1 IN HIGH COURT OF JUDICATURE AT MADRAS RESERVED ON : 13.12.2019 DELIVERED ON : 18.12.2019 CORAM HONOURABLE MR.JUSTICE C.SARAVANAN W.P.Nos.29005 & 29006 of 2015 and M.P.Nos.1 & 1 of 2015 T.Krishnamurthy Petitioner in both W.Ps. vs Income Tax Officer, Non-Corporate Ward 16(4), 142, MG Road, Chennai 34. Respondent in both W.Ps. Prayer in W.P.No.29005 of 2015:Writ Petition filed under Article 226 of Constitution of India, to issue writ of Certiorarified Mandamus, calling for records of respondent and quash notice u/s.148 of Act in PAN/GIR : AAAPK7442G dated 17.03.2015 and consequential Order in PAN/GIR : AAAPK7442G/2015-16 dated 16.07.2015 and direct respondent to drop reassessment proceedings for assessment year 2008-09. Prayer in W.P.No.29006 of 2015:Writ Petition filed under Article 226 of Constitution of India, to issue writ of Certiorarified Mandamus, calling for records of respondent and quash notice u/s.148 of Act in PAN/GIR : AAAPK7442G dated http://www.judis.nic.in 2 17.03.2015 and consequential Order in PAN/GIR : AAAPK7442G/2015-16 dated 16.07.2015 and direct respondent to drop reassessment proceedings for assessment year 2009-10. For Petitioner : Mr.Vikram Vijayaraghavan for M/s.Subbaraya Aiyar Padmanabhan ( in both cases) For Respondents : M/s.Hema Murali Krishnan Senior Standing Counsel ( in both Cases) COMMON ORDER Heard learned counsel for petitioner Mr Vikram Vijayaraghavan and Mrs.HemaMurali Krishnan for respondent. 2. By this common order, both writ petitions are being disposed. 3. In these writ petitions, petitioner has challenged both impugned notices dated 17.3.2015 issued under section 148 of Income Tax Act, 1961 for assessment year 2008-09 and assessment year 2009-10 and consequential orders dated 16.7.2015 rejecting petitioner s objection to impugned notices. http://www.judis.nic.in 3 4. petitioner had filed returns under section 139 of Income Tax Act, 1961 for respective assessment years. These returns were assessed under section 143 of Act. Later, two separate notices dated 7.3.2011 were issued to petitioner under section 148 of Income Tax Act, 1961 based on data captured in Assets Information Report (AIR). 5. Thereafter, on 31.12.2011, two separate assessment orders were passed by respondent under section 147 read with section 144 of Income Tax Act, 1961 for respective assessment years and accordingly intimations were also issued to petitioner to pay revised tax assessment. 6. petitioner took up issue before Commissioner of Income Tax (Appeals). By two separate orders dated 12.11.2013, Commissioner of Income Tax (Appeals) had set aside respective assessment orders under section 250(6) of Income Tax Act, 1961 on ground that respondent had failed to follow mandatory requirement of section 143(2) of Income Tax Act, 1961. 7.The Commissioner of Income Tax (Appeals) followed decision of Gujarat High Court in CIT versus K.M.Raviji vide order dated 18.7.2011 in Appeal No. http://www.judis.nic.in 4 771 or 2010 and decision of this court rendered in Sapthagiri Finance and investment versus ITO rendered on 17.7.2012 [2012] 25 Taxmann.com 341 (Mad) following decision of Honourable Supreme Court in ACIT versus Hotel Blue Moon [2012] 321 ITR 362. 8. In purported compliance of these two orders of Commissioner of Income Tax(Appeals), respondent also passed two separate orders dated 27.11.2013 to give effect to above orders dated 12.11.2013 of Commissioner of Income Tax (Appeals) for respective assessment years. 9. Further appeals by revenue were also dismissed by common order dated 26.9.2014 of Income Tax Appellate Tribunal, Chennai. Under these circumstances, respondent Assessing Officer/ITO issued impugned notices dated 17.3.2013 which read identity. Sample notice for assessment year 2008-09 reads as under:- To, 17.3.2015 Shri T Krishnamoorthy, Flat No. A-3, Temple Tree RPAD No. 37, Venkata Narayana Road, Chennai-6000 17 http://www.judis.nic.in 5 Sir, Whereas I have reasons to believe that your income chargeable to tax for assessment year 2008-09 has escaped assessment within meaning of section 147 Of Income Tax Act, 1961. 2. I, therefore, propose to assess income for said assessment year and I hereby require you to deliver to me within 30 days from service of this notice, return in prescribed form of your income for said assessment year. 3. This notice is being issued after obtaining necessary satisfaction of Commissioner of Income Tax-5, Chennai- 600034./The Central Board of Direct Taxes. (B. Baladandayutham) Assessing Officer/Income Tax Officer Non-Corporate Ward-16 (4), Chennai-600034. 10. petitioner sent separate replies dated 16.4.2015 to respective notice for respective assessment years and requested returns originally filed by petitioner for respective assessment years on 31.7. 2008 and on 29.7.2009 as returns filed in response to impugned notices dated 17.3.2015. 11. petitioner further submitted that he had disclosed all these facts, fully http://www.judis.nic.in 6 and truly which were considered while passing 1st assessment order under section 147 read with section 144 of Act and therefore requested respondent to furnish reasons recorded for reopening assessment for respective assessment years for second time. 12. respondent later furnished reasons recorded for reopening of respective assessment years vide two separate communications dated 15.5.2015 which more or less reiterated reasons given for reopening of assessment years earlier vide communication dated 13.6.2011. 13. Under these circumstances, petitioner filed both his objections dated 19.6.2015 against reopening of assessment for 2nd time. After setting out entire history, it was submitted that assessment having been reopened on earlier occasion based on AIR information relating to investment in shares and immovable property and issue having attained finality on earlier occasion, it was not open for respondent to reopen assessment for second time in absence of any tangible material and it would amount to change of opinion which was impermissible. It was submitted that for invocation of section 148 to assess income escaping assessment under section 147, there has to be reason to believe that income had escaped assessment and jurisdiction is conferred on assessing http://www.judis.nic.in 7 officer. However, reassessment has to be based on fulfillment of certain precondition and Assessing Officer cannot reopen assessment for mere change of opinion. It is submitted that there was no tangible material for invoking Section 148 for 2nd time. 14. It was further submitted that assessment having been originally completed, 1st proviso to section 147 was attracted. petitioner submits that where assessment has been completed under section 143(3) or under section 147, no notice under section 148 can be issued beyond period of 4 years from end of assessment year unless there was failure on part of assessee to disclose fully and truly all material facts for making assessment. 15. Since assessment was reopened on 17.3.2015, reopening of assessment once again was barred as per well settled principles of law. petitioner further submits that two impugned orders dated 16.7.2015 rejecting objections of petitioner against reopening of assessment under two impugned notices dated 17.3.2015 under Section 148 of Act were liable to be quashed. 16. learned counsel for petitioner primarily argued that there were no new materials available for invoking Section 148 of Income Tax Act, 1961 for http://www.judis.nic.in 8 2nd time and therefore impugned notices and consequential orders rejecting objections of petitioner against invocation of Section 148 were bad and were liable to be set aside and quashed. 17. He further submits that earlier round of proceedings culminated in two separate re-assessment orders dated 31.12.2011 which were eventually set aside by Commissioner of Income Tax (Appeals) vide two separate orders dated 12.11.2013 and were given effect to by two separate orders dated 27.11.2013. 18. In this connection, learned counsel for petitioner relied on decision of Punjab and Haryana in Smt Anchi Devi Vs Commissioner of Income Tax (2008)218 CT 011. There court held that though proceedings were initiated by officer within prescribed period of limitation, yet same was initiated only to circumvent earlier order of Tribunal which held that invocation of Section 148 was time barred. It was held that Assessing Officer cannot be allowed to initiate fresh proceedings on identical facts as 1st assessment proceeding had failed to result in valid re-assessment due to lapse on part of IT authority. 19. learned counsel for petitioner further relied on decision of http://www.judis.nic.in 9 Delhi High Court in Commissioner of Income Tax versus Vishal Gupta (2012) 210 Taxmann 65 wherein it was held that Section 148 of Income Tax Act, 1961 can be invoked only where there is fresh materials available and that such notice should stand on its own legs. learned counsel for petitioner further submits that as per decision of Honourable Supreme Court in Commissioner of Income Tax versus Rao Thakur Narayan Singh (1965) 65 ITR 234, even if Tribunal had erroneously set aside assessment order, such order would be binding unless it is set aside by appellate authority in hierarchy. learned counsel for petitioner submits that rightly or wrongly orders dated 12.11.2013 of Appellate Commissioner had been complied by respondent by giving effect to it on 27.11.2013 and therefore as long as that order giving effect to said order of Appellate Commissioner had remained unchallenged, it was not open for revenue to reopen assessment once again. 20.Per contra, learned counsel for Income Tax Department submits that impugned notices in consequential orders were in accordance with law and these two writ petitions were liable to be dismissed. 21. learned counsel for Income Tax Department relies on decision of Punjab and Haryana High Court in R. Kakkar Glass And Crockery House versus http://www.judis.nic.in 10 CIT (2002) 254 ITR 0273. She submits that unless notice itself is set aside or quashed mere setting aside of re-assessment order is not sufficient to bar invocation of section 148 for 2nd time. 22.She submits that in said case it was observed that when notices quashed on some technical ground, and no findings were recorded on merits of additional income assessed as stable income, it would be in order to issue fresh notice under section 148 of Income Tax Act, 1961 provided all other legal requirements of law have been complied. In above case court observed that, For instance, if notice under section 148 is quashed on ground that no reasons had been recorded, 2nd notice shall be in order after recording reasons. Similarly, if notice is quashed on ground that it has been issued without requisite sanction of higher authority, fresh notice can be issued after obtaining necessary sanction. Such instance can be multiplied. However, if notice under section 148 is quashed after examination of material relied on by AO and after recording of finding that basis of such material additional income cannot be said to have escaped assessment, then it shall not be permissible for AO to issue fresh notice on basis of material in respect of same item of income. http://www.judis.nic.in 11 23. She further submits that that invocation of Section 148 read with Section 147 of Income Tax Act, 1961 was in any event within period of limitation inasmuch as there was material failure on part of petitioner to disclose fully and truly all material facts necessary for his assessment for respective assessment years. 24. I have considered arguments advanced by learned counsel for petitioner and learned counsel for Income Tax Department. 25. This is case where details of investment in shares and immovable property were not originally disclosed by petitioner at time of filing of original returns under Section 139 of Income Tax Act, 1961 for respective assessment years. Therefore, two notices under Section 148 of Income Tax Act, 1961 were issued on 7.3.2011 for respective assessment years. 26. Reassessment were thereafter completed however without complying with mandatory requirement of Section 143 (2) of Income Tax Act, 1961 by invoking Section 144 of Income Tax Act, 1961. Thus, Commissioner of Income Tax (Appeals) allowed two appeals filed by petitioner and set aside respective http://www.judis.nic.in 12 orders of re-assessment made by respondent on 31.12.2011 vide orders dated 12.11.2013. Re-assessments made on 31.12.2011 were set aside on technical ground of failure to comply with mandatory requirement of Section 143 (2) of Act in terms of decision of Hon'ble Supreme Court in CIT versus Hotel Blue Moon (2012) 321 ITR 362 and that of decision of this court rendered in Sapathagiri Finance and Investment versus ITO (2012) 25 Taxmann.com 341. assessment was not set aside on merits. 27. Notices dated 07.03.2011 issued under Section 148 of Income Tax Act for respective assessment years were not set aside. For invoking Section 148 of Income Tax Act, 1961, Limitation is prescribed under Section 149 of Income Tax Act. It reads as under :- Section 149 : Time Limit for notice :- (1) No notice under section 148 shall be issued for relevant assessment year,- (a) if four years have elapsed from end of relevant assessment year, unless case falls under sub- clause (a) or clause (c); (ii) if four years, but not more than six years, have elapsed from end of relevant assessment year unless income chargeable to tax which has escaped assessment amounts to or is likely to amount to one lakh rupees or more (for that year) http://www.judis.nic.in 13 (iii) if seven years, but not more than sixteen years, have elapsed from end of relevant assessment year, unless income in relation to any asset (including financial interest in any entity) located outside India, chargeable to tax has escaped assessment ) Explanation - In determining income chargeable to tax which has escaped assessment for purposes of this sub-section, provisions of Explanation 2 of section 147 shall apply as they apply for purposes of that section) (2) provisions of sub-section (1) as to issue of notice shall be subject to provisions of Section 151. (3) If person on whom notice under Section 148 is to be served is person treated as agent of non-resident under Section 163 and assessment, reassessment or recomputation to be made in pursuance of notice is to be made on him as agent of such non-resident, notice shall not be issued after expiry of period of (six) years from end of relevant assessment year. 28. Last date for invoking Section 148 for Assessment Year 2008-09 express only on 31/03.2015 and for Assessment Year 2009-10 on 31.03.2016 since impugned notice are dated 17.03.2013, they are well within time. 29. Had there been finding given on merits that there was no case for escaped assessment for respective assessment years in response to Section 148 notice issued for 1st time on 7.3.2011, it can be said that 2nd notice dated 17.5.2015 under Section 148 would have been barred and therefore there were no http://www.judis.nic.in 14 reasons for invoking Section 148 again. 30.Therefore, respondents are not precluded from invoking Section 148 of Income Tax Act, 1961 for 2nd time as issue as to whether income had escaped assessment or not was decided by Commissioner of Income Tax (Appeals) on merits. It was pointed out that there mandatory failure by and further re- assessment orders dated 31.12.2011 were set aside. 31. Therefore, impugned notices were not only in time but also in accordance with law. Therefore, consequential impugned orders passed by respondent are sustainable and cannot be quashed. Therefore these writ petitions are liable to be dismissed. 32.It is noticed that dispute pertains to assessment year 2008-09 and assessment year 2009-10. re-assessment proceedings have been considerably delayed partly due to lapse on part of respondents on earlier occasion which resulted in orders of Commissioner of Income Tax (Appeals) on 12.11.2013 and partly on account of petitioner due to pendency of present writ petitions. http://www.judis.nic.in 15 33. In view of above, respondent is directed to complete proceedings within period of 3 months from date of receipt of copy of this order in accordance with law. writ petition stands dismissed with above observation. No costs. Consequently connected miscellaneous petitions are closed. 18.12.2019 Internet : Yes / No Index :Yes / No Speaking : Non Speaking order kkd To Income Tax Officer, Non-Corporate Ward 16(4), 142, MG Road, Chennai 34. http://www.judis.nic.in 16 C.SARAVANAN, J. kkd Pre-Delivery Common Order in W.P.Nos.29005 & 29006 of 2015 and M.P.Nos.1 & 1 of 2015 18.12.2019 http://www.judis.nic.in T. Krishnamurthy v. Income-tax Officer, Non-Corporate Ward-16(4), Chennai