... 1 ... IN THE HIGH COURT OF BOMBAY AT GOA. TAX APPEAL NO.27 OF 2003 1. M/s V. A. Kamat Bros. A partnership firm duly constituted under the Indian Partnership Act, 1932, having its place of business at Anjuna, Goa and through its Partner, Shri Ajit Vinayak Kamat, major, married, resident of Vagator, Anjuna, Goa. 2. Shri Ajit Vinayak Kamat, Partner of appellant no.1 above major, married, resident of Vagator, Anjuna, Goa. 3. Shri Vassudev Anand Kamat, Partner of appellant no.1 above major, married, resident of Vagator, Anjuna, Goa. 4. Shri Ramprasad Vinayak Kamat, Partner of appellant no.1 above major, married, resident of Vagator, Anjuna, Goa. 5. Shri Aman Vinayak Kamat, Partner of appellant no.1 above major, married, resident of Vagator, Anjuna, Goa. … Appellants v e r s u s Income Tax Officer, Ward II (I), Panaji, Goa. … Respondent ... 2 ... Mr. Shivan Dessai, Advocate for the appellants. Mr. S. R. Rivonkar, Advocate for the respondent. CORAM: SHRI B. P. DHARMADHIKARI & SHRI U. D. SALVI, JJ DATE: 14th JULY, 2009. ORAL JUDGMENT:(PER DHARMADHIKARI, J) The assessee's appeal came to be admitted on 07.10.2003 without formulating any substantial questions of law. On 22.01.2009, this Court directed the assessee to submit these questions and accordingly on 17.02.2009 following two questions have been formulated: 1. Whether the assessment proceedings are an initio void being barred by the limitation prescribed under the Income Tax Act and the said proceedings having been commenced after the limitation period are no-est and ab-initio void ? ... 3 ... 2. Whether the provision of Section 184 (5) of Income Tax Act, 1961 could be invoked by the Assessing Officer in the absence of proceeding under section 144 being initiated by the authorities ? In this background, we have heard Advocate Mr. Shivan Dessai for the appellants and Mr. Rivonkar for the department. 2. The facts are not much in dispute. The challenge is to the order of the Income Tax Appellate Tribunal, Panaji Bench, Panaji dated 17.03.2003 whereby the appeal filed by the assessee came to be dismissed and order of Central Income Tax (A) against him was maintained. The relevant assessment year is 1994-95. 31st August,1994 was the date by which return for the said year ought to have been filed. The assessee who had paid advance tax of Rs.8000/- did not file any return. He however on 09.01.1998 voluntarily filed a return for that year. On 08.08.2000 notice under section 148 of the Income Tax Act 1961 was then served upon the appellant calling ... 4 ... upon him to file his return in the prescribed form. The appellant/assessee did not comply with it and on 06.09.2000 he was served with another notice purporting to be under section 142 calling for accounts, certain documents and particularly informing him that he was to explain why the assessee firm should not be treated as AOP as he did not furnish return under section 139 (1) or 139 (4). The Appellate Authority in its order dated 12.07.2002 has mentioned that “the appellant has given its constructive acceptance to such a treatment which is evident from the facts that notices under section 143 (2) on 06.09.2000 and 27.11.2001 and notice issued under section 142(1) on 06.09.2000 were responded to by the appellant without taking any objection whatsoever.” The Assessment Officer therefore, vide his order dated 12.12.2001 passed under section 147 r/w 143 (3) determined the total income to be Rs.1,61,114/- and then after deducting the advance tax payment of Rs.8000/- arrived at tax liability of Rs.40,671/-. He then proceeded to add interest under section 234 A and 234 B and thus determined the total ... 5 ... tax liability to be Rs.1,73,809/-. 3. On 02.02.2002 the assessee approached CIT (A) and his appeal came to be dismissed on 12.07.2002. Then he approached ITAT on 07.10.2002 and ITAT dismissed his appeal on 17.07.2002. 4. In this back ground Advocate Mr. Dessai for the assessee has invited our attention to the provisions of Section 153 (1) to urge that the time limit for undertaking the exercise of assessment expired on 31.03.1997. He states that the return filed by the assessee was on 09.01.1998 and under wrong advice. As there was no scope for assessing the income at that time, the return filed ought to have been ignored as it has no legal recognition in the scheme of Income Tax Act. He has further invited our attention to the provisions of section 148 to point out that the said notice was issued for exercise of powers under section 147 and that also is subject to the provisions of section 148 to 153. He invites attention to the provisions of section 149 ... 6 ... (1) (a) to show that it prescribes period of four years within which the action for re-assessment could have been taken and as the said period expired on 31.03.1999, the assessment or re-assessment exercise as undertaken by the Assessing Officer in the present matter on 12.12.2001 is void ab-initio. In support of his contention, he relied upon the judgment of the Hon'ble Apex Court reported at S.S. Gadgil v. Messrs. Lal and Co., AIR 1965 Supreme Court 171. 5. He further points out that the assessee has been treated as AOP and deductions claimed under section 184 have been disallowed only because of alleged re-assessment done on 12.12.2001. He argues that if re-assessment is barred by limitation, dis- allowance itself is not legal and deserves to be set aside. He points out that the provisions of Section 184 (5) operate only after expiry of particular time limit but then can be resorted to only if assessment or re-assessment is legally sustainable. ... 7 ... 6. He contended that in the instant circumstances, the interest levied under section 234 A and 234 B is arbitrary as proper notice as also opportunity to the appellant in that regard was a must. He states that on 12.12.2001 the Assessing Officer has not passed any order to support levy of such interest. He has relied upon the judgment of the Hon'ble Patna High Court reported in Smt. Tej Kumari v. Commissioner of Income Tax and ors. MANU/BH/0556/2000 to show that the order of the Assessing Officer is therefore, liable to be quashed and set aside at least to the extent of levy of interest. 7. Advocate Rivonkar has invited attention to the provisions of section 260 (A) to urge that the questions as formulated can only be looked into at the stage of final hearing. He further stated that though in appropriate cases this Court can frame even additional substantial question of law, this is not one such matter. He states that the challenge to section 148 notice or then proceedings under section ... 8 ... 147 was expressly given up before the ITAT and there is no challenge also to the interest levied under section 234 A and 234 B. In the light of the second question as formulated he has invited attention to the notice under section 142 dated 06.09.2000 to show that previous opportunity about proposed treatment as AOP was extended to the assessee and his explanation was called for. He therefore contended that the ingredients of provisions under section 184 (5) which otherwise operate of their own have been satisfied before levying tax as AOP and not as a firm. He therefore, argues that no substantial questions of law arises in this appeal and there is no scope for remand also. 8. In his brief reply, Advocate Dessai states that mention by ITAT that the assessee did not challenge the validity of the proceedings under section 148 is incorrect because the said challenge was very much raised in the appeal memo filed before the ITAT and after hearing the parties, this Court has framed the substantial question of law which ... 9 ... needs to be decided. He also invited attention to reproduction of part of order by ITAT to show that the aspect of delay was pressed into service before ITAT and therefore only it has reproduced the said part. 9. Before us, it is clear that the assessee paid advance tax of Rs.8000/- and did not file any return. His return for assessment year 1994-95 was tendered by him on 09.01.1998. The provisions of section 153 (1) on which reliance was placed envisage assessment under section 143 and 144. It is therefore, obvious that the bar under section 153 (1) is not relevant in the present circumstances. 10. Admittedly as no return was filed, in the light of explanation (2) of Section 147, the respondents have issued notice under section 148. As notice under section 148 was issued, it is clear that the procedure as contemplated by section 142 needed to be followed and accordingly steps for assessment ... 10 ... were taken up. Section 149 regulates issuance of notice under section 148 at the relevant time as per its clause (b) (i) time limit for issuing such notice was four years from the end of assessment year 1994- 95. However, then that clause (i) has a further rider attached to it and said time limit of four years is relevant only if the case is not falling under sub clause (ii) or (iii). As per sub clause (ii) the said period is seven years from the end of relevant assessment year if the quantum of income chargeable to tax which has escaped assessment is likely to amount of Rs.25,000/- or more for that year. As per sub clause (iii) the said period is ten years, if the quantum of such income is likely to be Rs.50,000/- or more for that year. 11. The facts on record need to be viewed in this back ground. The return filed by the assessee under mistaken advise is on 09.01.1998 and even if it is ignored and not accepted as his return, the said disclosure could have been very well used by the Assessing Officer while passing the order under ... 11 ... section 147 r/w 143 (3) of the Income Tax Act. The facts and figures disclosed by the assessee pertained to assessment year 1994-95. He accepted the advance tax payment of Rs.8000/- and returned taxable income of Rs.4060/- only. This exercise of the assessee has been used by the Assessing Officer and there is no dispute about correctness or otherwise of the figures disclosed therein by the assessee. The Assessing Officer has implemented the provisions of section 184 (5) and as there was failure on part of the assessee to file return as contemplated by section 144 (1) of the Act, the assessment has been done by treating the assessee as AOP. The allowance claimed by the assessee while returning taxable income of Rs.4060/- was therefore disallowed by the Assessing Officer. This dis- allowance is after issuing notice to the assessee. The income escaping assessment is calculated at Rs.1,61,144/- i.e. in excess of Rs.50,000/-. The time limit therefore was ten years as per clause (iii) of Section 149 (b) then in force. In this view of matter, we do not find any substance in the ... 12 ... contention that the notice that the notice issued under section 148 was barred by expiry of time. In view of this, we do not find it necessary to consider the judgment of the Hon'ble Apex Court mentioned above. 12. The levy of interest under section 234 A and 234 B in the present matter is not done independently by the Assessing Officer and the levy forms part of the assessment order dated 12.12.2001 itself. The judgment of the Hon'ble High Court particularly paragraph 20 thereof, which has been pressed into service shows that such interest is leviable on the tax on the total income declared in the return and not on the income as assessed and determined by the Assessing Authority and it cannot be assessed in the absence of specific order of the Assessing Authority. Here, the total income declared in the return was Rs.4060/- but it was by ignoring the provisions of section 184 (5) of the Income Tax Act. The allowance wrongfully appropriated by the assessee was corrected by the Assessing Officer and ... 13 ... then the interest has been calculated and charged in the assessment order. Therefore, there is no error in the said levy as it is with previous notice to assessee. 13. In the circumstances, we do not find any merit in the substantial questions of law as formulated or then as sought to be raised in this Court. It is therefore, not necessary to consider if points were really given up or then pressed before ITAT. The appeal is therefore, dismissed. No order as to costs. B. P. DHARMADHIKARI, J U. D. SALVI, J lh/.