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Commercial Art Press Vs. Commissioner of Income-tax - Court Judgment

LegalCrystal Citation
SubjectDirect Taxation
CourtAllahabad High Court
Decided On
Case NumberIncome-tax Reference No. 658 of 1974
Judge
Reported in(1979)9CTR(All)148; [1988]115ITR876(All); [1979]1TAXMAN38(All)
ActsIncome Tax Act, 1961 - Sections 143(2) and 148
AppellantCommercial Art Press
RespondentCommissioner of Income-tax
Appellant AdvocateR.K. Gulati, Adv.
Respondent AdvocateA. Gupta, Adv.
Excerpt:
- - the ito, however, completed the assessment to the best of his judgment. the tribunal affirmed the finding that the notice dated august 30, 1968, was clearly invalid because on that date proceedings consequent on the earlier notice issued under section 148 were pending. he filed a return in pursuance of the notice dated july 2, 1966. he then filed another return, though in pursuance of the notice dated august 30, 1968, but the finding of the tribunal is that the assessee has failed to establish that he filed it under protest......in the alternative, they held that the assessment order can be held valid on the basis of the return filed by the assessee in pursuance of the original notice ofjuly 2, 1966. the order of annulment was set aside and the matter was remanded to the aac for deciding the appeal on the merits.4. at the instance of the assessee, the tribunal has referred the following questions of law for our opinion:'1. whether, on the facts and in the circumstances of the case, the tribunal was justified in law in upholding the validity of the assessment with reference to the notice under section 148 issued on july 2, 1966? 2. whether the return filed pursuant to second notice under section 148 dated august 30, 1968, which was without jurisdiction and invalid, could form the basis of the impugned.....
Judgment:

Satish Chandra, C.J.

1. The assessee is a registered partnership firm. It carries on the business of printing press at Lucknow. For the assessment year 1961-62, the assessees filed a return. The ITO, however, completed the assessment to the best of his judgment. Subsequently, the ITO felt that some income had escaped assessment. He issued a notice under Section 148 on July 2, 1966. He again issued a notice under Section 143(2) on April 13, 1967, requiring the assessee to attend in order to explain certain matters.

2. Though these proceedings were pending, the ITO issued yet another notice under Section 148 on August 30, 1968. In due course, he completed the reassessment proceedings by an order dated December 2, 1968.

3. On appeal, the notice dated August 30, 1968, was held to be illegal and the assessment order dated December 2, 1968, having been passed on its basis, was annulled. The department took the matter to the Tribunal. The Tribunal affirmed the finding that the notice dated August 30, 1968, was clearly invalid because on that date proceedings consequent on the earlier notice issued under Section 148 were pending. The ITO had no jurisdiction to issue this notice. But the Tribunal went on to hold that the return which was filed in consequence of the notice dated August 30, 1968, does not automatically become illegal or infructuous. It can be looked into and the ITO had jurisdiction to complete the proceedings for reassessment on its basis which were initiated by the notice dated July 2, 1966. Since the order dated December 2, 1968, was within time from the date of the notice dated July 2, 1966, the same was valid. The illegality of the second notice of August 30, 1968, will not vitiate the assessment order. In the alternative, they held that the assessment order can be held valid on the basis of the return filed by the assessee in pursuance of the original notice ofJuly 2, 1966. The order of annulment was set aside and the matter was remanded to the AAC for deciding the appeal on the merits.

4. At the instance of the assessee, the Tribunal has referred the following questions of law for our opinion:

'1. Whether, on the facts and in the circumstances of the case, the Tribunal was justified in law in upholding the validity of the assessment with reference to the notice under Section 148 issued on July 2, 1966?

2. Whether the return filed pursuant to second notice under Section 148 dated August 30, 1968, which was without jurisdiction and invalid, could form the basis of the impugned assessment ?

3. Whether, on the facts and in the circumstances of the case, theTribunal could hold that the return filed pursuant to the notice under Section 148 dated August 30, 1968, was filed under Section 139(4)

4. Whether the impugned assessment can be upheld on the basis of the return which the assessee had filed pursuant to the notice under Section 148 dated July 2, 1966?'

5. There can be no manner of doubt that an ITO has no jurisdiction at all to issue notices under Section 148 repeatedly. When reassessment proceedings commence owing to the issuance of the notice under Section 148 and the same are validly pending, no fresh notice can be issued under Section 148. Subsequent notices can only be in pursuance of the provisions of Section 143(2) requiring the assessee to come forward and explain the return filed by him. The view that the notice issued under Section 148 on August 30, 1968, was illegal, hence admits of no doubt or dispute.

6. In the eye of law, the reassessment proceedings were pending whenthe return was filed in pursuance of the notice dated July 2, 1966. Theyhad to be completed by an assessment order. The assessment order passedon December 2, 1968, was within time computed from the date of the notice of July 2, 1966.

7. Learned counsel for the assessee stressed that in the assessment order, the ITO has heavily relied upon the statement of facts made by the assessee in the return filed in pursuance of the notice dated August 30, 1968. This shows that the ITO in fact passed the assessment order on the basis of that return.

8. There is no specific bar on the assessee filing a revised return at any time before the assessment is completed. He filed a return in pursuance of the notice dated July 2, 1966. He then filed another return, though in pursuance of the notice dated August 30, 1968, but the finding of the Tribunal is that the assessee has failed to establish that he filed it under protest. This return was, therefore, a valid material on record. The ITO could look into it as a piece of evidence to come to the conclusion as to the assessable income. This return would, at any rate, have the same value asthe account books, etc., filed or relied upon by the assessee in the course ofreassessment proceedings. The existence of a voluntary return is not obliterated merely because the notice, in pursuance of which it was filed, wasillegal. The assessment order was not without jurisdiction. It was notliable to be annulled simply because the ITO had utilised some informationwhich was given in the return filed in consequence of the illegal notice ofAugust 30, 1968. We agree with the Tribunal that the assessment orderwas not invalid. We, therefore, answer questions Nos. 1, 2 and 4, in the affirmative, infavour of the department and against the assessee. Question No. 3 doesnot, in view of the findings recorded by us, arise and is returnedunanswered. The Commissioner will be entitled to costs which are assessedat Rs. 200.


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