2013 (3) TMI 331

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.... facts may be noticed in brief. The return of income had originally been filed on 31st October, 2005 in the status of individual showing income of Rs.1,88,090/and was duly processed under Section 143(1) of the Act. Subsequently, on 4th July, 2006, notice under Section 148 of the Act was issued and the assessee stated that the return already filed on 31st October, 2005 may be treated in response to notice under Section 148 of the Act. The Assessing Officer concluded the reassessment proceeding by making certain additions in the income of assesseerespondent by the order dated 27th December, 2007. The matter was carried in appeal before the C.I.T. (A). Besides challenging the additions made in the income on various grounds, it was submitted that the issuance of notice under Section 148 of the Act is not valid. The proceedings should have been taken under Section 143(3) of the Act instead. Argument was repelled on the ground that during assessment proceeding, no such specific objection was raised by the assessee or his counsel challenging the initiation of proceeding under Section 147 of the Act. However, the C.I.T. (A) has allowed the appeal in part by deleting certain additions. H....

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....from total purchase value of Rs.35,816,299.34, an amount of Rs.7,54,080/relating to Commission on sales received from Reliance Petro Marketing Limited. The Assessing Officer was of the view that as the expenses are duly debited in profit and loss account, there remains no scope for further deduction on account of expenses resulting into short computation in income which escaped assessment. Submission of the assessee is that on such transpiration, the proper course for the Assessing Officer was to issue notice under subsection (3) of Section 143 for regular assessment and Assessing Officer could not have recourse to Section 147 and 148 of the Act. Submission is that there was still time to complete the assessment proceeding by taking recourse to regular assessment proceedings. Strong reliance was placed on the judgment of Apex Court on the case of Trustees of H.E.H. The Nizam's Supplemental Family Trust (supra). There the decision given by the Apex Court relates to the assessment year 196263. The decision was rendered on the peculiar facts of that case. Along with return of income, an application under Section 237 of the Act for refund of tax deducted at source on interest on Gov....

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....here a return of income has been furnished by the assessee but no assessment has been made and it is noticed by the Assessing Officer that the assessee has understated the income or has claimed excessive loss, deduction, allowance or relief in the return." It shall be deemed case where income chargeable to tax has escaped assessment. In view of the above statutory provisions, the argument that no assessment order was framed, no reassessment proceeding can be initiated is not valid provided the other conditions of clause (b) to Explanation-2 are specified. In any view of the matter, so far as the Allahabad High Court is concerned, the controversy stands concluded by the decision of this Court in the case of Pradeep Kumar Har Saran Lal (supra). The Allahabad High Court has followed the judgment of the Calcutta High Court and it extracted the relevant portion from the judgment of the Calcutta High Court in Jorawar Singh Baid versus CIT (Asst.) [1992] ITR 47 (Cal). The extracted portion is reproduced below :- "Simply because the return of the assessee has been accepted without scrutiny and in good faith the Assessing Officer is not precluded from initiating a proceeding satisf....

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....l, 1989. It considered the relevant provisions relating to reassessment proceeding as it is existed prior to April, 1st 1989 and thereafter, It has been laid down that the scope and effect of section 147 as substituted with effect from April 1, 1989, as also sections 148 to 152 are substantially different from the provisions as they stood prior to such substitution. The relevant portions from the said judgment is extracted below: "17. The scope and effect of section 147 as substituted with effect from April 1, 1989, as also sections 148 to 152 are substantially different from the provisions as they stood prior to such substitution. Under the old provisions of section 147, separate clauses (a) and (b) laid down the circumstances under which income escaping assessment for the past assessment years could be assessed or reassessed. To confer jurisdiction under section 147(a) two conditions were required to be satisfied firstly the Assessing Officer must have reason to believe that income profits or gains chargeable to income tax have escaped assessment, and secondly he must also have reason to believe that such escapement has occurred by reason of either (i) omission or failure on t....