Gauhati High Court
Commissioner Of Income Tax vs Mintu Kalita on 22 February, 2002
Author: D. Biswas
Bench: D. Biswas
JUDGMENT
1. The brief facts are as follows : The assessee filed his return for the assessment year of 1980-81 and 1981 -82 and the Income Tax Officer completed the assessment Under Section 143(1) of the Income Tax Act (hereinafter called the Act for the sake of brevity). Thereafter the Income Tax Officer came to know that the Firm M/s. Gouri Kanta Kalita And Company had income from Hullar Rice Mill which was assessed in the hands of Shri Gouri Kanta Kalita in his individual capacity in the earlier years. In view of this he completed the assessment of M/s. Gouri Kanta Kalita And Company at Nil and initiated proceedings Under Section 147(a) of the Act for the assessment years under reference and issued notice Under Section 148 of the Act there was response on the part of the assessee in respect of notice Under Section 148. The Issuing Officer issued notice Under Section 142(1) of the Act in response to which one Shri J.C. Chakravarty, an employee appeared. The Assessing Officer then completed the assessment. Before the Assessing Officer, the assessee did not raise the question of non-service of notice Under Section 148.
2. Before the Appellate Assistant Commissioner the contention of the assessee, amongst other things, was that there was no justification for initiation of proceeding Under Section 147 and that the assessee was not served with notice Under Section 148 and the entire proceedings were bad in law and should be quashed in respect of both the years. The Appellate Assistant Commissioner however, did not accept this contention and disposed of the matter on merits and allowed certain reliefs. Against this, the assessee filed an appeal before the Tribunal and the Tribunal by its order dated 25.10.1988 remanded the matter back to the file of the Appellate Assistant Commissioner for fresh disposal after considering all the grounds raised by the assessee. The DCIT (appeals) (Formerly Appellate Assistant Commissioner) again considered the matter, but he dismissed the appeals.
3. Aggrieved by the order the Assesses came in Second Appeal before the Tribunal. The Tribunal after considering the facts and circumstances of the case asked for a remand report from the Assistant Commissioner vide its order dated 28.4.1989. After considering the remand report submitted by the Income Tax Officer, the Tribunal was satisfied that notice Under Section 148 of the Act was issued and came to the conclusion that as the Income Tax Officer had issued notice Under Section 148 of the Act, he had the jurisdiction to re-assess the income. But it was found that he cannot proceeded to make reassessment as there was no prove that the notices Under Section 148 of the Act were served on the assessee. The Tribunal, therefore, cancelled the assessment made by the Income Tax Officer for both the years under reference. Thereafter in pursuance of the direction of this Court in Civil Rule No. 5M/90, a statement of case was drawn up and the following question Under Section 256(2) was referred to this Court for opinion. The question is as follows :
"Whether on the facts and circumstances of the case, particularly in view of the fact that the assessee approached through the authorised representative before the assessing Officer in response to notice Under Section 142(1) in the proceeding Under Section 147, the assessee had sufficient notice Under Section 148 of the IT Act 1961?"
4. We have heard Shri K.P. Sarma, learned counsel for the Revenue. None appears for the assessee. The finding of the Appellate Tribunal in I. T. A. No. 209 and 210 (Gauhati) 1983 is quoted below :
"In fact, Section 148 requires that before making the assessment, re-assessment or the recomputation Under Section 147 of the I.T.O. shall serve on the assessee a notice Under Section 148 containing all or any of the requirement which may be included in a notice under Sub-section (2) of Section 139 and other procedure would follow suit, Service of notice on the assessee is inevitable unless service was effected, we can not say that re-assessment should be treated to be in order as held by the A. A. C. on the ground that the assessee had not raised this ground in the appeal as he has not sought leave to , adduce the said additional grounds. The appellate authority would have to take into account any plea and to dispose of the matter as such."
It is the further findings in I.T.A. No. 245/90 and 248/90 and that is quoted below :
"In that remand report, the assessing Officer categorically stated that notice under Section 148 was issued for both-the years by registered post as established by necessary entries in the file and registers relevant for the purpose. But the assessing officer has categorically stated that acknowledgement slip or indication of service of notice under Section 148 is not available at this stage."
The further finding of the appellate Tribunal is as follows :
"In the present case before us and on the basis of the remand report and the additional remand report, it is seen that the notice under Section 148 was issued by the ITO to the assessee under registered post. But the ITO has reported that no acknowledgement slip is available at this stage. From the photo-copies of the order sheet entries for the assessment years under considerations, it can not be seen that there was any service of notice under Section 148 to the assessee for both the years."
The further findings of the appellate Tribunal is as follows :
"That in the present case before us, we find that the notice under Section 148 was actually issued by the ITO for both the years and, therefore, the ITO had the jurisdiction to call for a return account books etc. for the purpose of re-assessment proceedings. But as pointed out by the Hon'ble Supreme Court that the mandate of Section 148(1) is that re-assessment order shall not be made until there has been service of such notice."
5. Section 148(1) of the Income Tax Act is quoted below :
"148(1). Before making the assessment, reassessment or recomputation under Section 147, the Assessing Officer shall serve on the assessee a notice requiring him to furnish within such period (***) as may be specified in the notice, a return of his income or the income of any other person in respect of which is assessable under this Act during the previous year corresponding to the relevant assessment year, in the prescribed form and verified in the prescribed manner and setting forth such other particulars as may be prescribed and the provisions of this Act, shall so far as may be, apply accordingly as if such return were a return required to be furnished under Section 139."
Service of notice prescribed by Section 148 of the Income Tax Act for the purpose of initiating the proceeding for reassessment is not a mere procedural requirement, it is a condition precedent to the initiation of a proceeding for the assessment Under Section 147 of the Act. Mere issuance of a notice is not sufficient. In AIR 1987 S.C. 1378 (R. K. Upadhyay, Appellant v. Shanabhai P. Patel, Respondent), the Supreme Court has pointed out that service under the new Act is not a condition precedent to conferment of Jurisdiction in the Income-tax Officer to deal with the matter, but it is a condition precedent to making of the order of assessment."
6. There is no material to show that the employee appeared in pursuance of a notice Under Section 148. He appeared only in response to a notice Under Section 142(1) of the Act. Section 142(1) deals with enquiry before assessment and the appearance of the employee in terms of this notice to produce such account or document as the assessing officer may require can not be deemed to be the knowledge of the proceeding Under Section 147 of the Act.
7. That being the position, agreeing with the findings as quoted above. We, hold that no notice was served Under Section 148 of the Act and the appearance of a person in response to a notice Under Section 142(1) of the Act can not be deemed to be the knowledge of the proceedings Under Section 147 of the Act. The question is accordingly answered in favour of the assessee. Accordingly the Income Tax Reference shall stand disposed of.