The Commissioner of Income Tax vs C. Palaniappan

P.D. Dinakaran, J.—The above appeals are filed by the Revenue u/s 260-A of the Income Tax Act, 1961 (hereinafter referred to as ''the Act'') against the common order of the Income Tax Appellate Tribunal dated 18.8.2004 made in ITA. Nos. 909, 908, 907 and 910/Mds/2003, raising the following substantial questions of law:

1) Whether on the facts and in the circumstances of the case, the Income Tax Appellate Tribunal was right in holding that the reopening of the assessment u/s 147, and completion of assessment without issue of notice u/s 143(2) within 12 months is not valid?

2) Whether on the facts and in the circumstances of the case, the Income Tax Appellate Tribunal was right in law in holding that, non-furnishing of the copies of the reasons by the assessing officer for reopening the case u/s 147, even though the assessee has not applied for certified copies of the reasons recorded by the assessing officer and paying the necessary charges is valid ?

The assessment years involved are 1991-92, 1990-91, 1989-90 and 1992-93 respectively. The facts relevant for the purpose of disposal of the appeals are as under:-

(a) The assessee, by name, C. Palaniappan, is a co-owner of a building called "Kannammai Building". On notice u/s 148 of the Act, the assessee filed return which was processed u/s 143(1)(a) of the Act. Later, after issue of notice u/s 143(2) of the Act, the assessment was completed u/s 143(3) read with section 147 of the Act.

(b) On appeal by the assessee, the Commissioner of Income Tax (Appeals) directed the assessing officer to recompute the assessee''s share in the income from the Kannammai Building for the relevant assessment years, by taking the admissible deduction u/s 24(1)(vi) at Rs. 7,20,000/- for each assessment year. The Income Tax Appellate Tribunal, on further appeal by the assessee, decided the issue in favour of the assessee holding that the reopening of assessment is bad in law.

(c) Aggrieved by the order of the Appellate Tribunal, the Revenue has come forward with this appeal raising the questions referred to above.

We heard learned counsel for the parties. Learned counsel appearing for the Revenue submitted that the Appellate Tribunal failed to appreciate the fact that the assessment was completed only u/s 143(1) of the Act and hence, the reopening of assessment u/s 147 of the Act to consider the correct quantum of interest allowable as deduction in computing the income from house property was correct as the assessee had not furnished relevant facts and evidence along with the return. Learned counsel further submitted that the Appellate Tribunal erred in its conclusion that in the case of reopened assessment, issue of notice u/s 143(2) of the Act within 12 months is statutory and the Tribunal was also wrong in deciding the issue on technical grounds without going into the merits of the case.

In respect of Question No. 1, we find that on a similar issue came up for consideration in CIT v. M. Chellappan, a Division Bench of this Court, in which one of us was a party (P.D. Dinakaran, J.), applying the ratio laid down by the Punjab & Haryana High Court in Vipan Khanna v. CIT, held as follows:

...admittedly, no notices u/s 143(2) of the Act were served on the assessees within the stipulated period of twelve months and, therefore, the proceedings u/s 143 of the Act come to an end and the matter becomes final.

In view of the above, the first question now raised, therefore, stands concluded in favour of the assessee.

In view of the above conclusion in respect of question No. 1, the question of non-furnishing of copies of the reasons by the assessing officer for reopening the assessment does not arise at all.

Accordingly, we find no error or illegality in the order of the Appellate Tribunal and there is no question of law, much less a substantial question of law that arises out of the order of Appellate Tribunal for our consideration. The appeal stands dismissed. No costs.