Case Law Details
RELEVANT PARAGRAPH
16. The term ‘pending’ means ‘undecided1 i.e something which is not concluded. An action is considered as pending from the time of commencement of the proceedings. Thus, a legal proceeding is pending as soon as commenced and until it is concluded. As per Advanced Law Lexicon, third Edition of 2005, page 3521/3522, following are the definitions of the word ‘pending’:
“A suit is pending until final judgment is rendered. See 3
An action is pending until the judgment is fully satisfied.
A pending action is an action which has been commenced, and in
which some proceeding may be taken (Sherwood v. Ray) (1837) I Moo. PC 353; Hart v. Hart, (1881) 18 Gh D 670, 680; Fordham v. Clagett, (1882) 20 Ch D 637, 653). So long as it is possible for any proceeding to be taken in a case, such cause is still pending (per JESSEL, M.R., in Fordham v. Clagett, supra p. 653). For the purposes of Sec. 24 (5) and (7) of the Judicature Act, 1873, and action is pending after final judgment so long as the judgment remains unsatisfied. (Saltv. Cooper, (1880) 16 Ch D 544).
[A legal proceeding is “pending” as soon as commenced (on which see 5 Rep. 47, 48; 7 Rep. 30), and until it is concluded, i.e. so long as the Court having original cognizance of it can make an order on the matters in issue, or to be dealt with, therein.
Pending judicial proceeding. A judicial proceeding is said to be pending
(A) in the case of a civil proceeding, when it is instituted by the filing of a plaint or otherwise;
(B) in the case of a criminal proceeding under the Code of Criminal Procedure, 1898, or any other law-
(i) Where it relates to the commission of an offence, when the charge-sheet or challan is filed, or when the Court issues summons or warrant, as the case may be against the accused, and
(ii) in any other case, when the Court takes cognizance of the matter to which the proceeding relates, and in the case of a civil or criminal proceeding. [Contempt of Courts Act. (70 of 1971), S. 3 Expln. (a)]”.
17. From the above definitions/ concepts of the term ‘pending’, an authority is required statutorily to complete a proceeding when it is pending before him. Thus, unless authority/court, by operation of law, is required to conclude the proceedings it could not be said to be pending before it. If we examine the nature of the proceedings before the Assessing Officer (commenced by filing the return) in the light of above definitions, we find that a return filed by an assessee and processed by the Assessing Officer could not be said to be pending before him as he is not statutorily required to conclude those proceedings, it would have been a different matter if after filing of the return of income, the Assessing Officer does not process the return. Such return which has commenced a proceeding before the Assessing Officer would be said to be pending, but when return is processed or even where acknowledgement of return is treated as intimation, in that situation, the Assessing Officer is not required to conclude the assessment proceedings necessarily. Therefore, it could not be said that a proceeding is pending because of the return filed by the assessee. A fresh proceedings would commence and be pending when notice u/s 143(2) is issued. Thus, proceedings cannot be deemed to be pending before the Assessing Officer by virtue of return filed after Assessing Officer has processed the return, determined the tax payable including the interest on the returned income and also where return filed by the assessee is accepted by way of issuing acknowledgment. Merely because the Assessing Officer is prohibited from issuing notice u/s 143(2) after twelve months of filing of the return, it does not mean that proceedings commenced with filing of a return, are pending before him. In fact and in law, proceedings arising after filing of the return is a separate proceeding and proceedings initiated after issuance of notice u/s 143(2) are separate proceedings. If notice u/s 143(2) is not issued by the A.O, and twelve months of the filing of the return is expired, it could not be said that conclusion of any proceeding is time barred because such proceedings were not at all initiated. It is only the commencement of proceedings u/s 143(2) are barred by limitation after expiry of twelve months. So far as the proceedings initiated by filing the return of income is concerned, it has to be viewed independently. It will commence with the filing of the return and will come to an end when processing is done or acknowledgement is issued deeming it to be intimation. It cannot be deemed to be pending after processing or issuance of acknowledgement. Thus, proceedings for assessment has two methods of initiation, one is when return of income is filed and the other is when notice u/s 143(2) is issued. When return of income is fried and subsequently notice u/s 143(2) is issued without processing or issuing acknowledgement, then the two proceedings merged into each other and conclude when assessment order u/s 143(3) is passed. In an other case, when return is filed and is processed/acknowled gement is issued treating it as intimation, the first assessment proceedings gets concluded. So, the second assessment proceedings are initiated when notice u/s 143(2) is issued within twelve months of filing of return. The law provides for these two proceedings. The third proceedings for assessment is initiated by way of issuance of notice u/s 148(1). The statute provides jurisdiction in respect of second (by issuing notice u/s 143(2)) and third proceedings (by issuing notice u/s 148(1)) to the Assessing Officer when conditions laid down for them are fulfilled. As stated earlier, the first set of assessment proceedings initiates when return of income is filed by the assessee. In this regard, we make a reference to Section 147 as amended with effect from 1.4.1989, as under:
“147. Income escaping assessment-lf the Assessing Officer, has reason to believe that any income chargeable to tax has escaped assessment for any assessment year, he may, subject to the provisions of sections 148 to 153, assess or reassess such income and also any other income chargeable to tax which has escaped assessment and which comes to his notice subsequently in the course of the proceedings under this section, or recompute the loss or the depreciation allowance or any other allowance, as the case may be, for the assessment year concerned (hereafter in this section and in sections 148 to 153 referred to as the relevant assessment year):
Provided that where an assessment under sub-section (3) of section 143 or this section has been made for the relevant assessment year, no action shall be taken under this section after the expiry of four years from the end of the relevant assessment year, unless any income chargeable to tax has escaped assessment for such assessment year by reason of the failure on the part of the assessee to make a return under section 139 or in response to a notice issued under sub-section (1) of section 142 or section 148 or to disclose fully and truly all material facts necessary for his assessment for that assessment year.
Explanation 1.-Production before the Assessing officer of account books or other evidence from which material evidence could with due diligence have been discovered by the Assessing officer will not necessarily amount to disclosure within the meaning of the foregoing proviso.
Explanation 2.—For the purposes of this section, the following shall also be deemed to be cases where income chargeable to tax has escaped assessment, namely:—
(a) where no return of income has been furnished by the assessee although his total income or the total income of any other person in respect of which he is assessable under this Act during the previous year exceeded the maximum amount which is not chargeable to income-tax;
(b) where a return of income has been furnished by the assessee but no assessment has been made and it is noticed by the Assessing Officer that the assessee has understated the income or has claimed excessive loss, deduction, allowance or relief in the return;
(c) where an assessment has been made, but—
(i) income chargeable to tax has been under assessed; or
(ii) such income has been assessed at too low a rate; or
(iii) such income has been made the subject of excessive relief under this Act; or
(iv) excessive loss or depreciation allowance or any other allowance under this Act has been computed.”
18. Explanation 2 to above Section clearly provides three situations where it is deemed that income has escaped assessment and therefore, initiation of assessment/re- assessment proceedings by issue of notice u/s
148(1) would be valid. These situations are –
(i) when return of income is not filed and there is a case of under assessment as mentioned in clause (a).
(ii) when return of income is filed and assessment is not made and there is a case of under assessment as mentioned in clause (b).
(iii) when return of income is filed and assessment is made and there is a case of under assessment of income as mentioned in clause (c).
36. The basis of overwhelming authorities on the subject as referred to above, we hold that notice issued u/s 148(1) can be issued even where notice u/s 143(2) has been pending and not closed. We hold that by processing the return and by issuing acknowledgement as token of accepting the return, the proceedings initiated by filing the return are terminated and no proceedings therefore, remain pending. It has been held by the Hon’ble Supreme Court in the case of Rajesh Jhaveri case itself that intimation is not an assessment. Following the above proposition of law, as sending of intimation or issuing acknowledgement is not an assessment, proceedings initiated by filing the return of income are concluded when return is processed and/or acknowledgement is issued as token of acceptance of the return. No proceeding is pending thereafter and also no assessment is made in view of interpretation of the term ‘intimation’ by Apex Court. This situation is directly covered in Explanation 2(b) to Section 147 and therefore, issuance of notice u/s 148(1) after processing is completed / acknowledgment issued would be covered by the deeming provision in Explanation 2(b). The argument of Id. AR that re-assessment presupposes that assessment should have been framed and intimation is not an assessment, therefore, assessment is not framed and therefore, re-assessment could not be initiated is not acceptable because deeming provision of Explanation 2(b) to Section 147 does not contemplate that an assessment of the nature as done u/s 143(3) should be completed for invoking that clause of the explanation. It only says that the assessee has under stated the income or has claimed excessive loss, deduction, allowance or relief in the return. Thus, Assessing Officer has to only point out, or it should come to his notice on the basis of examination of the return that assessee has under-stated the income or claimed excessive loss, deduction, allowance or relief. It nowhere presupposes that assessment of the type prescribed u/s 143(3) should have been completed for deeming escapement of income. The word ‘assessment’ has not been used at all in Explanation 2(b), therefore, it will cover all the situations where assessment is not framed. This situation will include the situation where only intimation is sent or processing is done or even nothing is done after filing the return. The opening words of Section 147 “if the Assessing Officer has reason to believe that any income chargeable to tax has escaped the assessment
for any assessment year ………… …… ” cannot be read without considering
Explanation 2 which defines and prescribes the scope and limit of all deemed escapement of income under the situation mentioned in three clauses.
37. Thus, we reject the contention of the id. AR for the assessee that Assessing Officer could not have issued the notice u/s 148(1) within twelve months of filing of the return which is the period when Assessing Officer should have issued notice u/s 143(2) which has not been issued.
