JUDGMENT M. katju J.
1. The petitioner has challenged the validity of the notice dated March 18, 1994, under Section 148 of the Income-tax Act, 1961, issued to the petitioner for the assessment year 1990-91 (vide annexure 4 to the writ petition). In the alternative the petitioner has also challenged the order dated March 19, 1994 (vide annexure 6 to the petition), by which the return filed under Section 139(1) in compliance of notice under Section 148 has not been accepted. It is prayed that the return under Section 139(1) in compliance of notice under Section 148 be accepted.
2. Heard learned counsel for the parties.
3. The petitioner is a company registered under the Indian Companies Act having its head office at Varanasi. The petitioner established a vanaspati manufacturing unit which started production from March 29, 1990. The petitioner maintains account on mercantile basis.
4. For the assessment year 1990-91, the petitioner filed a return under the Income-tax Act on December 31, 1990, declaring a loss of Rs. 24,61,860. Notice under Section 143(2) of the Act dated June 18, 1991, was issued to the petitioner and was served on him on June 21, 1991. Thereafter, the case was transferred to the Deputy Commissioner of Income-tax (Assessment), Varanasi, who again issued notice under Section 143(2) dated July 15, 1991. Thereafter letter dated July 30, 1991, was issued to the petitioner making various enquiries and asking him to justify the claim of investment allowance and depreciation. The petitioner replied to these queries. Thereafter the case of the petitioner was transferred to the respondent who issued notice dated November 7, 1991. Thereafter the respondent again issued a notice dated November 9, 1992, making certain inquiries and directing the petitioner to prove various matters in respect of the claims made by the petitioner.
5. It is alleged in para. 9 of the petition that the respondent examined the petitioner's accounts in detail and passed an assessment order dated March 24, 1993, determining the assessable income of the petitioner as Rs. 62,47,993 as against the loss of Rs. 24,61,860 claimed by the petitioner. Photocopy of the assessment year is annexure 1 to the writ petition.
6. Against the aforesaid order, the petitioner filed an appeal to the Commissioner of Income-tax (Appeals) vide annexure 2 to the petition. By order dated March 15, 1994, the Commissioner of Income-tax (Appeals) allowed the appeal and set aside the assessment order so that the assessment can be de novo (vide annexure 3 to the petition).
7. Thereafter, on March 22, 1994, the petitioner received a notice under Section 148 of the Act dated March 18, 1994, alleging that the income of the petitioner chargeable to tax for the assessment year 1990-91 had escaped assessment and asking to the petitioner to submit a return. True copy of the notice is annexure 4 to the writ petition.
8. The petitioner filed a reply dated March 24, 1994 (vide annexure 5 to the petition). In this letter he has stated that the return filed under Section 139(1) should be taken to be the return in compliance of the notice under Section 148. The petitioner has also prayed that the reasons recorded under Section 148 be supplied to him.
9. In response the respondent passed an order that the return filed under Section 139(1) shall not be accepted as the return in response to the notice under Section 148. The respondent stated that the reasons will be given after the petitioner responded to the notice under Section 148 (vide annexure 6 to the petition).
10. It is alleged in para. 18 of the petition that after the assessment order of the Commissioner of Income-tax (Appeals) dated March 15, 1994, the assessment proceedings were pending before the Assessing Officer when notice dated March 18, 1994, under Section 148 was issued. Hence, it is alleged that the notice was illegal. It is also alleged that there was no reason to believe on the basis of relevant material that the petitioner's income escaped assessment.
11. A counter affidavit has been filed and we have perused the same.
12. In paragraph 3(1) of the same it is mentioned that an order of the Commissioner of Income-tax (Appeals) dated March 15, 1994 (vide annexure 3 to the writ petition) was received by the Assistant Commissioner of Income-tax, Central Circle I, Varanasi, on March 30, 1994. Copy of the valuation record was received by the Assistant Commissioner on March 17, 1994. It is alleged that on March 18, 1994, when the impugned notice under Section 148 was issued respondent No. 1 did not have any knowledge about the fate of the appeal as he received the copy of the order dated March 15, 1994, only on March 30, 1994.
13. Be that as it may, there is no dispute that once the Commissioner of Income-tax (Appeals) passed an order of remand on March 15, 1994, the assessment proceedings became pending before the Assessing Officer.
14. It is well settled that the notice under Section 148 cannot be issued when assessment proceedings are pending vide CIT v. Ranchhoddas Karsondas [1959] 36 ITR 569 (SC) ; CIT v. S. Raman Chettiar [1965] 55 ITR 630 (SC) ; N. Naganatha Iyer v. CIT [1966] 60 ITR 647 (Mad); Ram Bilas Kedar Nath v. ITO [1963] 47 ITR 586 (All); Dr. Onkar Dutt Sharma v. CIT [1967] 65 ITR 359 (All); Sool Chand Ram Sewak v. CIT [1969] 73 ITR 466 (All); S.P. Kochhar v. ITO [1984] 145 ITR 255 (All); Trustees of H. E. H. The Nizam's Supplemental Family Trust v. CIT [2000] 242 ITR 381 (SC) and CIT v. M. K.K. R. Muthu-kamppan Chettiar [1970] 78 ITR 69 (SC), etc.
15. In the present case, the petitioner filed a supplementary affidavit stating that against the order of the Commissioner of Income-tax (Appeals) an appeal was filed before she Income-tax Appellate Tribunal which has been dismissed on January 28, 1997 (vide annexure SA 1). Hence, the order of the Commissioner of Income-tax (Appeals) stands confirmed.
16. In the circumstances it is not necessary for us going into the other points urged by the petitioner.
17. In view of the above, we arc of the opinion that the impugned notice dated March 18, 1994, under Section 148 is invalid and it is hereby quashed. The petition is allowed. No order as to costs.