COMMISSIONER OF INCOME TAX Vs. JAYAPRAKASH

JUDGEMENT

(1.) ITA. 149 of 2001 is an appeal preferred by the assessee against the order of Incometax Appellate Tribunal. Cochin Bench in ITA No. 210/Coch/98 dated 27th July, 2001 and ITA. 140 of 2001 is an appeal preferred by the revenue against the same order. We may first deal with the appeal preferred by the assessee under S.260A of the Incometax Act, 1961. Assessee has raised six questions of law, of which the first four questions are consolidated, redrafted and stated as follows:

(2.) The propriety of issuing a second notice under S.148 was questioned by the assessee vide letter dated 16-4-1996 and reply was given on 15-7-1996. Assessing officer later completed the assessment by order dated 26-3-1997 determining the aggregate income of the assessee as Rs. 30,36,990/- as against the total income shown in the original return of Rs. 1,36,970/-, The major variation is the addition of Es. 16,60,854/- on account of unaccounted sales of tins. Assessing officer had narrated the events which led to this addition. He has also highlighted the inconsistent explanations. Aggrieved by the order of the assessing authority assessee took up the matter in appeal before the Commissioner of Incometax (Appeals). Appellate Authority found no infirmity in the assessing authority issuing second notice after having found that the first notice dated 1-10-1993 was invalid. Appellate Authority also endorsed the view that initiation of proceedings by issuing fresh notice under S.148 dated 28-3-1996 was valid. Order passed by the assessing authority was upheld except with regard to the plea of the assessee regarding agricultural income. Appellate Authority held that there is no basis for keeping the figure of agricultural income especially when no such amount is returned in the second return filed. Aggrieved by the said order assessee filed appeal before the Tribunal. Contention of the assessee was that there was no scope for issuing fresh notice under S.148 since the plea of escaped income was rejected by the Tribunal. On merits the assessee's appeal was partly allowed. Tribunal found force in the contention of the assessee that it cannot be presumed that the sale of the entire tins had taken place in one stretch. Tribunal felt that only peak sales can be taken as the basis for making the addition. Consequently, Tribunal directed the assessing officer to give the assessee necessary relief in the light of the directions given by the Tribunal. Revenue as well as the assessee filed appeals aggrieved by that part of the order which is adverse to them.

(3.) Counsel appearing for the assessee Sri. T. M. Sreedharan submitted that the Tribunal was not justified in rejecting his legal plea stating that it was too technical. Counsel submitted, Tribunal should have found that the effect of the subsequent amendment with retrospective effect by Finance Act 2 of 1996 was to confer validity to the notice dated 1-10-1993 under S.148, even though such notice allowed only less than 30 days for filing the return of income. Counsel submitted that by giving retrospective effect to the amended law with effect from 1-4-1989 the notice dated 1-10-1993 issued under S.148 was legal and valid. Counsel therefore submitted that final assessment for the year 1992-93 should have been completed before 31-3-1996 by virtue of S.153(2) of the Incometax Act and that the assessment order passed on 26-3-1997 was invalid. Counsel further submitted that in the light of return of income pending before the assessing officer when he issued fresh notice under S.148 on 28-3-1996, there was no legal validity for the fresh notice dated 28-3-1996 and any assessment order made pursuant thereto would be invalid. In support of his contention reference was made to the decision of the apex court in State of U.P. v. Raja Syed Mohammad Saadat All Khan, (1961) 41 ITR 737, Commissioner of Income Tax v. Ranchhoddas Karsondas, ( 1959 (36) ITR 569 . Commissioner of Income Tax v. S. Raman Chettiar, ( 1965 (55) ITR 630 .