TaxTMI 
TaxTMI 
2010 (2) TMI 660
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....ounds in the appeal on this issue. 3. The issue which arises for our consideration in the assessee's appeal is whether the Ld. CIT(A) erred in upholding the proceedings initiated by the A.O. u/s. 147 and thereby issuing notice u/s. 148 of the I.T. Act to the assessee. 4. The facts which reveal from the record are as under : The assessee firm is a transport operator. The assessee filed the return of income for the A.Y. 2004-05 declaring total income of Rs. 12,46,674/-which was accepted by the A.O. u/s. 143(1) and there was no regular assessment for this year u/s. 143(3). Subsequently, the A.O. issued notice to the assessee u/s 148 dt. 20.4.2006 by giving the following reasons which is reproduced by the A.O. in the assessment order, ....
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....sessee on the same day. However, there has been no compliance to the said notice. Therefore, income chargeable has escaped assessment for A.Y. 2004-05@." 5. The main reason for the issuance of the notice was that that the assessee had included the rental income of Rs. 17,09,000/- treating the same as profits of the business and in opinion of the A.O. the said income should not have been treated as a business income and the assessee has claimed wrong/excess deduction in respect of the remuneration paid to the partners which was worked out at Rs. 9,18,616/- u/s. 40(b)(v). In the return in response to notice under sec. 148, the assessee has excluded the rental income from the "business income' and shown as income from house property and the....
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....n of the A.O. might have been treated as legal one. The Ld. Counsel referred to the reasons recorded by the A.O. (page No. 7, Paper Book) and submitted that when the proceedings u/s. 154 were pending, on the same reasons i.e. excess claim of the remuneration in respect of the partners u/s. 40(b)(v) of the Act, without conclusion or any decision on the same issue, the A.O. should not have proceeded to initiate any parallel proceedings under section 147 of the Act. He, therefore, pleaded that the proceedings initiated by the A.O. u/s. 147 is totally invalid and void ab initio and the same should be quashed. The Ld. Counsel also relied on the following precedents: Trustees of H.E.H. The Nizam's Supplementary Family Trust v. CIT 242 ITR 381(....
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....on to the working partner as per the provisions of section 40(b)(v) of the Act. It was noticed by the A.O. that there was mistake for not taking the action u/s. 143(2) and he resorted to the provisions of section 154. The A.O. issued the notice u/s. 154 dt. 8.2.2006 and the assessee did not comply with the said notice. The A.O. thereafter issued the notice u/s. 148. Nowhere, it is the case of the A.O. that the proceedings u/s. 154 which appears to be pending when the notice u/s. 148 was issued were either concluded or the A.O. has dropped the said proceedings. 9. In the case of Rajesh Jhaveri Stockbrokers Ltd., 291 ITR 500 (S.C), the Hon'ble Supreme Court has held that merely because the return filed by the assessee was accepted u/s. 143....
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....t condition suffices. In other words if the Assessing Officer for whatever reason has reason to believe that income has escaped assessment it confers jurisdiction to reopen the assessment. It is however to be noted that both the conditions must be fulfilled if the case falls within the ambit of the proviso to section 147. The case at hand is covered by the main provision and not the proviso. 18. 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." 10. In this case, the A.O....