Case Law Details
CIT Vs Super Spinning Mills Ltd. (Madras High Court)
In a recent ruling Hon’ble Madras HC dismissed appeal filed by revenue by holding that assessment in the case of assessee is pending when notice u/s 148 for reassessment was issued which is not sustainable in the eye of law.
Return for AY 2002-03 was filed on 30.10.2002 and an intimation under Section 143(1) was issued on 19.12.2003. A Revised return was filed on 23.03.2004 for which notice u/s 143 (2) can be issued up to 31.03.2005. AO issued notice u/s 148 on 09.07.2004.
Assessee argued that issue in question is directly covered from the decision of this HC in (i) Commissioner Income-tax v. K.M.Pachayappan [(2008) 304 ITR 264]; (ii)Commissioner of Income-tax v. Qatalys Software Technologies Ltd. [(2009) 308 ITR 249] and (iii)Commissioner of Income-tax v. Tcp Ltd. [(2010) 323 ITR 346].
On the other hand, revenue department argued that since Section 147 applies to both assessment and re-assessment, the action of the AO in issuing notice u/s148 cannot be termed illegal and placed reliance upon the judgment of the Supreme Court in Assistant Commissioner of Income Tax v. Rajesh Jhaveri Stock Brokers Private Limited [(2007) 291 ITR 500]
After considering submission from both sides Hon’ble HC have held that issuance of notice under Section 143(2) will apply only in the case of pending assessment. This is a case where the assessment is pending and instead of completing the same, the assessing authority has initiated proceedings for re-assessment.
Appeal filed by revenue is dismissed.
FULL TEXT OF THE JUDGMENT/ORDER OF MADRAS HIGH COURT
The substantial questions on which the Tax Case Appeal have been admitted are as follows:
1)Whether on the facts and in the circumstances of the case, the Appellate Tribunal was right in law in holding that, notice under section 148 of the Income Tax Act cannot be issued before the time limit for issuance of notice under section 143(2) had expired?
2)Whether on the facts and in the circumstances of the case, the Appellate Tribunal was right in law in holding that the proceedings initiated by the assessing officer under section 147 of the Act for the assessment year 2002-03 while notice issued under section 148 was valid in law?’
2. The assessment year (AY) in question is 2002-03. Return was filed on 30.10.2002 and an intimation under Section 143(1) was issued on 19.12.2003. A Revised return was filed on 23.03.2004. Admittedly, the assessing authority had time till 31.03.2005 to issue a notice under Section 143(2). Notice under Section 148 has however been issued on 09.07.2004. Learned Senior Standing Counsel would accede to the date of events as above.
3. Hence and as the petitioner rightly points out the issue in question is squarely covered by decisions of this Court in (i) Commissioner of Income-tax v. K. M. Pachayappan [(2008) 304 ITR 264]; (ii)Commissioner of Income-tax v. Qatalys Software Technologies Ltd. [(2009) 308 ITR 249] and (iii)Commissioner of Income-tax v. Tcp Ltd. [(2010) 323 ITR 346].
4. Learned Senior Standing Counsel would attempt to state, taking a cue from the judgment of the Supreme Court in Assistant Commissioner of Income Tax v. Rajesh Jhaveri Stock Brokers Private Limited [(2007) 291 ITR 500] that since Section 147 applies to both assessment and reassessment, the action of the assessing authority in issuing notice under Section 148 will be saved.
5. We find this argument misconceived for the reason that the issuance of notice under Section 143(2) will apply only in the case of pending assessment. This is a case where the assessment is pending and instead of completing the same, the assessing authority has initiated proceedings for re-assessment. Hence, the submission of learned Senior Standing Counsel is seen to be devoid of merit and is rejected.
6. The substantial questions are answered in favour of the assessee and the Tax Case Appeal is dismissed. No costs.
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