Appeal details
Counselvise Citation
[2019] 116 COUNSELVISE.COM (IT) 7404 (ITAT-BANGALORE)
Assessee PAN
Bench
Appeal Number
Duration Of Justice
3 month(s) 28 day(s)
Appellant
Respondent
Appeal Type
Income Tax Appeal
Pronouncement Date
19-07-2019
Appeal Filed By
Assessee
Order Result
Allowed
Bench Allotted
C
Assessment Year
2008-2009
Appeal Filed On
22-03-2019
Judgement Text
IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH : BANGALORE BEFORE SHRI ARUN KUMAR GARODIA, ACCOUNTANT MEMBER AND SHRI PAVAN KUMAR GADALE, JUDICIAL MEMBER I TA NO. 585 /BANG/201 9 ASSESSMENT YEAR : 20 08 - 09 M/S. THE ARCHDIOCESAN BOARD OF EDUCATION, ARCHBISHOPS HOUSE, NO. 75 MILLERS ROAD, BENSON TOWN, BANGALORE 560 046. PAN: AABAT5296P VS. THE DEPUTY COMMISSIONER OF INCOME TAX (EXEMPTIONS), CIRCLE 1, BANGALORE. APPELLANT RESPONDENT ASSESSEE BY : SHRI PADAM CHAND KHINCHA, CA REVENUE BY : DR. P.V. PRADEEP KUMAR, ADDL. CIT (DR) DATE OF HEARING : 0 1 .0 7 .2019 DATE OF PRONOUNCEMENT : 19 .0 7 .2019 O R D E R PER SHRI A.K. GARODIA, ACCOUNTANT MEMBER THIS APPEAL IS FILED BY THE ASSESSEE AND THE SAME IS DIRECTED AGAINST THE ORDER OF LD. CIT(A)-10, BANGALORE DATED 31.01.2019 FOR ASSESSMENT YEAR 2008-09. 2. THE GROUNDS RAISED BY THE ASSESSEE ARE AS UNDER. GENERAL GROUND 1.1. THE LEARNED DEPUTY COMMISSIONER OF INCOME TAX (EXEMPTIONS), CIRCLE-1, BANGALORE (`A0') HAS ERRED IN PASSING THE ASSESSMENT ORDER UNDER SECTION 143(3) OF THE INCOME TAX ACT, 1961 (`THE ACT') IN THE MANNER PASSED BY HIM AND THE COMMISSIONER OF INCOME TAX-(APPEALS)- 10(`CIT(A)') HAS ERRED IN CONFIRMING THE SAID ASSESSMENT ORDER. THE SAID ORDER BEING HAD IN LAW IS LIABLE TO BE QUASHED. 2. GROUNDS RELATING TO ISSUE OF SECOND NOTICE UNDER SECTION 148 DATED 31.03.2015 TAX EFFECT : 1,35,59,450 2.1. THE LEARNED AO HAS ERRED ISSUING SECOND NOTICE UNDER SECTION 148 DATED 31.03.2015 WHEN PROCEEDINGS INITIATED BY FIRST NOTICE UNDER SECTION 148 DATED 18.04.2013 WERE STILL PENDING AS ON 31.03.2015. ON FACTS AND CIRCUMSTANCES OF THE CASE AND LAW APPLICABLE, THE SAID NOTICE ITA NO. 585/BANG/2019 PAGE 2 OF 16 IS BAD IN LAW AND LIABLE TO BE QUASHED. CONSEQUENTLY, THE RE-ASSESSMENT ORDER DATED 29.03.2016 IS INVALID, BAD IN LAW AND LIABLE TO BE QUASHED. 2.2. THE LEARNED CIT(A) HAS ERRED IN CONCLUDING THAT THE LEARNED AO HAD ISSUED A VALID NOTICE UNDER SECTION 148 DATED 31.03.2015 EVEN AFTER ACKNOWLEDGING THE FACT THAT THE LEARNED AO HAD COMMITTED A MISTAKE BY NOT DROPPING THE RE-ASSESSMENT PROCEEDINGS INITIATED THROUGH NOTICE UNDER SECTION 148 DATED 18.04.2013.ON FACTS AND CIRCUMSTANCES OF THE CASE AND LAW APPLICABLE, THE SECOND NOTICE UNDER SECTION 148 DATED 31.03.2015 IS BAD IN LAW AND LIABLE TO BE QUASHED. CONSEQUENTLY, THE RE-ASSESSMENT ORDER DATED 29.03.2016 IS INVALID, BAD IN LAW AND LIABLE TO BE QUASHED. 2.3. THE LEARNED CIT(A) HAS ERRED IN CONCLUDING THAT THE ACTION OF THE LEARNED AO BY NOT DROPPING THE RE-ASSESSMENT PROCEEDINGS INITIATED THROUGH NOTICE UNDER SECTION 148 DATED 18.04.2013 IS NOTHING BUT A TECHNICAL DEFECT AND NOT A MISTAKE AS CONSTRUED UNDER THE PROVISIONS OF SECTION 292B.ON FACTS AND CIRCUMSTANCES OF THE CASE AND LAW APPLICABLE, THE SECOND NOTICE UNDER SECTION 148 DATED 31.03.2015 IS BAD IN LAW AND LIABLE TO BE QUASHED. CONSEQUENTLY, THE RE-ASSESSMENT ORDER DATED 29.03.2016 IS INVALID, BAD IN LAW AND LIABLE TO BE QUASHED. 3. GROUNDS RELATING TO REASSESSMENT PROCEEDINGS INITIATED AS PER THE DIRECTIONS OF THE CIT(EXEMPTIONS) LAX EFFECT : 1,35,59,450 3.1. THE LEARNED AO HAS ERRED IN ISSUING SECOND NOTICE UNDER SECTION 148 DATED 31.03.2015 CONSEQUENT TO THE DIRECTIONS OF THE THEN COMMISSIONER OF INCOME-TAX (EXEMPTIONS), BANGALORE. THE REASSESSMENT PROCEEDINGS AND THE CONSEQUENT REASSESSMENT ASSESSMENT ORDER PASSED BY THE LEARNED AO ACTING ON THE DIRECTIONS OF A HIGHER AUTHORITY IS AGAINST THE PROVISIONS OF SECTION 147 AND HENCE BAD IN LAW. ON FACTS AND CIRCUMSTANCES OF THE CASE AND LAW APPLICABLE, THE SAID NOTICE IS BAD IN LAW AND LIABLE TO BE QUASHED. CONSEQUENTLY, THE RE- ASSESSMENT ORDER DATED 29.03.2016 IS INVALID, BAD IN LAW AND LIABLE TO BE QUASHED. 4. GROUNDS RELATING TO CHANGE OF OPINION - TAX EFFECT : 1,35,59,450 4.1. THE LEARNED AO HAS ERRED IN ISSUING SECOND NOTICE UNDER SECTION 148 DATED 31.03.2015 CONSEQUENT TO MERE CHANGE OF OPINION RESULTING FROM THE DIRECTIONS OF A HIGHER AUTHORITY, AND CONSIDERING THE FACT THAT ASSESSMENT UNDER SECTION 143(3) HAD BEEN COMPLETED. ON FACTS AND CIRCUMSTANCES OF THE CASE AND LAW APPLICABLE, THE SAID NOTICE IS BAD IN LAW AND LIABLE TO BE QUASHED. CONSEQUENTLY, THE RE-ASSESSMENT ORDER DATED 29.03.2016 IS INVALID, BAD IN LAW AND LIABLE TO BE QUASHED. 5. GROUNDS RELATING TO REASSESSMENT MADE ON THE BASIS OF AUDIT OBJECTION- TAX EFFECT : 1.35,59,450 5 1. THE LEARNED AO HAS ERRED IN ISSUING SECOND NOTICE UNDER SECTION 148 DATED 31.03.2015 BASED ON THE OBJECTION RAISED BY REVENUE AUDIT PARTY (RAP). ON FACTS AND CIRCUMSTANCES OF THE CASE AND LAW APPLICABLE, THE SAID NOTICE IS BAD IN LAW AND LIABLE TO BE QUASHED. ITA NO. 585/BANG/2019 PAGE 3 OF 16 CONSEQUENTLY, THE RE-ASSESSMENT ORDER DATED 29.03.2016 IS INVALID, BAD IN LAW AND LIABLE TO BE QUASHED. 6. GROUNDS RELATING TO REASSESSMENT MADE AFTER THE EXPIRY OF 4 YEARS FROM THE END OF THE ASSESSMENT YEAR - TAX EFFECT : 1,35,59,450 6.1. THE LEARNED AO HAS ERRED IN ISSUING SECOND NOTICE UNDER SECTION 148 DATED 31.03.2015 AFTER THE EXPIRY OF FOUR YEARS FROM THE END OF THE ASSESSMENT YEAR. ON FACTS AND CIRCUMSTANCES OF THE CASE AND LAW APPLICABLE, THE SAID NOTICE ISSUED AND THE RE-ASSESSMENT ORDER PASSED UNDER SECTION 143(3) DATED 29.03.2016, AFTER THE EXPIRY OF FOUR YEARS FROM THE END OF THE ASSESSMENT YEAR IS CONTRARY TO THE FIRST PROVISO TO SECTION 147 AND THUS BAD IN LAW AND LIABLE TO BE QUASHED. 6.2. THE LEARNED AO HAS ERRED IN NOT APPRECIATING THE FACT THAT THERE IS NO FAILURE ON THE PART OF THE ASSESSEE TO MAKE A RETURN OR TO DISCLOSE FULL AND TRULY ALL MATERIAL FACTS NECESSARY FOR HIS ASSESSMENT. ON FACTS AND CIRCUMSTANCES OF THE CASE AND LAW APPLICABLE, THE SAID NOTICE ISSUED AND THE RE-ASSESSMENT ORDER PASSED UNDER SECTION 143(3) DATED 29.03.2016, AFTER THE EXPIRY OF FOUR YEARS FROM THE END OF THE ASSESSMENT YEAR IS CONTRARY TO THE FIRST PROVISO TO SECTION 147 AND THUS BAD IN LAW AND LIABLE TO BE QUASHED. 7. GROUNDS RELATING TO REASONS RECORDED FOR ISSUE OF NOTICE UNDER SECTION 148 - TAX EFFECT : 1,35,59,450 7.1 THE REASSESSMENT ORDER BY THE LEARNED AO IS BAD IN LAW AS THE REASONS RECORDED DOES NOT STATE THAT THERE WAS A FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE FULLY 'AND TRULY ALL MATERIAL FACTS NECESSARY FOR HIS ASSESSMENT. THE REASSESSMENT ORDER SO PASSED IS AGAINST FIRST PROVISO TO SECTION 147 AND HENCE BAD IN LAW AND LIABLE TO BE QUASHED. 8. GROUNDS RELATING TO ISSUE OF NOTICE UNDER SECTION 148 AFTER THE LIMITATION PERIOD - TAX EFFECT : 1,35,59,450 8.1. THE LEARNED AO HAS ERRED IN ISSUING SECOND NOTICE UNDER SECTION 148 DATED 31.03.2015 AFTER THE LIMITATION PERIOD OF 31.03.2015. THE IMPUGNED NOTICE DATED 31.03.2015 HAVING RECEIVED ON 16.04.2015 DEMONSTRATES THAT THE SAID NOTICE WAS ISSUED AFTER 31.03.2015 ALTHOUGH DATED 31.03.2015. ON FACTS AND CIRCUMSTANCES OF THE CASE AND LAW APPLICABLE, THE SAID NOTICE IS BAD IN LAW AND LIABLE TO BE QUASHED. CONSEQUENTLY, THE RE-ASSESSMENT ORDER DATED 29.03.2016 IS INVALID, BAD IN LAW AND LIABLE TO BE QUASHED. 9. GROUNDS RELATING TO EXEMPTION CLAIMED UNDER SECTION 11 / 10(23C) - TAX EFFECT : 1 35 59 450 9.1 THE LEARNED AO AND CIT(A) HAVE ERRED IN DISALLOWING EXEMPTION CLAIMED UNDER SECTION 11 FOR THE YEAR UNDER CONSIDERATION. ON FACTS AND CIRCUMSTANCES OF THE CASE AND LAW APPLICABLE, EXEMPTION UNDER SECTION 11 SHOULD BE ALLOWED AS CLAIMED IN THE RETURN OF INCOME. 9.2 ASSUMING WITHOUT ADMITTING THAT THE APPELLANT IS NOT ELIGIBLE FOR EXEMPTION UNDER SECTION 11, THE LEARNED AO AND CIT(A) HAVE ERRED IN ITA NO. 585/BANG/2019 PAGE 4 OF 16 NOT ALLOWING EXEMPTION UNDER SECTION 10(23C) (IIIAD) IN RESPECT OF EDUCATIONAL INSTITUTIONS WITH AGGREGATE ANNUAL RECEIPTS NOT EXCEEDING RS. 1CRORE. 9.3 ASSUMING WITHOUT ADMITTING THAT THE APPELLANT IS NOT ELIGIBLE FOR EXEMPTION UNDER SECTION 11, THE LEARNED AO AND CIT(A) HAVE ERRED IN NOT ALLOWING EXEMPTION UNDER SECTION 10(23C) (VI) AS THE EDUCATIONAL INSTITUTIONS EXISTS SOLELY FOR EDUCATIONAL PURPOSES AND NOT PURPOSES OF PROFIT. ALTHOUGH REGISTRATION UNDER SECTION 10(23C) (VI) WAS OBTAINED IN SUBSEQUENT YEAR, THE BENEFIT OF THE SAME HAS TO BE APPLIED IN THE EARLIER ASSESSMENT YEARS, UNLESS THE REGISTRATION GRANTED EARLIER IS CANCELLED OR REFUSED FOR SPECIFIC REASONS. 9.4 ON FACTS AND CIRCUMSTANCES OF THE CASE AND LAW APPLICABLE, EXEMPTION SHOULD BE ALLOWED EITHER UNDER SECTION 11 OR UNDER SECTION 10(23C) (III AD) OR UNDER SECTION 10(23C) (VI) FOR THE YEAR UNDER CONSIDERATION. 10. GROUND RELATING TO INTEREST UNDER SECTION 234B 10.1. THE LEARNED AO HAS ERRED IN LEVYING INTEREST UNDER SECTION 234B AMOUNTING TO RS. 1,28,98,609. ON FACTS AND CIRCUMSTANCES OF THE CASE AND LAW APPLICABLE, INTEREST UNDER SECTION 234B IS NOT LEVIABLE. THE APPELLANT DENIES ITS LIABILITY TO PAY INTEREST UNDER SECTION 234B. 11. PRAYER 11.1. IN VIEW OF THE ABOVE AND OTHER GROUNDS TO BE ADDUCED AT THE TIME OF HEARING, THE APPELLANT PRAYS THAT THE ORDER PASSED BY THE LEARNED CIT(A) BE QUASHED OR IN THE ALTERNATIVE A) EXEMPTION BE ALLOWED UNDER SECTION 11 OR UNDER SECTION 10(23C) (IIIAD) OR UNDER SECTION 10(23C) (VI), B) INTEREST LEVIED UNDER SECTION 234B AMOUNTING TO RS. 1,28,98,609 IS TO BE DELETED. THE APPELLANT PRAYS ACCORDINGLY. 3. IN COURSE OF HEARING OF THE APPEAL, IT WAS SUBMITTED BY LD. AR OF ASSESSEE THAT THE ORIGINAL ASSESSMENT ORDER U/S. 143(3) WAS PASSED BY THE AO ON 12.05.2010, COPY OF WHICH IS AVAILABLE ON PAGES 100 AND 101 OF THE PAPER BOOK. THEREAFTER, HE SUBMITTED THAT FIRST NOTICE U/S. 148 WAS ISSUED BY THE AO ON 18.04.2013 AS PER COPY AVAILABLE ON PAGE 102 OF THE PAPER BOOK. HE SUBMITTED THAT AS PER THIS NOTICE ISSUED BY THE AO U/S. 148, THE AO WAS REQUIRED TO COMPLETE THE ASSESSMENT AND IN VIEW OF THE PROVISIONS OF SECTION 153 OF IT ACT, THE AO HAD TIME UP TO 31.03.2015 TO COMPLETE THE ASSESSMENT ITA NO. 585/BANG/2019 PAGE 5 OF 16 PURSUANT TO THIS NOTICE ISSUED BY HIM ON 18.04.2013 U/S. 148 OF IT ACT BUT NO ORDER WAS PASSED BY THE AO PURSUANT TO THIS NOTICE ISSUED BY THE AO U/S. 148 ON 18.04.2013. THEREAFTER HE SUBMITTED THAT ONE MORE NOTICE WAS ISSUED BY THE AO U/S. 148 ON 31.03.2015, COPY OF WHICH IS AVAILABLE ON PAGE NO. 103 OF THE PAPER BOOK AND PURSUANT TO THIS NOTICE ISSUED BY THE AO U/S. 148 ON 31.03.2015, THE AO HAS PASSED THE PRESENT ASSESSMENT ORDER ON 29.03.2016. IT WAS A SUBMISSION THAT THIS IS ADMITTED POSITION THAT THE ASSESSMENT ORDER DATED 29.03.2016 IS FRAMED BY THE AO PURSUANT TO THIS NOTICE ISSUED BY HIM ON 31.03.2015 BECAUSE THIS FACT IS NOTED BY THE AO ALSO IN PARA 2 OF THE ASSESSMENT ORDER AND THIS FACT IS STATED BY LD. CIT(A) ALSO IN PARA 5.3 OF HIS ORDER. IT WAS A SUBMISSION THAT THEREFORE, IT IS ADMITTED POSITION OF FACT THAT SECOND NOTICE U/S. 148 WAS ISSUED BY THE AO ON 31.03.2015 BEING THE DATE BY WHICH THE AO SHOULD HAVE PASSED THE ASSESSMENT ORDER IN PURSUANCE TO FIRST NOTICE U/S. 148 ISSUED BY HIM ON 18.04.2013. HE SUBMITTED THAT UNDER THIS FACTUAL POSITION, THE JUDGMENT OF HONBLE GUJARAT HIGH COURT RENDERED IN THE CASE OF MARWADI SHARES & FINANCE LTD. VS. DCIT AS REPORTED IN [2018] 94 TAXMANN.COM 398 (GUJARAT), COPY AVAILABLE ON PAGES 457 TO 469 OF THE PAPER BOOK IS SQUARELY APPLICABLE. HE SUBMITTED THAT IN THIS CASE ALSO, TWO NOTICES WERE ISSUED BY THE AO U/S. 148, OUT OF WHICH FIRST NOTICE WAS ISSUED ON 31.03.2015 AND THE SECOND NOTICE WAS ISSUED BY THE AO U/S. 148 ON 29.03.2017 AND IT WAS HELD BY HONBLE GUJARAT HIGH COURT IN THAT CASE THAT THERE CAN BE ONLY ONE PROCESS OF ASSESSMENT OR REASSESSMENT AND PENDING ANY SUCH ASSESSMENT OR REASSESSMENT, THERE CANNOT BE A NOTICE OF REOPENING. IT IS ALSO HELD THAT THE LAW DOES NOT RECOGNIZE TWO PARALLEL ASSESSMENTS AND IN ABSENCE OF WITHDRAWAL OF THE FIRST NOTICE OF REASSESSMENT, THE PROCEEDINGS AS PER THE SUBSEQUENT NOTICE OF REOPENING ARE INVALID. 4. AS AGAINST THIS, THE LD. DR OF REVENUE SUBMITTED THAT THIS JUDGMENT OF HONBLE GUJARAT HIGH COURT IS NOT APPLICABLE IN THE FACTS OF PRESENT CASE BECAUSE IN THE PRESENT CASE, THE ASSESSEE HAS NOT FILED RETURN OF INCOME IN PURSUANCE TO THE FIRST NOTICE ISSUED BY AO U/S. 148 ON 18.04.2013 WHEREAS IN THE CASE OF MARWADI SHARES & FINANCE LTD. VS. DCIT (SUPRA), AGAINST THE FIRST NOTICE ISSUED BY THE AO U/S. 148 OF IT ACT, THE ASSESSEE CHALLENGED SUCH NOTICE OF ITA NO. 585/BANG/2019 PAGE 6 OF 16 REOPENING BY FILING SPECIAL CIVIL APPLICATION BEFORE HONBLE GUJARAT HIGH COURT WHICH WAS DISPOSED OF BY HONBLE GUJARAT HIGH COURT BY AN ORDER DATED 21.06.2016 AND THEREFORE, THIS JUDGMENT OF HONBLE GUJARAT HIGH COURT IS NOT APPLICABLE IN THE PRESENT CASE. HE PLACED RELIANCE ON THE JUDGMENT OF HON'BLE KARNATAKA HIGH COURT RENDERED IN THE CASE OF P. DAYANANDA PAI VS. ACIT AS REPORTED IN [2011] 15 TAXMANN.COM 249 (KARNATAKA), COPY AVAILABLE ON PAGES 11 TO 24 OF THE CASE LAW COMPILATION FILED BY LD. DR OF REVENUE. HE SUBMITTED THAT WHEN THE JUDGMENT OF HON'BLE KARNATAKA HIGH COURT IS AVAILABLE, THE SAME SHOULD BE FOLLOWED IN PREFERENCE TO THE JUDGMENT OF ANY OTHER HIGH COURT. HE ALSO PLACED RELIANCE ON THE JUDGMENT OF HONBLE APEX COURT RENDERED IN THE CASE OF COMUNIDADO OF CHICALIM VS. ITO AS REPORTED IN [2000] 113 TAXMAN 331 (SC), COPY AVAILABLE ON PAGES 1 AND 2 OF THE CASE LAW COMPILATION FILED BY LD. DR OF REVENUE. HE ALSO PLACED RELIANCE ON ONE MORE JUDGMENT OF HONBLE APEX COURT RENDERED IN THE CASE OF TAPAN KUMAR DATTA VS. CIT AS REPORTED IN [2018] 92 TAXMANN.COM 367 (SC), COPY AVAILABLE ON PAGES 3 TO 10 OF THE CASE LAW COMPILATION FILED BY LD. DR OF REVENUE. THE LD. DR OF REVENUE ALSO PLACED RELIANCE ON THE JUDGMENT OF HONBLE ALLAHABAD HIGH COURT RENDERED IN THE CASE OF ASHOK KUMAR DIXIT VS. ITO AS REPORTED IN [1992] 198 ITR 669 (ALL.). HE ALSO PLACED RELIANCE ON THE JUDGMENT OF HONBLE KERALA HIGH COURT RENDERED IN THE CASE OF ITO VS. SMT. NILOFER HAMEED AS REPORTED IN [2003] 133 TAXMAN 722 (KER.), COPY AVAILABLE ON PAGES 27 TO 32 OF PAPER BOOK. 5. IN THE REJOINDER, IT WAS SUBMITTED BY LD. AR OF ASSESSEE THAT ALL THE THREE JUDGMENTS INCLUDING ONE JUDGMENT OF HON'BLE KARNATAKA HIGH COURT AND TWO JUDGMENTS OF HONBLE APEX COURT CITED BY LD. DR OF REVENUE ARE NOT APPLICABLE IN THE FACTS OF PRESENT CASE AND THEREFORE, THE JUDGMENT OF HONBLE GUJARAT HIGH COURT SHOULD BE FOLLOWED. REGARDING TWO JUDGMENTS OF HONBLE ALLAHABAD HIGH COURT AND HONBLE KERALA HIGH COURT, HE SUBMITTED THAT THESE ARE ALSO NOT APPLICABLE IN THE PRESENT CASE AND EVEN IF IT IS HELD THAT THESE ARE APPLICABLE, THE JUDGMENT IN FAVOUR OF THE ASSESSEE SHOULD BE FOLLOWED I.E. THE JUDGMENT OF HONBLE GUJARAT HIGH COURT IN VIEW OF THE JUDGMENT OF HONBLE APEX COURT RENDERED IN THE CASE OF CIT VS. VEGETABLE PRODUCTS LTD., 88 ITR 192. ITA NO. 585/BANG/2019 PAGE 7 OF 16 6. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. FIRST OF ALL, WE EXAMINE THE APPLICABILITY OF THE JUDGMENT OF HON'BLE KARNATAKA HIGH COURT CITED BY LD. DR OF REVENUE BECAUSE IF WE FIND THAT THIS JUDGMENT OF HON'BLE KARNATAKA HIGH COURT IS APPLICABLE IN THE PRESENT CASE, THEN THE JUDGMENT OF ANY OTHER HIGH COURT IS NOT REQUIRED TO BE CONSIDERED BECAUSE WE ARE DUTY BOUND TO FOLLOW THE JUDGMENT OF HON'BLE KARNATAKA HIGH COURT IN PREFERENCE TO ANY JUDGMENT OF ANY OTHER HIGH COURT. 7. TO EXAMINE THE APPLICABILITY OF THIS JUDGMENT IN THE PRESENT CASE, WE REPRODUCE PARA NOS. 12 TO 17 OF THIS JUDGMENT FROM PAGES 17 TO 19 OF CASE LAW COMPILATION FILED BY LD. DR OF REVENUE. THESE PARAS READ AS UNDER. 12. FROM THE MATERIAL ON RECORD, IT IS NOTICED THAT IN RESPECT OF THE ASSESSMENT YEAR 1991-92, WHICH IS UNDER CONSIDERATION, THE LAST, DATE FOR FILING OF THE RETURN WAS 30/10/1991. HOWEVER, NO SUCH RETURN WAS FILED BY THE APPELLANT BEFORE THE SAID DATE. SUBSEQUENTLY, ON 24/2/1992, A SEARCH WAS CONDUCTED IN THE PREMISES OF THE APPELLANT UNDER SECTION 132 OF THE ACT AND THEREAFTER, A DECLARATION OF INCOME OF RS. 3 LAKHS WAS MADE BY THE APPELLANT. HOWEVER, THERE WAS NO RETURN WHICH WAS FILED. THEREFORE, NOTICE UNDER SECTION 148 OF THE ACT WAS ISSUED ON 14/12/1992, WHICH WAS SERVED ON THE ASSESSEE ON 24/12/1992. EVEN PRIOR TO THE SERVICE OF NOTICE IN THE INTERREGNUM, THE ASSESSEE FILED HIS RETURN OF INCOME ON 22/12/1992, DECLARING INCOME OF RS. 3 LAKHS. IN THE USUAL COURSE, WITHIN A PERIOD OF TWO YEARS I.E., BY 31/3/1995, THE ASSESSMENT HAD TO BE COMPLETED. HOWEVER, ASSESSMENT ORDER IN THE INSTANT CASE WAS PASSED ON 27/3/1997 AND ANOTHER NOTICE UNDER SECTION 148 WAS ISSUED ON 24/11/1994 AND A REVISED RETURN WAS FILED ON 31/3/1995. THE CONTENTION OF THE COUNSEL FOR THE APPELLANT IS THAT THE SECOND NOTICE DATED 24/11/94 IS BARRED BY LIMITATION SINCE THE TIME LIMIT FOR THE CONCLUSION OF THE ASSESSMENT WAS 31/3/1995 AND AFTER THAT DATE, SINCE BY THEN, NO ASSESSMENT ORDER HAD BEEN PASSED, IT MUST BE DEEMED TO HAVE BEEN CONCLUDED AND HENCE, THE ASSESSMENT ORDER DATED 27/3/1997 IS INVALID. BEFORE ANSWERING THE POINTS FOR CONSIDERATION, IT WOULD BE NECESSARY TO REFER TO THE DOCUMENTS ANNEXED TO THE MEMORANDUM OF APPEAL. 13. IT IS SEEN FROM THE DOCUMENTS ANNEXED, THAT AS PER ANNEXURE-B DATED 24.10.1992 STATEMENT OF RETURN OF INCOME AS DISCLOSED ON 31.3.1992 AT THE TIME OF SEARCH UNDER SECTION 132(4) OF THE ACT IS GIVEN. IN THE SAID STATEMENT IT IS NOTED THAT AGRICULTURAL INCOME IS NOT INCLUDED SINCE THE SAME WAS BEING WORKED OUT AND WAS TO BE FURNISHED AT THE TIME OF FILING A REVISED RETURN. THOUGH THE SAID DOCUMENT IS DATED 24.10.1992, IT HAS NOT BEEN FILED IN THE INCOME TAX OFFICE. IN THE ABSENCE OF THERE BEING ANY RETURN FILED, NOTICE UNDER SECTION 148 OF THE ACT WAS ISSUED DATED ITA NO. 585/BANG/2019 PAGE 8 OF 16 14.12.1992 STATING THAT, RETURN HAS TO BE FILED IN THE PRESCRIBED FORM WITHIN 30 DAYS FROM THE DATE OF SERVICE OF NOTICE. BETWEEN THE DATE OF SERVICE OF NOTICE DATED 14.12.1992 AND THE RECEIPT OF NOTICE ON 24.12.1992 THE APPELLANT HAS FILED RETURN OF INCOME ON 22.12.1992 AS PER ANNEXURE-D. AFTER RECEIPT OF NOTICE DATED 24.12.1992 REPLY WAS GIVEN BY THE PETITIONER ON 29.12.1992 STATING THAT RETURN HAS BEEN FILED ON 22.12.1992. AFTER VERIFYING THE SAID RETURN NOTICE UNDER SECTION 148 OF THE ACT WAS ISSUED ON 24.11.1994 STATING THAT THERE HAS BEEN ESCAPEMENT OF INCOME. IN RESPONSE TO THE SAID NOTICE, THE APPELLANT FILED ANOTHER STATEMENT OF RETURN OF INCOME ON 18.10.1995. THE CASE WAS TAKEN UP FOR SCRUTINY BY ISSUE OF NOTICE UNDER SECTION 143(2) ON 15.5.1996 AND THEREAFTER VARIOUS DETAILS WERE CALLED FOR AND THE ASSESSMENT ORDER WAS PASSED ON 27.3.1997. 14. UNDER EXPLANATION TO SECTION 147 CERTAIN SITUATIONS WHICH ARE DEEMED TO BE CASES OF INCOME ESCAPING ASSESSMENT ARE STATED AS FOLLOWS: (A) WHERE NO RETURN OF INCOME IS FURNISHED BY AN ASSESSEE, ALTHOUGH TOTAL INCOME IS ABOVE THE TAXABLE LIMIT; (B) WHERE A RETURN OF INCOME HAS BEEN FURNISHED, BUT NO ASSESSMENT HAS BEEN MADE, AND THE ASSESSEE IS FOUND TO HAVE UNDERSTATED HIS INCOME OR CLAIMED, EXCESSIVE LOSS DEDUCTION, ETC., IN THE RETURN; AND (C) WHERE AN ASSESSMENT HAS BEEN MADE, BUT INCOME CHARGEABLE TO TAX HAS BEEN UNDER ASSESSED OR HAS BEEN ASSESSED AT TOO LOW A RATE OR ANY EXCESSIVE LOSS OR RELIEF OR DEPRECIATION ALLOWANCE OR ANY OTHER ALLOWANCE UNDER THE ACT HAS BEEN ALLOWED. 15. THE ASSESSING OFFICER MAY ASSESS OR REASSESS SUCH INCOME, OTHER THAN THE INCOME INVOLVING MATTERS WHICH ARE THE SUBJECT MATTER OF ANY APPEAL, REFERENCE OR REVISION, WHICH IS CHARGEABLE TO TAX AND HAS ESCAPED ASSESSMENT. 16. HAVING REGARD TO THE FACTS OF THE PRESENT, CASE, IT BECOMES CLEAR THAT IN RESPECT OF THE ASSESSMENT YEAR 1991-92, THE APPELLANT ASSESSEE HAD TO FILE HIS RETURN ON OR BEFORE 30.10.1991. THE SAME WAS NOT DONE. SUBSEQUENTLY, A SEARCH WAS CONDUCTED IN THE PREMISES OF THE APPELLANT UNDER SECTION 132 OF THE ACT ON 24.2.1992. A DECLARATION OF INCOME OF RS. 3.00 LAKH WAS MADE BY THE APPELLANT BUT NO RETURN WAS FILED TILL THEN. SINCE THERE WAS NO RETURN FILED BY THE APPELLANT NOTICE UNDER SECTION 148 OF THE ACT WAS ISSUED ON 14.2.1992 AS PER ANNEXURE-C WHICH WAS SERVED ON THE ASSESSEE ON 24.12.1992. THEREFORE, WHEN THE NOTICE UNDER SECTION 148 OF THE ACT WAS ISSUED, THE ASSESSEE HAD NOT FILED HIS RETURN OF INCOME ONLY ON 22.12.1992, THE ASSESSEE FILED HIS RETURN DECLARING INCOME OF RS. 3.00 LAKH. IF THE APPELLANT-ASSESSEE HAD FILED HIS RETURN IN THE USUAL COURSE THAT IS ON OR BEFORE 30.10.1991, THEN THE ASSESSMENT WOULD HAVE TO BE COMPLETED BY 31.3.1994. BUT IN THE PRESENT CASE A RETURN WAS FILED ONLY ON 22.12.1992 AFTER ISSUANCE OF NOTICE UNDER SECTION 148 OF THE ACT. THE SAID RETURN WAS THEREFORE, FILED SUBSEQUENT ITA NO. 585/BANG/2019 PAGE 9 OF 16 TO THE ISSUANCE OF NOTICE DATED 14.12.1992. THEREAFTER, ON CONSIDERATION OF THE RETURN FILED BY THE ASSESSEE ON 22.12.1992, NOTICE UNDER SECTION 148 WAS ISSUED ON 24.11.1994. IN RESPONSE TO WHICH, A REVISED RETURN WAS FILED ON 20.10.1995. ON THE FACTS OF THE PRESENT CASE, IT BECOMES CLEAR THAT AS ON THE DATE THE FIRST NOTICE WAS ISSUED, THERE WAS NO RETURN WHICH HAD BEEN FILED BY THE APPELLANT. IF A RETURN IS NOT FILED WITHIN TIME PRESCRIBED UNDER SECTION 139(1) OR WITHIN THE TIME ALLOWED UNDER SECTION 142(1), A NOTICE CAN BE ISSUED UNDER SECTION 148 SEEKING A RETURN TO BE FILED IN THE PRESCRIBED FORM AS IT WOULD BE DEEMED TO BE A CASE OF INCOME ESCAPING ASSESSMENT, PARTICULARLY WHEN THE TOTAL INCOME IS ABOVE THE TOTAL LIMIT. AFTER THE FILING OF HIS RETURN ON 22.12.1992, ANOTHER NOTICE WAS SENT ON 24.11.1994 PURSUANT TO WHICH THE ASSESSEE FILED A REVISED RETURN DECLARING REVISED TOTAL INCOME OF RS. 4,57,934/- ON 20.10.1995. IN FACT, IN THE RETURN FILED ON 22.12.1992, THE ASSESSEE HAD DECLARED A TOTAL INCOME OF RS. 3.00 LAKH WITHOUT PROFIT AND LOSS ACCOUNT AND BALANCE SHEET. 17. HAVING REGARD TO THE POSITION OF LAW AND THE PECULIAR FACTS OF THE CASE, IN THE ABSENCE OF ANY RETURN BEING FILED NOTICE UNDER SECTION 148 OF THE ACT DATED 14/12/1992 WAS RIGHTLY ISSUED BY THE ASSESSING OFFICER. WHEN THE RETURN WAS FILED BY THE ASSESSEE ON 22/12/1992 THE ASSESSING OFFICER HAD TIME TILL 31/3/1995 TO COMPLETE THE ASSESSMENT, WHEN HE CONSIDERED THE RETURN DATED 22/12/1992 AND FOUND THAT THERE WAS ESCAPEMENT OF INCOME, HE ISSUED NOTICE DATED 24/11/1994 WHICH WAS ALSO RESPONDED TO BY THE APPELLANT-ASSESSEE ONLY ON 20/10/1995 BY FILING A REVISED RETURN THEREFORE THE (NOTICE DATED 24/11/1994 IS IN FACT NOT A 'SECOND NOTICE', UNDER SECTION 148 OF THE ACT DURING THE PENDENCY OF AN EARLIER OR FIRST NOTICE UNDER SECTION 148 OF THE ACT. THE CIRCUMSTANCES UNDER WHICH THE TWO NOTICES HAVE BEEN SENT HAVE TO BE BORNE IN MIND. THE FIRST NOTICE DATED 14/12/1992 WAS ISSUED UNDER SECTION 148 OF THE ACT, WHEN THERE WAS NO RETURN FILED AND THE SAID NOTICE WAS VALIDLY ISSUED. WHEN A RETURN WAS FILED ON 22/12/1992, EVEN BEFORE THE SERVICE OF THE SAID NOTICE THE PURPOSE OF SENDING SUCH A NOTICE WAS FULFILLED. HOWEVER, THERE IS NO BAR IN LAW TO SEND A NOTICE UNDER SECTION 148 OF THE ACT AFTER THE RETURN DATED 22/12/1992 WAS FILED BY THE APPELLANT. SUCH A NOTICE CAN BE ISSUED BY THE ASSESSING OFFICER AFTER PERUSAL OF THE RETURN FILED BY THE ASSESSEE AFTER A RETURN IS FILED BUT NO ASSESSMENT HAS BEEN MADE AND THE ASSESSEE IS FOUND TO HAVE UNDER STATED HIS INCOME OR CLAIMED EXCESSIVE LOSS OR DEDUCTION IN THE RETURN. THIS NOTICE DATED 24/11/1994 WAS IN FACT NOT OBJECTED TO BY THE APPELLANT, BUT WAS ALSO RESPONDED TO BY FILING A REVISED RETURN ON 20/10/1995. THEREFORE, THE NOTICE DATED 24/12/1994 WAS VALIDLY ISSUED AFTER CONSIDERING THE RETURN FILED BY THE APPELLANT ON 22/12/1992. POINT NO. 1 IS ACCORDINGLY ANSWERED AGAINST THE APPELLANT. 8. FROM ABOVE PARA REPRODUCED FROM THIS JUDGMENT OF HON'BLE KARNATAKA HIGH COURT, WE FIND THAT IN THAT CASE, FIRST NOTICE U/S. 148 WAS ISSUED BY THE AO ON THIS BASIS THAT EVEN AFTER EXPIRY OF THE TIME FIXED FOR FILING THE RETURN OF INCOME ITA NO. 585/BANG/2019 PAGE 10 OF 16 U/S. 139(1) OF IT ACT WHICH WAS 30.10.1991 IN THAT CASE, NO RETURN OF INCOME WAS FILED BY THE ASSESSEE AND IN BETWEEN, SEARCH TOOK PLACE IN THAT CASE OF ASSESSEE ON 24.02.1992. IT IS ALSO NOTED IN THAT CASE THAT THE ASSESSEE IN THAT CASE DECLARED INCOME OF RS. 3 LAKHS IN COURSE OF SEARCH BUT THERE WAS NO RETURN OF INCOME FILED BY THE ASSESSEE AND THEREFORE, NOTICE U/S. 148 WAS ISSUED ON 14.12.1992 WHICH WAS SERVED ON THE ASSESSEE ON 24.12.1992. THIS IS ALSO NOTED BY HONBLE HIGH COURT IN THAT CASE THAT EVEN BEFORE SERVICE OF NOTICE ON 24.12.1992, THE ASSESSEE FILED RETURN OF INCOME ON 22.12.1992 DECLARING INCOME OF RS. 3 LAKHS. IN VIEW OF THESE FACTS, IT IS NOTED BY HON'BLE KARNATAKA HIGH COURT IN THAT CASE IN PARA 17 OF THE JUDGMENT REPRODUCED ABOVE THAT THE CIRCUMSTANCES UNDER WHICH THE TWO NOTICES HAVE BEEN SENT HAVE TO BE BORNE IN MIND. THE HONBLE HIGH COURT HAS NOTED THAT THE FIRST NOTICE DATED 14.12.1992 WAS ISSUED U/S. 148, WHEN THERE WAS NO RETURN FILED AND THE SAID NOTICE WAS VALIDLY ISSUED. THIS IS ALSO NOTED BY HON'BLE KARNATAKA HIGH COURT THAT WHEN RETURN WAS FILED ON 22.12.1992 EVEN BEFORE THE SERVICE OF THE SAID NOTICE, THE PURPOSE OF SENDING SUCH A NOTICE WAS FULFILLED BUT THERE IS NO BAR IN LAW TO SEND A NOTICE U/S. 148 OF THE ACT AFTER THE RETURN DATED 22.12.1992 WAS FILED BY THE ASSESSEE. IT IS ALSO NOTED BY HON'BLE KARNATAKA HIGH COURT IN THAT CASE THAT AFTER PERUSAL OF THE RETURN FILED BY THE ASSESSEE ON 22.12.1992, THE AO FOUND THAT THERE WAS ESCARPMENT OF INCOME ALTHOUGH NO ASSESSMENT HAS BEEN MADE AND BECAUSE OF THIS REASON, SECOND NOTICE WAS ISSUED ON 24.11.1994. IT IS ALSO NOTED BY HON'BLE KARNATAKA HIGH COURT IN THAT CASE THAT SECOND NOTICE DATED 24.11.1994 WAS IN FACT RESPONDED TO BY FILING A REVISED RETURN ON 20.10.1995 AND UNDER THESE FACTS, IT WAS HELD THAT THE SECOND NOTICE U/S. 148 DATED 24.12.1994 WAS VALIDLY ISSUED AFTER CONSIDERING THE RETURN FILED BY THE ASSESSEE ON 22.12.1992. HENCE AS PER THIS JUDGMENT OF HON'BLE KARNATAKA HIGH COURT, IT IS VERY IMPORTANT TO CONSIDER THAT UNDER WHICH CIRCUMSTANCES, TWO NOTICES HAVE BEEN ISSUED BY THE AO U/S. 148. IN THE PRESENT CASE, THE REASONS RECORDED BY THE AO FOR ISSUING THE FIRST NOTICE U/S. 148 ON 18.04.2013 ARE AVAILABLE ON PAGE 132 OF THE PAPER BOOK AND THE REASONS RECORDED BY THE AO FOR ISSUING THE SECOND NOTICE U/S. 148 ON 31.03.2015 ARE AVAILABLE ON PAGE 133 OF THE PAPER BOOK. BOTH THESE REASONS ARE IDENTICAL AS PER WHICH, THIS IS STATED BY THE AO THAT, THE ASSESSEE ITA NO. 585/BANG/2019 PAGE 11 OF 16 IS NOT REGISTERED U/S 12A AND HENCE NOT ELIGIBLE FOR EXEMPTION U/S 11 AND THE ASSESSEE IS NOT ELIGIBLE FOR EXEMPTION U/S 10 (23C) (VI) ALSO AND THEREFORE, ENTIRE INCOME OF THE ASSESSEE IS TAXABLE. THESE FACTS SHOW THAT BOTH NOTICES U/S 148 WERE ISSUED FOR THE SAME REASON IN THE PRESENT CASE WHEREAS IN THE CASE OF P. DAYANANDA PAI VS. ACIT (SUPRA), THE FIRST NOTICE U/S 148 WAS ISSUED FOR THIS REASON THAT NO RETURN OF INCOME WAS FILED BY THE ASSESSEE IN SPITE OF EXPIRY OF TIME ALLOWED U/S 139 (1) AND PURSUANT TO SEARCH, A DECLARATION OF INCOME OF RS. 3 LACS WAS MADE BUT NO RETURN WAS FILED. THIS IS ALSO A FACT OF THAT CASE THAT EVEN BEFORE SERVICE OF THE FIRST NOTICE ON 24.12.1992, THE ASSESSEE FILED RETURN OF INCOME ON 22.12.1992 DECLARING AN INCOME OF RS. 3 LACS AND SECOND NOTICE IN THAT CASE WAS ISSUED BY THE AO FOR THIS REASON THAT THERE IS ESCARPMENT OF INCOME AS PER THE AO AS PER THE RETURN FILED ON 22.12.1992. AS PER PARA 17 OF THIS JUDGMENT AS REPRODUCED ABOVE, IT IS CATEGORICALLY STATED BY HONBLE KARNATAKA HIGH COURT THAT THIS JUDGMENT IS HAVING REGARD TO PECULIAR FACTS OF THAT CASE. THESE PECULIAR FACTS ARE THESE THAT THE FIRST NOTICE WAS ISSUED IN VIEW OF NON FILING OF RETURN OF INCOME BY THE ASSESSEE EVEN AFTER EXPIRY OF TIME ALLOWED U/S 139 (1) OF I T ACT AND DECLARATION OF INCOME OF RS. 3 LACS IN COURSE OF SEARCH. THIS IS ALSO A FACT OF THAT CASE THAT EVEN BEFORE THE SERVICE OF THE FIRST NOTICE U/S 148 ON 24.12.1992, THE ASSESSEE HAD FILED RETURN OF INCOME ON 22.12.1992 AND BECAUSE OF THESE FACTS, A CATEGORICAL FINDING IS GIVEN BY HON'BLE KARNATAKA HIGH COURT IN THE SAME PARA 17 AS REPRODUCED ABOVE THAT NOTICE DATED 24/11/1994 IS IN FACT NOT A 'SECOND NOTICE', UNDER SECTION 148 OF THE ACT DURING THE PENDENCY OF AN EARLIER OR FIRST NOTICE UNDER SECTION 148 OF THE ACT. IN THAT CASE, HONBLE HIGH COURT WAS OF THE VIEW THAT FIRST NOTICE STOOD DISPOSED OF THE MOMENT THE RETURN OF INCOME WAS FILED BY THE ASSESSEE BECAUSE THE FIRST NOTICE WAS FOR ASKING THE ASSESSEE TO FILE RETURN OF INCOME BECAUSE NO RETURN WAS FILED BY THE ASSESSEE EVEN AFTER EXPIRY OF TIME PERMITTED U/S 139 (1) AND THEREFORE, THE SECOND NOTICE WAS HELD TO BE NOT DURING THE PENDENCY OF AN EARLIER OR FIRST NOTICE UNDER SECTION 148 OF THE ACT. BUT IN THE PRESENT CASE, THE REASONS RECORDED FOR BOTH NOTICES ARE SAME AS NOTED ABOVE BEING NON ELIGIBILITY OF THE ASSESSEE FOR EXEMPTION U/S 11 AND SECTION 10 (23C) (VI). HENCE IN THE FACTS OF THE PRESENT CASE, THE SECOND ITA NO. 585/BANG/2019 PAGE 12 OF 16 NOTICE WAS ISSUED DURING PENDENCY OF THE FIRST NOTICE AND THEREFORE, IN OUR CONSIDERED OPINION, THIS JUDGMENT OF HON'BLE KARNATAKA HIGH COURT RENDERED IN THE CASE OF P. DAYANANDA PAI VS. ACIT (SUPRA) IS NOT APPLICABLE IN THE PRESENT CASE. 9. NOW WE EXAMINE THE APPLICABILITY OF THE REMAINING JUDGMENTS CITED BY LD. DR OF REVENUE. FIRST OF ALL, WE EXAMINE THE APPLICABILITY OF THE JUDGMENT OF HONBLE APEX COURT RENDERED IN THE CASE OF COMUNIDADO OF CHICALIM VS. ITO (SUPRA). IN THIS CASE, IT WAS HELD BY HONBLE BOMBAY HIGH COURT THAT SECTION 148 MERELY REQUIRED THAT REASONS SHOULD BE RECORDED, NOT THAT THEY SHOULD BE COMMUNICATED. AGAINST THIS JUDGMENT OF HONBLE HIGH COURT, THE APPEAL WAS FILED BY THE ASSESSEE BEFORE HONBLE APEX COURT AND HONBLE APEX COURT RESTORED THE MATTER BACK TO THE FILE OF HONBLE BOMBAY HIGH COURT BY OBSERVING THAT WHEN AN ASSESSEE CHALLENGES A NOTICE TO REOPEN UNDER SECTION 147 ON THE GROUND THAT NO REASONS UNDER SECTION 148 HAD BEEN RECORDED OR DISCLOSED, THE COURT MUST CALL FOR AND EXAMINE THE REASONS. IT WAS ALSO HELD THAT HONBLE BOMBAY HIGH COURT DID NOT APPRECIATE THAT IF THE APPELLANT HAD ALREADY BEEN SERVED WITH A NOTICE UNDER SECTION 148 AND HAD COMPLIED THEREWITH BY FILING A RETURN, IT WAS ENTITLED TO CONTEND THAT NO SECOND NOTICE LAY AND ALSO TO SUBMIT THAT, IN ANY EVENT, THE SECOND NOTICE WAS BARRED BY TIME. ON BOTH THESE ASPECTS, THE MATTER WAS RESTORED BACK BY HONBLE APEX COURT TO THE HONBLE BOMBAY HIGH COURT AND THEREFORE, THIS JUDGMENT DOES NOT RENDER ANY HELP TO REVENUE IN THE PRESENT CASE. 10. NOW WE EXAMINE THE APPLICABILITY OF THE SECOND JUDGEMENT OF HONBLE APEX COURT RENDERED IN THE CASE OF TAPAN KUMAR DATTA VS. CIT (SUPRA). THIS JUDGMENT IS NOT IN RESPECT OF ANY NOTICE U/S. 148 BUT THIS JUDGMENT IS IN RESPECT OF NOTICE ISSUED BY THE AO U/S. 158BD R.W.S. 158BC OF IT ACT. AS PER THE FACTS OF THAT CASE, IT IS NOTED BY HONBLE APEX COURT THAT ASSESSEE WAS A PARTNER IN PARTNERSHIP FIRM BY NAME NITYAKALI RICE MILL AND ON 06.11.1998, A SEARCH WAS CONDUCTED AT THE BUSINESS PREMISES OF THE FIRM BY THE DEPARTMENT AND SEVERAL DOCUMENTS/BOOKS INCLUDING A SUM OF RS. 34 LAKHS ITA NO. 585/BANG/2019 PAGE 13 OF 16 WERE SEIZED. IT IS ALSO NOTED BY HONBLE APEX COURT THAT ON 09.09.1999, A NOTICE WAS ISSUED TO THE ASSESSEE BY THE AO U/S. 158BC OF THE IT ACT. ON THE SAME DATE, A NOTICE WAS ISSUED BY THE AO TO THE SAID PARTNERSHIP FIRM ALSO U/S. 158BC OF THE IT ACT. ON 20.11.2000, BLOCK ASSESSMENT ORDER WAS PASSED BY THE AO IN THE CASE OF THE FIRM AND IN THE SAME, IT WAS HELD THAT IN THE CASE OF THE FIRM, NIL INCOME REPORTED BY THE FIRM SHOULD BE ACCEPTED AND THIS WAS ALSO DIRECTED TO INITIATE PROCEEDINGS AGAINST THE APPELLANT FOR THE ASSESSMENT OF UNDISCLOSED INCOME FOR THE BLOCK PERIOD. PURSUANT TO THE ORDER DATED 20.11.2000 PASSED BY THE AO IN THE CASE OF THE FIRM, A FRESH NOTICE U/S. 158BD R.W.S. 158BC WAS ISSUED TO THE ASSESSEE WHO WAS THE PARTNER OF THAT FIRM. SINCE IN THAT CASE, THERE WAS NO ISSUE REGARDING NOTICE U/S. 148 AND REGARDING THE ISSUE OF TWO NOTICES ALSO, IT IS SEEN THAT THE FIRST NOTICE WAS ISSUED U/S. 158BC WHEREAS THE SECOND NOTICE WAS ISSUED U/S. 158BD AND THEREFORE, IN OUR CONSIDERED OPINION, THIS JUDGMENT OF HONBLE APEX COURT IS ALSO NOT APPLICABLE IN THE FACTS OF PRESENT CASE. 11. THE REMAINING JUDGEMENTS CITED BY LD. DR OF REVENUE ARE OF VARIOUS OTHER HIGH COURTS I.E. HONBLE ALLAHABAD HIGH COURT AND HONBLE KERALA HIGH COURT AND HENCE, BEFORE EXAMINING THE APPLICABILITY OF THESE TWO JUDGMENTS, WE FEEL IT PROPER TO EXAMINE THE APPLICABILITY OF THE JUDGMENT OF HONBLE GUJARAT HIGH COURT CITED BY LD. AR OF ASSESSEE HAVING BEEN RENDERED IN THE CASE OF MARWADI SHARES & FINANCE LTD. VS. DCIT (SUPRA). AS PER THE FACTS OF THAT CASE, FOR ASSESSMENT YEAR 2010-11, THE ASSESSEE FILED RETURN OF INCOME ON 29.09.2010 AND THE ASSESSMENT ORDER WAS PASSED BY THE AO U/S. 143(3) ON 28.02.2013. LATER ON, THE AO ISSUED NOTICE U/S. 148 ON 31.03.2015 AND AS PER THE REASONS RECORDED BY THE AO FOR ISSUING THAT NOTICE AS REPRODUCED BY HONBLE GUJARAT HIGH COURT, IT IS STATED BY THE AO IN THE REASONS RECORDED BY HIM THAT INFORMATION HAS BEEN RECEIVED BY HIM IN RESPECT OF FICTITIOUS LOSSES CREATED BY SOME BROKERS BY MISUSING THE CLIENT CODE MODIFICATIONS FACILITY IN F & O SEGMENT ON NSE DURING MARCH 2010 AND THAT ASSESSEE I.E. M/S. MARWADI SHARES AND FINANCE LTD. IS REPORTED TO BE ONE OF THE BENEFICIARIES OF SUCH FICTITIOUS LOSSES BY MISUSE OF CLIENT CODE MODIFICATION FACILITY. THE ASSESSEE IN THAT CASE CHALLENGED HE SAID NOTICE OF REOPENING BY FILING SPECIAL ITA NO. 585/BANG/2019 PAGE 14 OF 16 CIVIL APPLICATION BEFORE THE HONBLE GUJARAT HIGH COURT AND AS PER THE JUDGMENT DATED 21.06.2016, IT WAS HELD BY HONBLE GUJARAT HIGH COURT THAT IT WAS SUBMITTED BY LD. COUNSEL FOR THE DEPARTMENT THAT THE RESPONDENT ASSESSING OFFICER WOULD WITHDRAW THE IMPUGNED NOTICE FOR RE-OPENING OF THE ASSESSMENT BASED ON THE REASONS SUPPLIED TO THE PETITIONER, WITH A VIEW TO ISSUING A FRESH NOTICE AFTER RECORDING FRESH REASONS. SUBSEQUENTLY THE AO ISSUED FRESH NOTICE OF RE-OPENING ON 29.03.2017 AFTER RECORDING FRESH REASONS WHICH ARE ALSO REPRODUCED BY HONBLE GUJARAT HIGH COURT IN THAT JUDGMENT. AGAINST THIS SECOND NOTICE ISSUED BY THE AO U/S. 148, SPECIAL CIVIL APPLICATION WAS FILED BY THE ASSESSEE BEFORE HONBLE GUJARAT HIGH COURT AND IN THIS, THE ASSESSEE CHALLENGED THE VALIDITY OF THE FRESH NOTICE ISSUED BY THE AO U/S. 148. PARAS 17 AND 18 OF THIS JUDGMENT ARE RELEVANT IN RESPECT OF DECISION OF HONBLE GUJARAT HIGH COURT ON THIS ASPECT OF THE MATTER I.E. VALIDITY OF THE SECOND NOTICE ISSUED BY THE AO U/S. 148 AND THEREFORE, THESE TWO PARAS FROM THIS JUDGMENT ARE REPRODUCED HEREINBELOW. 17. WHEN THEREFORE IN THE PRESENT CASE THE FIRST NOTICE OF REOPENING OF ASSESSMENT WAS NOT WITHDRAWN, THERE WAS NO SCOPE, NOR PERMISSIBLE IN LAW TO ISSUE FRESH NOTICE OF REOPENING. COUNSEL FOR THE REVENUE, HOWEVER, VEHEMENTLY CONTENDED THAT SUCH WITHDRAWAL OF NOTICE OF REOPENING MUST BE DEDUCED FROM FACTS AND ATTENDANT CIRCUMSTANCES. HIS CONTENTION WAS THAT THE REVENUE HAD, ALL ALONG, INTENDED TO WITHDRAW THE NOTICE AND THE FACT, THAT SUCH NOTICE WAS ABANDONED, WAS SUFFICIENT TO ESTABLISH WITHDRAWAL THEREOF. WE, HOWEVER, HOLD A SLIGHTLY DIFFERENT BELIEF. A NOTICE OF REOPENING WHICH IS ONCE ISSUED WOULD REMAIN IN OPERATION UNLESS IT IS SPECIFICALLY WITHDRAWN, QUASHED OR GETS TIME BARRED. FIRST INSTANCE WOULD BE AT THE VOLITION OF THE ASSESSING OFFICER AS THE PERSON WHO HAD ISSUED THE NOTICE. HE CAN RECALL THE NOTICE FOR VALID REASONS AND MAY EVEN ISSUE A FRESH NOTICE WHICH IS NOT IMPERMISSIBLE IN LAW. NEVERTHELESS, THERE HAS TO BE AN ACTION OF WITHDRAWAL. MERE INTENTION, A STATED INTENTION OR EVEN AN INTENTION WHICH IS OTHERWISE PUT IN PRACTICE CANNOT BE EQUATED WITH WITHDRAWAL OF THE NOTICE. BY MERE INTENTION TO ABANDON THE PROCEEDINGS ARISING OUT OF THE NOTICE, THE ASSESSING OFFICER CANNOT BRING ABOUT THE DESIRED RESULT OF WITHDRAWING THE NOTICE. THE NOTICE WAS EITHER WITHDRAWN OR IS STOOD AS IT IS, MAY BE WITHOUT ANY FOLLOW UP ACTION ON PART OF THE ASSESSING OFFICER. 18. THE MATERIAL ON RECORD WOULD CLEARLY DEMONSTRATE THAT THE ASSESSING OFFICER IN THE PRESENT CASE DID NOT TRAVEL BEYOND EXPRESSING HIS CLEAR INTENTION TO WITHDRAW THE NOTICE. HE HAD SO STATED BEFORE THE HIGH COURT THROUGH HIS ADVOCATE ON 21.06.2016 WHEN SPECIAL CIVIL APPLICATION NO. 2120 OF 2016 WAS BEING DISPOSED OF. HE HAS SO STATED ITA NO. 585/BANG/2019 PAGE 15 OF 16 AT MULTIPLE PLACES IN THE REPLY DATED 20.11.2017 FILED BEFORE US. AT NO STAGE, EITHER HE PASSED AND COMMUNICATED THE ORDER OF WITHDRAWAL OF THE NOTICE TO THE PETITIONER. EVEN THE FILES DO NOT SHOW ANY SUCH FORMAL WITHDRAWAL OF THE NOTICE WITH OR WITHOUT COMMUNICATION THEREOF TO THE PETITIONER. THE CONCLUSION THAT WE HAVE REACHED WOULD INVARIABLY RESULT IN FRUSTRATING THE REVENUE'S ATTEMPT TO REOPEN THE ASSESSMENT AND MAY HAVE BEEN SEEN TO BE BASED ON SOMEWHAT TECHNICAL REASONS. HAVING SUCCEEDED ON ALL OTHER GROUNDS, THE REVENUE MAY LEGITIMATELY FEEL SOMEWHAT DISAPPOINTED. NEVERTHELESS, OUR DUTY IS TO GIVE EFFECT TO THE LEGAL PRINCIPLES. THE LAW DOES NOT RECOGNIZE TWO PARALLEL ASSESSMENTS. IN ABSENCE OF WITHDRAWAL OF THE FIRST NOTICE OF REASSESSMENT, THE PROCEEDINGS WOULD SURVIVE MAKING THE SUBSEQUENT NOTICE OF REOPENING INVALID. 12. FROM THE ABOVE TWO PARAS REPRODUCED FROM THIS JUDGEMENT OF HONBLE GUJARAT HIGH COURT, IT IS SEEN THAT IN THAT CASE, THE SECOND NOTICE U/S. 148 WAS ISSUED BY THE AO WITHOUT WITHDRAWING THE FIRST NOTICE ISSUED BY THE AO U/S. 148. THIS WAS HELD BY HONBLE GUJARAT HIGH COURT THAT THE LAW DOES NOT RECOGNIZE TWO PARALLEL ASSESSMENTS. IT WAS HELD THAT IN THE ABSENCE OF WITHDRAWAL OF THE FIRST NOTICE OF REASSESSMENT, THE PROCEEDINGS WOULD SURVIVE MAKING THE SUBSEQUENT NOTICE OF REOPENING INVALID. IN THE PRESENT CASE, WE HAVE NOTED THAT SECOND NOTICE OF REASSESSMENT WAS ISSUED ON 31.03.2015 WHEREAS THE ASSESSMENT PURSUANT TO FIRST NOTICE OF REASSESSMENT U/S. 148 COULD HAVE BEEN MADE BY THE AO UP TO 31.03.2015 AND THEREFORE, IT HAS TO BE ACCEPTED THAT SECOND NOTICE OF RE-OPENING U/S. 148 WAS ISSUED DURING THE PENDENCY OF FIRST NOTICE ISSUED BY THE AO U/S. 148 AND THEREFORE, THIS JUDGMENT OF HONBLE GUJARAT HIGH COURT IS SQUARELY APPLICABLE AND RESPECTFULLY FOLLOWING THE SAME, WE HOLD THAT THE SECOND NOTICE OF REASSESSMENT U/S. 148 ISSUED BY THE AO ON 31.03.2015 IS INVALID AND THEREFORE, THE ASSESSMENT FRAMED BY THE AO PURSUANT TO THIS NOTICE OF REASSESSMENT U/S. 148 ISSUED ON 31.03.2015 IS VOID- AB-INITIO. 13. REGARDING THE RELIANCE PLACED BY LD. DR OF REVENUE ON TWO OTHER JUDGMENTS OF HONBLE ALLAHABAD HIGH COURT AND HONBLE KERALA HIGH COURT, WE WOULD LIKE TO OBSERVE THAT WE FIND FORCE IN THE SUBMISSIONS OF LD. AR OF ASSESSEE THAT IN VIEW OF JUDGMENT OF HONBLE APEX COURT RENDERED IN THE CASE OF CIT VS. VEGETABLE PRODUCTS LTD. (SUPRA), IF IN CASE OF TAXING PROVISION, TWO REASONABLE CONSTRUCTIONS ARE POSSIBLE, THE CONSTRUCTION WHICH FAVOURS THE ITA NO. 585/BANG/2019 PAGE 16 OF 16 ASSESSEE MUST BE ADOPTED. HENCE IN OUR CONSIDERED OPINION EVEN IF THESE TWO JUDGMENTS OF HONBLE ALLAHABAD HIGH COURT AND HONBLE KERALA HIGH COURT ARE FOUND TO BE APPLICABLE IN THE PRESENT CASE, THEN ALSO, WE HAVE TO FOLLOW THE JUDGMENT OF HONBLE GUJARAT HIGH COURT WHICH FAVOURS THE ASSESSEE AND THEREFORE, WE DO NOT EXAMINE THE APPLICABILITY OF THESE TWO JUDGMENTS CITED BY LD. DR OF REVENUE HAVING BEEN RENDERED BY HONBLE ALLAHABAD HIGH COURT AND HONBLE KERALA HIGH COURT. IN VIEW OF THIS DECISION THAT THE ASSESSMENT ORDER IS VOID-AB-INITIO, OTHER GROUNDS RAISED BY THE ASSESSEE IN THIS APPEAL HAVE BECOME INFRUCTUOUS AND NO ADJUDICATION IS CALLED FOR. 14. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON THE DATE MENTIONED ON THE CAPTION PAGE. SD/- SD/- (PAVAN KUMAR GADALE) (ARUN KUMAR GARODIA) JUDICIAL MEMBER ACCOUNTANT MEMBER BANGALORE, DATED, THE 19 TH JULY, 2019. /MS/ COPY TO: 1. APPELLANT 4. CIT(A) 2. RESPONDENT 5. DR, ITAT, BANGALORE 3. CIT 6. GUARD FILE BY ORDER ASSISTANT REGISTRAR, INCOME TAX APPELLATE TRIBUNAL, BANGALORE.
