TaxTMI 
TaxTMI 
2015 (1) TMI 569
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....her reassessment u/s. 147 of the Act for escapement of income can be initiated by issuing notice u/s. 148 of the Act despite the fact that valid return filed by assessee u/s. 139(4) of the Act is pending. Pending means, time is available for issuance of notice u/s. 143(2) of the Act with the revenue. 3. Briefly stated facts are that the assessee filed return of income for AY 2006-07 on 21.02.2007. The AO issued notice u/s. 148 of the Act dated 01.11.2007 and in response to this notice u/s. 148 of the Act, assessee replied vide letter dated 14.05.2008 that the return filed by assessee on 21.02.2007 be treated as return filed in response to notice u/s. 148 of the Act without any alteration. The AO issued notice u/s. 143(2) and 142(1) of the ....
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....ice under section 143(2) issued on 22.5.08 is valid. 6. As I had held that the notice under section 143(2) and 148 to be valid. I dismiss grounds 1.0 to 3.0." Aggrieved, assessee came in appeal before me. 4. I have heard rival submissions and gone through facts and circumstances of the case. I find from the facts of the case as narrated above that a valid return of income submitted by assessee u/s. 139(4) of the Act was pending assessment. On this pending return, AO is empowered to issue notice u/s. 143(2) of the Act as the time limit has not expired. If a valid return of income has been submitted by an assessee within the period fixed u/s. 139(4) of the Act for submission of return, the provision of section 147 and 148 of the Act will n....
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....of the Act one of the grounds which enables the ITO to assess or reassess the income of an assessee by issuing a notice under s. 148 is that the ITO has reason to believe that, by reason of the omission or failure on the part of the assessee to make a return under s. 139 of the Act for any assessment year, income chargeable to tax has escaped assessment for that year. Section 139 provides, inter alia, that the assessee shall furnish a return of his income during the previous year in the prescribed form and verified in the prescribed manner and setting forth such other particulars as may be prescribed Section 143 of the Act, as it stood before its amendment in 1970, runs as follows: "143. (1) Where a return has been made under section 139 a....
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....ot conform to the provisions of that section. In other words, if a return is not verified in the prescribed manner and does not contain the prescribed particulars, it is not correct and complete. Section 143 lays down the procedure to be followed by the ITO when a return filed by an assessee is not correct and complete or when it is so, as the case may be. There is a distinction between the case of a non-filing of a return and the case of filing an incorrect and incomplete return. The former contemplates when no return has been actually filed by the assessee, while the latter contemplates the presence of a return which is not correct and complete. An incomplete return, that is, a return which does not comply with the provisions of s. 139 ma....
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....rded as non-existent. If it is laid down that an incorrect and incomplete return is not a return in the eye of law and should be ignored or disregarded, then s. 143 would become nugatory. If that was the intention of the Legislature, there would not have been any necessity for it to provide for the procedure which the ITO is to follow when a return is not correct and complete. In the case of CIT v. S. Raman Chettiar [1965] 55 ITR 630 (SC), a return was filed pursuant to a notice under s. 34 of the Indian I.T. Act, 1922. The said notice was invalid as the sanction of the Commissioner was not obtained. The income shown by the assessee in the return was below the taxable limit and, consequently, the assessment proceeding was dropped as infruc....
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....it was observed that it could not be regarded as a case where no return had been filed by the assessee or that his income had escaped assessment. Mr. Pal, however, strongly relied on a decision of the Lahore High Court in Lal Mohammad Sardar Mohammad v. CIT [1934] 2 ITR 358 (Lah). In that case, it was held that the return was invalid and the ITO was justified in making an assessment under s. 23(4) of the said Act, namely, a best judgment assessment. We are unable to agree with the view expressed by the Lahore High Court in Lal Mohammad Sardar Mohammad's case. It does not appear that the Lahore High Court considered the provisions of sub-ss. (1), (2) and (3) of s. 23 of the Indian I.T. Act, 1922, which were somewhat similar to s. 143 of....