IMPORTANT POINT
So long as the ingredients of section 147 are fulfilled, the Assessing Officer is free to initiate proceeding under section 147 and failure to take steps under section 143(3) will not render the Assessing Officer powerless to initiate reassessment proceedings even when intimation under section 143(1) had been issued.

JUDGMENT

Dr. ARIJIT PASAYAT, J.—

1.Leave granted.

2.Challenge in this appeal filed by the revenue is to the correctness of the decision rendered by a Division Bench of the Gujarat High Court allowing the Special Civil Application filed by the appellant.

3.Background facts in a nutshell are as follows :

4.The respondent a Private Limited Company filed its return of income for Assessment year 2001-02 on 30th October, 2001 declaring total loss of Rs.2,70,85,105/-. The said return was processed under Section 143(1) of the Income Tax Act, 1961 (in short the Act) accepting the loss returned by the respondent. Notice under Section 148 of the Act was issued on the ground that claim of bad debts as expenditure was not acceptable. On 12th May, 2004 a return of income declaring the loss at the same figure, as declared in the original return, was filed by the respondent under protest. Copy of the reasons recorded was furnished by the appellant on the respondents request some time in November, 2004. The respondent raised various objections, both on jurisdiction and merits of the subject matter recorded in the reasons. On 4th February, 2005 the appellant disposed of the objections holding that the initiation of reassessment proceedings was valid and he had jurisdiction to undertake such an exercise. It is in the aforesaid backdrop of facts that the impugned notice under Section 148 of the Act dated 12th May, 2004 was challenged by the respondent.

5.The High Court allowed the writ petition following the decision of the High Court in Adani Exports v. Deputy Commissioner of Income Tax (Assessment),1 (1999) 240 ITR 224.

6.In support of the appeal learned counsel for the appellant submitted that the factual position involved in Adani Exports case (supra) was entirely different. That was a case relating to Section143 (3) of the Act and the present case relates to Section 143(1) of the Act. It is pointed out that return was filed by the respondent for the concerned assessment year i.e. 2001-2002 on 30.10.2001. The return was processed under Section 143 (1) of the Act on 26.11. 2001. The revenue audit raised an objection relating to a debit of Rs.1285.72 lakh as bad debt out of total expenditure of Rs.1307.64. Since the conditions stipulated under Section 36(1)(vii) read with Section 36(2) of the Act were not fulfilled, the assessing officer reopened the assessment by issuing a notice in terms ofSection 148 of the Act on the ground that it has reason to believe that the income assessable to tax had escaped assessment within the meaning of Section 147 of the Act. The respondent asked for the reason for re-opening the assessment. On 31.5.2004 a return of income declaring the loss of the original return was filed by the respondent under protest and raised various objections relating to jurisdiction and merits of the subject matter. The same was disposed of by the assessing officer holding the initiation of re-assessment proceedings was valid and the assessing officer had jurisdiction to undertake the exercise. Thereafter a writ petition was filed as noted above. The High Court relying on the decision in Adani Exports case (supra), which had no application, allowed the writ petition.

7.According to the learned counsel for the appellant the distinction between the position as under Section 143(1) of the Act vis-à-vis under Section 143(3) of the Act has been completely lost sight of by the High Court. Adanis case (supra) related to a case under Section 143(3) of the Act.

8.Learned counsel for the respondent on the other hand supported the order.

9.In order to consider the rival submissions, it is necessary to take note of Section 143(1) (as it stood before and after amendment with effect from June 1, 1999), 147 and 148. The provisions read as follows :

After amendment :

“143. Assessment- (1) Where a return has been made under section 139, or in response to a notice under sub-section (1) of Section 142,-

(i)if any tax or interest is found due on the basis of such r