TaxTMI 
TaxTMI 
2013 (10) TMI 782
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....de through Addl. DIT (inv.), Bangalore and as per the report Shri M. Neelkanta Naidu, purchaser of the land stated that the land was a dry land at the time of purchase and no agricultural operations were being carried out by Shri Nitin Kumar Shah, the assessee; there were foundation with pillar for the proposed three sheds; the copies of pahani obtained showed that the land was an agricultural land during the period in which the property was owned by the earlier owner Sri S. Lokanath from whom the assessee purchased the property; enquiries also revealed that there was no agricultural activity carried out in the said land for the past three years. 3. The assessee was confronted with the said enquiry asking him to show why the long term capital gain should not be considered on sale of land and disallow the claim of exemption u/s 2(14)(iii). In response, the assessee acknowledged that there was no agricultural activity carried out by him during the year under consideration and duly acknowledged the photographs of the land shown as pertaining to the said land under consideration and agreed that the structures that exist in the said land were constructed by him before the sale as per t....
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....rd Member decision of Chennai Bench of Income-tax Appellate Tribunal in case of Super Spinning Mills Ltd. Vs. ACIT ( 3 ITR (Trib.) 258 iv) M/s Eenadu Relief Fund Vs. DDIT, ITA No. 434/Hyd/2010, dt. 13 th January, 2011. v) CIT Vs. Ved & Co., 302 ITR 328 (Del.) vi) CIT Vs. TCP Ltd., 323 ITR 346 (Mad.) 8. The learned DR, on the other hand, justifying the initiation of action u/s 147 of the Act, submitted that there is no legal bar in issuing notice u/s 148 of the Act within the time prescribed for issuance of notice u/s 143(2) of the Act. 9. We have considered the rival submissions and perused the material on record. We have also carefully applied our mind to the decisions relied upon by the learned AR before us. Before examining the legal issue raised, it is necessary to deal with the facts, first. For the impugned assessment year, the assessee filed his return of income on 05/02/2010 disclosing income of Rs. 1,36,600/-. As can be seen, the return was filed within the time limit u/s 139 of the Act. Section 143(2) of the Act prescribes that in a case where return is filed u/s 139 of the Act or in response to notice under sub-section (1) of section 142, the AO if he considers it n....
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....initiating proceedings u/s 147 of the Act. When the aforesaid difference of opinion was referred to Hon'ble 3 rd Member, the Hon'ble 3 rd Member held as under:- "The Department wants to interpret the expression "no assessment has been made" in the above clause to mean that it also includes situation where assessment under section 143(3) is still possible but not yet made. If thiss interpretation is to be accepted, it will set at naught the fundamental principles underlying section 147 of the Act and which principles have been followed till date. These principles are applicable even to the extended meaning given to the term "escaped assessent" in the amended provision. The above clause is intended to cover the following two situations: i) where a return is filed and no action is taken either under section 143(1) or under section 143(3) and the time limit for issuing notice under section 143(2) has expired; (ii) where a return is filed and is processed under section 143(1) and the time limit for issuing notice under section 143(2) has expired. It does not envisage a situation where a return is filed and the time limit 56 for issue of a notice under section 143(2) has not expired.....
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.... of reopening of assessment follows. This is one indication that an assessment be reopened only on the termination of the procedure prescribed in the pending provisions, viz., from sections 142 to 14:3A. Further, section 147 the expression "assess or reassess". The word "reassess" is used to indicate the termination of proceedings as a result of an assessment made under section 143(3) of the Act. The word "assess" is used to cover those sections where the return has or has not been processed under section (1) but the time limit to issue notice under section 143(2) has expired. en the Legislature has logically arranged the relevant provisions, there no need to put a specific bar in section 1471148 to the effect that the Assessing Officer cannot initiate proceedings under section 147 when the tine available for issuing notice under section 143(2) has not expired. In this view, it would be quite absurd to put such a provision and it is well known that the Legislature does not waste words. The next observation of learned Judicial Member is also in paragraph 6 which says that failure to take steps under section 143(3) will not render the Assessing Officer powerless to initiate proceedin....
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....on of Special Bench in the case of Motorola Inc. (supra), it is obvious that Explanation-2 (b) to section 147 refers to a situation where no assessment order has been passed and the time limit for passing such order has been expired or time limit for issuing a notice under section 143(2) was expired. This is obvious from the decision of the Special Bench in the case of Motorola Inc. (supra) and the judgment of Apex Court in the case of Narsee Nagsee & Company (supra). The question of escapement of income from assessment would come when the assessment proceedings have been terminated/ concluded either by an order under section 143(3) or by operation of law on the expiry of time limit for issuing a notice under section 143(2) of the Act. It is observed by the Apex Court that section 147 refers to a situation where the income had escaped assessment. Section 143(2) refers to a situation where the assessing officer was of the opinion that the assessee has understated the income. When the assessing officer has time limit for making an enquiry under section 143(2) of the Act as held by the Apex Court, we may not be able to say that any income has escaped assessment. The Lucknow Bench of h....