov., 1985 Notice 148 for sign
Sd/- ITO
The assessee had filed return of income on 28th Dec, 1984, for asst. yr. 1981-82 showing income of Rs. 20,000. The return is beyond time and, therefore, invalid in view of income shown by the assessee, and the impounded documents, the income as the assessee is much above the taxable limits. Issue notice under Section 148.' From the above, it is evident that the AO's first noting of 25th Nov., 1985 "Issue notice under Section 148". This noting was duly signed. Another noting also signed on the same date was "Notice under Section 148 send for signature". This noting is also signed. We are unable to understand the significance of the second noting. Notice under Section 148 has to be signed by the AO himself, and it is not clear for whose signature the notice was sent. Thereafter, there is noting without putting any date. As per this noting the reasons have been recorded. The claim of the assessee's counsel is that this subsequent noting is not of 25th Nov., 1985, but of subsequent date. In support of his contention, he tried to derive support from the fact that no date was mentioned while asking this noting. He pointed out that in earlier two notings the dates were mentioned by the AO, but not on this noting which clearly indicates that this noting was not made on 25th Nov., 1985 itself. The learned Departmental Representative submitted that since the noting of 25th Nov., 1985, itself was continuing there was no necessity of putting the date again. We are unable to accept the contention of the learned Departmental Representative because when on the first two notings the dates were mentioned both the times though it was necessary when the noting is on the same date, has no force. However, at the same time, the learned counsel also could not point out any positive evidence which may indicate that the third noting in the order-sheet was not of 25th Nov., 1985, but of the subsequent date."
5. Accordingly, the Tribunal held that notice under Section 148 of the Act was issued before recording the reasons under Section 148(2) and, therefore, initiation of proceedings under Section 148 and the assessment made in pursuance thereof were bad in law. Learned counsel appearing for the Revenue, however, could not point out with reference to any material on the record to show that the Tribunal had erred in recording the aforesaid finding.
6. In view of the above, the question as referred to by the Tribunal is answered in the affirmative, i.e., in favour of the assessee and against the Revenue.