Madhya Pradesh High Court
Inder Narayan Jhalani vs Union Of India (Uoi) And Anr. on 7 February, 2002
Equivalent citations: [2002]254ITR663(MP)
Author: A.M. Sapre
Bench: A.M. Sapre
JUDGMENT A.M. Sapre, J.
1. By filing this writ under article 226/227 of the Constitution of India, the petitioner seeks to assail the notice dated August 23, 1994 (annexure A/1), issued under Section 148 of the Income-tax Act, 1961 (for brevity called "the Act") by the Income-tax Officer, 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 Section 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 assessment year 1992-93, i.e., for the period April 1,1991 to March 31,1992. In the return, the petitioner claimed several deductions such as under Sections 80L, 80CCB, 80CCA, 80HHC and 80D in addition to other claims. The Assessing Officer processed the return of the petitioner under Section 143(l)(a) ibid and made prima facie adjustment in so far as the deduction claimed by the petitioner under Section 80HHC ibid was concerned by his order dated April 6, 1993 (annexure B at page 12 of the petition). The petitioner then on receipt of the said order felt aggrieved by the said adjustment and sought its rectification under Section 154 of the Act. The Assessing Officer rejected the application seeking rectification by his order dated July 19, 1993 (annexure D). The petitioner then filed an appeal to the Commissioner of Income-tax (Appeals). By order dated April 12, 1994, the Commissioner of Income-tax (Appeals) allowed the appeal and set aside the order of the Assessing Officer, by which he had made prima facie adjustment. The Revenue then felt aggrieved by the order passed by the Commissioner of Income-tax (Appeals) and filed a second appeal to the Tribunal. The Tribunal (the I. T. A. T.) dismissed the appeal and upheld the order of the Commissioner of Income-tax (Appeals). The Revenue then sought reference under Section 256(1) ibid to this court which having been declined by the Tribunal the Revenue came to the High Court under Section 256(2) of the Act. It is now pending.
3. On August 23, 1994, the Assessing Officer invoked the provisions of Section 147, Explanation 2(b) of the Act and issued notice under Section 148 ibid (annexure H). The notice was followed by the reasons as to why it is being sent. In the reasons/ the Assessing Officer said that he has reasons to believe that assessee has underestimated his income by claiming excessive deductions under Section 80HHC. It is this notice which is impugned in this writ.
4. 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.
5. The submission of learned counsel for the petitioner was that once the prima facie adjustment made in Section 143(1)(a) of the Act by the Assessing Officer in relation to deductions under Section 80HHC are held to be bad right up to the Tribunal, then, in such circumstance, no notice under Section 147/148 ibid for the same cause could be issued by the Assessing Officer. In other words, the submission was when the issue in question for which the ' impugned notice is sent was debated in Section 143(1)(a) proceedings and the same having been decided in favour of the assessee (petitioner) by the Commissioner of Income-tax (Appeals) and then by the Tribunal, then the same issue cannot be raised by the Assessing Officer again by sending notice under Section 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.
6. In reply learned counsel for the Revenue supported the issuance of the impugned notice and urged for its upholding and dismissal of the writ.
7. 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 Section 148 deserves to be upheld resulting in dismissal of the writ.
8. In my considered opinion, the scope of proceedings under Section 143(1)(a) of the Act are entirely different than that of proceedings under Section 148 of the Act. In other words merely because the action of the Assessing Officer while exercising the powers under Section 143(1)(a) are held to be not in conformity with Section 143(1)(a) is no ground to hold that the Assessing Officer cannot then exercise powers under Section 148 of the Act. When the Assessing Officer decides to resort to the provisions of Section 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 Section 143(1)(a), the Assessing Officer is mainly concerned as to whether he can do adjustment of any claim prima facie on the basis of material on record stated in the return. In case if the Assessing Officer 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 Assessing Officer feels that it is not so prima facie possible then the Assessing Officer 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 Section 143(1)(a) ibid.
9. In the present case, once it was held that the Assessing Officer was not justified under Section 143(1)(a) while making adjustment pertaining to deduction claimed by the petitioner under Section 80HHC, then the Assessing Officer is entitled to issue notice under Section 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 Section 147, Explanation 2(d), 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 Assessing Officer 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 Section 147 is made out then certainly a notice under Section 148 can be served on the petitioner for examining the issue as to whether the petitioner has rightly claimed the deduction under Section 80HHC in the return or not. Since, in this case the assessment has not yet been made of the year in question, the Assessing Officer was perfectly justified in invoking Section 147, Explanation 2(b) for issuing a notice under Section 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.
10. 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 Assessing Officer is free to pursue and complete the proceedings initiated against the petitioner under Section 148 ibid.
11. No costs.