TaxTMI 
TaxTMI 
2007 (1) TMI 72
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....eferring the facts in the case of Sukhini P. Moth as a representative case. Brief facts of the case are that the assessee has filed her return of income on March 5, 1997, for the assessment year 1996-97 showing income at Rs. 1,65,951, which was processed by the Assessing Officer under section 143(1) of the Act. No return was filed for the assessment year 1997-98. During the course of investigation, it was found that the shares of Rupmanglam Investment P. Ltd. (RIPL) and Flovin Plastics P. Ltd. (FPPL) were transferred to Dhanushya Financial P. Ltd. and the shareholders of FPPL and RIPL had already received sale price of the shares. On scrutiny of the case records, it was found that the assessee had not shown sale of shares and no capital gain had been offered for taxation. The Assessing Officer therefore, issued notice under section 148 of the Act. In response to which the assessee had filed her return of income on October 27, 2000, for the assessment year 1997-98 at Rs. 47,673. In respect of the assessment year 1996-97, the assessee, vide her written submissions dated June 22, 2001, stated that the return filed on March 5, 1997, may be treated as return to notice under section 148.....
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....epresentative and I am of the view that the judicial decisions are in favour of the appellant. The fact that notice under section 143(2) has not been issued and only a notice under section 142(1) was issued is very clear from the records. The hon'ble Supreme Court in the case of R. Dalmia [1999] 236 ITR 480 has very clearly stated that after the notice under section 148 has been issued, the procedures as required under sections 142(1) and 143 (in that specific case under section 144B), for completing of the assessment has to be carried out. It was stated that while assessment under section 143 and reassessment under section 147 are different but in making the assessments and reassessments under section 147, the procedure as laid down subsequent to section 139, including that laid down under section 144B has to be followed. The Ahmedabad Bench has also applied the ratio of this decision in the case of Rakesh S. Mardia v. Deputy CIT [2002] 74 TTJ 836 in the context of a block assessment under section 158BC. It will be worthwhile to quote from the order to clarify the issues. In view of the above it is clear that when the Legislature enacts a new provision or introduces a new provi....
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....ions of section 143(2) shall be applicable including the proviso. The decision of the Income-tax Appellate Tribunal, Mumbai, in the case of Uma Polymers P. Ltd. [2002] 123 Taxman 226 (Mag) is also on the similar lines. From the above, it is quite clear that the judicial position at the moment is in support of the fact that even in the case of a return filed in response to notice under section 148, the requirement of issuing a notice under section 143(2) within a year of filing of the return cannot be ignored. Following the same, in the appellant's case also, it is held that the assessment framed cannot be sustained as the notice under section 143(2) which was required to be issued within a year of filing of the return was not issued. Hence the assessment framed in this case is hereby annulled being bad in law. The other grounds of appeal against the quantum addition are not being taken up, as they become academic in the circumstances and are treated as infructuous." 6 The core question in these appeals is whether the reassessments completed without issue of formal notice under section 143(2) are invalid, null and void or irregular or in these cases the assessees had not....
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....no notice under this sub-section shall be served on the assessee after the expiry of twelve months from the end of the month in which the return is furnished." 11 Section 148, as it stood in the relevant year, is reproduced hereunder: "(1) Before making the assessment, reassessment or recomputation under section 147, the Assessing Officer shall serve on the assessee a notice requiring him to furnish within such period, not being less than thirty days as may be specified in the notice, a return of his income or the income of any other person in respect of which he is assessable under this Act during the previous year corresponding to the relevant assessment year, in the prescribed form and verified in the prescribed manner and setting forth such other particulars as may be prescribed and the provisions of this Act shall, so far as may be, apply accordingly as if such return were a return required to be furnished under section 139. (2) The Assessing Officer shall, before issuing any notice under this section, record his reasons for doing so." 12 Certain provisos are added by the Finance Act, 2006, to section 148 to save assessments completed on the assumption that no such....
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.... by inserting the proviso to section 148 of the Income-tax Act, 1961 ? and (iv) whether there was compliance with the provisions of section 143(2) ? 14 As regards the first part of the question the learned Departmental representative Dr. Banwarilal, submitted that the proceedings in the present cases are under section 148 and not under section 143 and, therefore, there is no requirement to issue a notice under section 143(2) at all. Under the whole scheme of the Income tax Act, 1961, there are two categories of returns ; (a) filed voluntarily under section 139(1) or 139(4), and (b) involuntarily, i.e., in compliance with notice under section 142(1), notice under section 148 and under section 158BC(a). For the purposes of issue of notice under section 143(2) within 12 months, the Legislature has consciously picked up returns filed in response to section 142(1) only from the second category. Thus, there is no legal requirement for issuance of notice under section 143(2) in the cases of returns filed under section 148 or 158BC(a). This position is evident and can be viewed from this angle, namely, see the proviso to section 147, which reads". . . where assessment is made under sect....
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.... of the assessee. This is a case for the assessment year 1995-96 wherein the admitted fact was that the notice under section 143(2) in respect of the three appellants have been served after the expiry of period of 12 months as provided under the proviso to section 143(2). The Bench held that since the assessing authority has failed to serve the notices within the statutory period provided under section 143(2), he lost the jurisdiction to make the assessment under section 143(3) read with section 147. A contrary construction would render the adoption of procedure as prescribed in sections 139 to 143 and other provisions as meaningless. The phrase has been used so as to provide that the provision would be generally applicable but to the extent it is not inconsistent with the express provisions of the adopting legislation. The proviso nowhere comes in conflict with the provisions of section 147. Had the proviso curtailed the limitation period as prescribed under section 153(2), then, certainly it will not apply. The Assessing Officer has to be more vigilant in making assessment pursuant to notice under section 148. Therefore, in almost all cases, he will issue notice to the assessee f....
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....er or initiation of search does not necessarily mean that anything seized during search has to be returned. This decision has been taken into consideration by the Special Bench in arriving at its decision and, therefore, no further discussion is necessary. To similar effect is the order in Mrs. C. Malathy wherein the Income-tax Appellate Tribunal, Chennai Bench [2004] 88 111)37 (Chennai) held that in order that an assessment could be framed on the assessee within the time permitted under section 153, the Assessing Officer has to necessarily and compulsorily follow the procedure prescribed under section 143(2) if he has to frame the assessment by calling upon the assessee, that is to frame an assessment order under section 143(3) or under section 144 or notice under section 143(2) is a. compulsory and mandatory prerogative to be complied by ensuring that the notice is issued within twelve months from the end of the month in which the return is furnished. In this case, the decision of Rakes S. Mardia [2002] 74 TTJ (Ahd) 836 was relied on. In Asst. CIT v. Baikunth Nath Singhal Income-tax Appellate Tribunal, Agra Bench [2004] 89 LTD 109 relying upon Triple Crown Agencies [1993] 204 ITR....
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.... H. H. Maharaja Raja Pawer Dewas v. CIT [1982] 138 ITR 518 (MP) and Prabhudayal Amichand v. CIT [1989] 180 ITR 84 (MP). Referring to the case of Ghanshyamdas v. Regional Asst. CST [1964] 51 ITR 557 (Sc), he submitted thatit is a settled legal position that the assessment proceedings are validlyinitiated either by filing of return or by issuance of notice for filing ofreturn. In the instant cases of the assessees, there is no provision for filing of voluntary return for escapement of income and the only provision under which return can be filed is on issue of a notice under section 148. .He submitted that escaped income assessment proceedings were validly initiated by issuance of notice under section 148 after recording proper reasons and therefore the Assessing Officer would have seisin over the case resulting in vesting of overall jurisdiction in the Assessing Officer. 18 Accordingly, non-issuance of notice under section 143(2) would only be a case of deviation from the rule of law resulting in irregularity only, which is curable, and not a nullity. The Assessing Officer having assumed valid jurisdiction by issuing a valid notice under section 148, is not further required to as....
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....ITR (AT) 225 (Delhi) [SB] particularly paragraphs 41-42 thereof. He also relied upon the decisions Smt. Kamala Devi Todi [1988] 174 ITR 414 (Gauhati); Vipan Khanna [2002] 255 ITR 220 (P & H); Uma Polymers P. Ltd. v. Asst. CIT [2002] 123 Taxman 226 (Mag) (Mum); Baikunth Nath Singhal [2004] 89 ITD 109 (Agra) and Mrs. C. Malathy [2004] 88 ITD 37 (Chennai). He then referred to the Central Board of Direct Taxes Circular No. 549 dated October 31, 1989, [1990] 182 ITR (St.) 1 at 24. He also relied upon the arguments raised in the case of Suratwala in I.T.A. Nos. 3218-19 & 3203-04/Ahd/2004 by Mr. S. N. Soparkar. 20 At the outset, we may observe that as per the settled legal position that the Assessing Officer gets jurisdiction under the Act for the assessment when proceedings are initiated either by suo motu filing of return by the assessee or by issue of notice requiring him to file the return. In the present case, there is no scope/occasion for filing a voluntary return for escapement of income and the only provision under which the return can be filed is on issue of a notice under section 148. The assessment proceedings for escaped income were initiated by issue of notice under secti....
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....garwal v. CIT [1983] 144 ITR 745 (All) ; P. N. Sasikumar v. CIT [1988] 170 ITR 80 (Ker) and Electro Steel Castings Ltd. [2003] 264 ITR 410 (Cal)——SLP dismissed [2004] 266 ITR (St.) 104. The existence of a valid 148 notice being a condition precedent for the exercise of the jurisdiction by the Assessing Officer to assess or reassess under section 147, it does not confer any right to the assessee, which he could abandon. Want of a notice affects the jurisdiction of the Assessing Officer to proceed with the assessment and failure to give the requisite notice shall deprive the Assessing Officer of his jurisdiction as held in Ghanshyamdas [1964] 51 ITR 557 (SC) ; Brij Bushan Lal v. CIT [1971] 81 ITR 497 (P&H); to T. A. George v. Agrl.. ITO [1985] 153 ITR 721 (Ker) and CIT v. Hindusthan Steel Ltd. [1989] 179 ITR 213, 218 (Cal). 22 The argument of the Departmental representative is that the failure to issue notice within the prescribed time of 12 months will not render the assessment a nullity and such a failure is to be treated as a procedural lapse or which will be construed as mere irregularity and not illegality because the limitation provisions are directory and not mandatory.....
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....dia, son of Rangalal Jajodia, Smt. Aruna Devi, wife of Rangalal Jajodia and her children". Appeals were preferred by the second wife, Aruna Devi contending, inter alia, that the assessments having been made without notice to her and the other executor were illegal and invalid. This plea was rejected by the Appellate Assistant Commissioner and the Tribunal, who however remitted the matters to the Income-tax Officer to complete the assessments after notice to Aruna Devi. The High Court too rejected the said contention whereupon the matter was brought to Supreme Court, which held that absence of notice to Aruna Devi makes the assessment merely defective but not null and void. The Supreme Court sustained the direction given by the Appellate Assistant Commissioner to the Income-tax Officer to make fresh assessment on Aruna Devi in accordance with the provisions of the Act. It held that if an assessment made with notice to Shankar Lal (who was not really the legal representative of the deceased Rangalal) and without serving notice upon the lawful legal representative,, Aruna Devi, is only "defective" and not null and void. The principle that emerges from the above decision is that an omi....
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....ction to assess and the liability to pay the tax, however, are not conditional on the validity of the notice. Suppose a person, even before a notice is published in the papers under section 22(1), or before he receives a notice under section 22(2) of the Income-tax Act, gets a form of return from the Income-tax Office and submits his return, it will be futile to contend that the Income-tax Officer is not entitled to assess the party or that the party is not liable to pay any tax because a notice had not been issued to him. The liability to pay the tax is founded in sections 3 and 4 of the Income-tax Act, which are the charging sections. Section 22, etc., are the machinery sections to determine the amount of tax. The decision in Maharaja of Patiala v. CIT [1943] 11 ITR 202 (Bom) is noted with approval. In that case, the facts were that the late Maharaja of Patiala had income from property and business in British India. On his death the Income-tax Officer, Bombay, served upon the successor Maharaja two notices under sections 22(2) and 38 of the Indian Income-tax Act, 1922, addressed to the Maharaja of Patiala requiring him to make a return of his income from all sources. Returns w....
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....tiated, but the invalidity is not, however, of such a nature which goes to the root of the proceedings and, that being so, the Appellate Assistant Commissioner having found it to be invalid, that invalidity did not go to the root of the matter. It could be set aside for being redone de novo. He should not have annulled it. Failure to serve notice on the assessee under section 143(2) is merely an irregularity and the Income-tax Officer, until and unless he gets the notices served, cannot complete the assessment. It is difficult to hold that the Income-tax Officer has no jurisdiction in respect of the proceedings. As soon as the return is filed, he gets seisin over the case He has jurisdiction over it, but on failure to comply with section 143(2), the only limited restriction is that he cannot complete the assessment. In these circumstances, the assessment orders completed without service of notice under section 143(2) cannot be said to be void ab initio and when it is not so, the assessment order cannot be annulled." In this case, the court followed Sant Baba Mohan Singh v. CIT [1973] 90 ITR 197 (All) and Rattan Lal Tiku v. CIT [1974] 97 ITR 553 (J & K). The de, court dissented f....
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....but on failure to comply with section 143(2) of the Act, the only limited restriction is that he cannot complete the assessment. In these circumstances, the assessment orders completed without service of notice under section 143(2) cannot be said to be ab initio void and when it is not so, the assessment order cannot be annulled." (d) Sant Baba Mohan Singh v. CIT [1973] 90 ITR 197 (All) A case for the assessment year 1960-61, wherein it is held that section 31(3)(a) speaks of the power of the Appellate Assistant Commissioner to annul an assessment. That is a power to be exercised where the assessment proceeding is a nullity in the sense that the Income-tax Officer had no jurisdiction ab initio to take the proceeding. A proceeding is a nullity when the authority taking it has no jurisdiction either because of want of pecuniary jurisdiction or of territorial jurisdiction or of jurisdiction over the subject-matter of the proceeding. A proceeding is a nullity when the authority taking it has no power to have seisin over the case. The omission of the Income-tax Officer to issue a notice under section 23(2) does not affect the ab initio jurisdiction enjoyed by the Income-tax Office....
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....he Income-tax Officer to comply with the requirements of law. The Appellate Assistant Commissioner, it is held, has inherent power to set aside the illegal order of assessment and direct the Income-tax Officer to comply with mandatory requirements while making the de novo assessment. It is further held that section 143 of the Act is not a substantive but purely a procedural section laying down the procedure for making assessment in various contingencies. The court then examined the effect of section 143(2). To begin with, it observed that it would appear that sub-section (2) of section 143 incorporates the essential rule of audi alteram partem, i.e., no man should be condemned unheard. It is, therefore, clear that this provision must be construed to have a mandatory force, because the object of the Legislature is that if the Income-tax Officer is not satisfied with the correctness of the return filed by an assessee or the documents or materials furnished by him, then before making the assessment he must give an opportunity to the assessee to explain and if possible to satisfy the Income-tax Officer regarding the correctness of the assessee's return. Secondly, the words "shall serve....
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....ackground, held that the Income-tax Officer had jurisdiction to continue the proceedings from the stage at which the illegality had occurred. (h) In Prabhudayal Amichand v. CIT [1989] 180 ITR 84 (MP), a case for the assessment year 1973-74 the Income-tax Officer levied a penalty under section 271(1)(c) of the Act. Aggrieved, the assessee preferred an appeal and contended that the order passed by the Income-tax Officer deserved to be quashed as no approval of the Inspecting Assistant Commissioner, as required by the proviso to clause (iii) of section 271(1) of the Act, was obtained by him and no opportunity of hearing was given to the assessee. The Commissioner of Income-tax (Appeals) upheld these contentions and quashed the order passed by the Income-tax Officer. On an appeal the Tribunal held that the Commissioner of Income-tax (Appeals), instead of quashing the order passed by the Income-tax Officer imposing penalty, should have remitted the matter to the Income-tax Officer for passing a fresh order in accordance with law and directed the Income-tax Officer to pass an order afresh in accordance with law. The court, on relying upon the decision of this court in Kimtee v. CIT [1....
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....sultation with a superior officer. This is only a procedural matter not involving the jurisdiction and, therefore, if there is a procedural irregularity which can be cured by directing the. Income-tax Officer to frame an assessment after following the correct procedure. The Madhya Pradesh High Court in Banarsidas Bhanot and Sons v. CIT [1981] 129 ITR 488, has considered this question and held that non-compliance with the provisions of section 144B of the Act is only a procedural irregularity and no question of jurisdiction is involved in such cases." It also considered its another decision in Banarsidas Bhanot and Sons v. CIT [1981] 129 ITR 488 (MP) wherein also it was held that non-compliance with the provisions of section 144B of the Act is only a procedural irregularity and no question of jurisdiction is involved in such cases. (k) In CIT v. Sumantbhai C. Munshaw (Decd.) [1981] 128 ITR 142 (Guj) The jurisdictional High Court of Gujarat examined a matter in connection with the proceedings under sections 159 and 143(2). Relying upon Chaube Jagdish Prasad v. Ganga Prasad Chaturvedi, AIR 1959 SC 492, the High Court explained the concepts of "nullity", "illegality" and "irregul....
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...."... no hard and fast line can be drawn between nullity and an irregularity; but this much is clear, that an irregularity is a deviation from a rule of law which does not take away the foundation or authority for the proceeding, or apply to its whole operation, whereas a nullity is a proceeding that is taken without any foundation for it or is so essentially defective as to be of no avail or effect whatever, or is void and incapable of being validated." 23 As to the question "what is a workable test to distinguish a nullity from an irregularity ?" the following passage from the decision in Holmes v. Russell [1841] 9 Dowl 487, is cited with approval in Dhirendra Nath, AIR 1964 SC 1300, at page 1304 "It is difficult sometimes to distinguish between an irregularity and a nullity; but the safest rule to determine what is an irregularity and what is a nullity is to see whether the party can waive the objection; if he can waive it, it amounts to an irregularity; if he cannot, it is a nullity." 24 A waiver, as observed in Dhirendra Nath, AIR 1964 sc 1300, is an intentional relinquishment of a known right. But can an objection as to jurisdiction be waived ? Jurisdiction ordinarily....
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....uj) and Estate of Late Rangalal Jajodia v. CIT [1971] 79 ITR 505 (SC), in which the question whether if one or more of the essential steps envisaged in such a machinery section are not taken and the assessing authority acts in breach of the said section or any part thereof, the assessment proceeding is rendered invalid, has come to be considered in the context of section 24B of the Indian Income-tax Act, 1922. These three decisions lay down that an error or omission in taking one or more of the various procedural steps prescribed under the said section or even a breach of the statutory injunction contained therein does not necessarily affect the inherent jurisdiction of the taxing authority and that, in certain cases subject to other just exceptions open under law, the resultant defective assessment can be substituted by a fresh assessment undertaken pursuant to a finding or direction of a higher authority without any inhibition of time limit and that, in others, the assessment would still be valid and effective, notwithstanding the defect, depending upon the conduct of the parties and other relevant circumstances. 26 The assessee relies on Smt. Kamala Devi Todi [1988] 174 ITR 4....
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....rassessment or escapement of income under any other item. There is no gainsaying the fact that in proceedings under section 147 it is only the escaped income which has to be assessed or reassessed. When proceedings under section 147 are initiated, the proceedings are open only qua items of underassessment. The finality of assessment proceedings on other issues remains undisturbed. It makes no difference whether the assessment proceedings have become final on account of framing of an assessment under section 143(3) or on account of non-issue of a notice under section 143(2) within the stipulated period. In view of the above discussion, the letter dated July 30, 1998, issued by the Assessing Officer in so far as it relates to matters unconnected with the issue of depreciation as also the directions issued by the Deputy Commissioner of Income-tax under section 144A cannot be sustained. The same are hereby vacated. The Assessing Officer will now proceed with the assessment under section 147 in accordance with law. CIT v. Sun Engineering Works P. Ltd. [1992] 198 ITR 297 (SC) followed. This is a case obviously for proceeding with items concluded in original proceedings which the Assessin....
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....sing Officer to issue a notice under section 143(2) does not affect the ab initio jurisdiction enjoyed by the Assessing Officer in respect of the proceeding. The Assessing Officer had seisin over the case, he had overall jurisdiction over the case and in that sense had power to initiate the proceeding. The omission to issue a notice under section 143(2) merely prevents the Income-tax Officer from making an assessment order under section 143(3), and after he rectifies the omission by issuing that notice he can proceed further to the next stage, that is, to exercise the power of completing the assessment under section 143(3). All these are steps within the overall jurisdiction vested in the Income-tax Officer over the entire assessment proceeding. The failure of the Income-tax Officer to issue a notice under section 143(2) does not call for an order by the Commissioner of Income-tax (Appeals) annulling the assessment. The power of setting aside the order of assessment, where it is illegal, is inherent in any appellate court his order would be perfectly legal order in directing the Income-tax Officer to issue notice to the assessee before making an assessment because he was not satisf....
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.... a procedural matter not involving the jurisdiction and, therefore, if there is a procedural irregularity which can be cured by directing the Income-tax Officer to frame an assessment after following the correct procedure. 32 As explained by the High Court of Gujarat in Sumantbhai C. Munshaw (Decd.) [1981] 128 ITR 142, a nullity results from an error which is incurable and, therefore, fatal to the proceeding. An illegality occurs when there is a breach of some provision of law and an irregularity, which is usually, amenable, occurs when some error of procedure is committed in the course of a proceeding. When there is a contravention of some provision of law, the question often arises whether the act done in the breach of such provision is perforce a nullity. If the provision is only directory, an act done in contravention thereof is manifestly not a nullity. Every act done in breach of a mandatory provision, however, is not necessarily a nullity. 33 The aforesaid is the situation prior to the introduction of time limit prescribed for issuing the notice under section 143(2). After the prescription of time limit of 12 months is prescribed by the proviso to this sub-section, the....
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....th in cases of reopened assessments. Thus, the status of law before April 1, 1988, has been restore Thus, after removal of the time limit for issuance of notice under section 143(2), the requirement for issuing notice under section 143(2), if any, becomes procedural only and, therefore, the ratio laid down in the case of Raj Kumar Chawla [2005] 277ITR (AT) 225 (Delhi) ; 94 ITD 1 (Delhi) [SB] and cases relied by learned counsel for the assessee would not apply. The discussion in paragraphs 38 and 39 of this case of Raj Kumar Chawla [2005] 277 ITR (AT) 225 (Delhi) [SB] for holding that non-issuance of notice under section 143(2) was a procedural lapse only, turned on the ground that the provisions of limitation are to be strictly construed. Similar were the views in other cases relied on by learned counsel. These cases are of the period, the learned Departmental representative contended, when limitation had been provided for issuing the notice under section 143(2), namely, the period between April 1, 1988, onwards, but upon amendment by the Finance Act, 2006, by inserting the proviso to section 148 with retrospective effect from October 1, 1991, to section 148, the position is brough....
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....ecified in sub-section (2) of section 153, such notice shall be deemed to be valid notice. It is further proposed to insert a proviso in the said sub-section so as to provide that where a return has been furnished during the period from October 1, 1991, to September 30, 2005, in response to a notice served under section 148 and, subsequently a notice has been served under clause (ii) of sub-section (2) of section 143 after the expiry of twelve months specified in the proviso to clause (ii) of sub-section (2) of section 143, but before the expiry of the time limit for making the assessment, reassessment or recomputation as specified in sub-section (2) of section 153, such notice shall be deemed to be valid notice. These amendments will take effect retrospectively from October 1, 1991. It is also proposed to insert an Explanation in sub-section (1) so as to clarify that the provisions of the newly inserted first proviso or the second proviso shall not apply in relation to any return which has been furnished on or after October 1, 2005, in response to a notice served under sub-section (1) of section 148. This amendment will take effect retrospectively from the 1st October, 20....
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....ny subsequent assessment year, an order of fresh assessment in pursuance of an order under section 250 or section 254 or section 263 or section 264, setting aside or cancelling an assessment, may be made at any time before the expiry of one year from the end of the financial year hi which the order under section 250 or section 254 is received by the Chief Commissioner or Commissioner or, as the case may be, the order under section 263 or section 264 is passed by the Chief Commissioner or Commissioner: Provided that where the order under section 250 or section 254 is received by the Chief Commissioner or Commissioner or, as the case may be, the order under section 263 or section 264 is passed by the Chief Commissioner or Commissioner, on or after the 1st day of April, 1999, but before the 1st day of April, 2000, such an order of fresh assessment may be made at any time up to the 31st day of March, 2002 Provided further that where the order under section 254 is received by the Chief Commissioner or Commissioner or, as the case may be, the order under section 263 or section 264 is passed by the Commissioner on or after the 1st day of April, 2005, the provisions of this sub-secti....
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.... if the Assessing Officer is not satisfied with the correctness of the return filed by an assessee or the documents or materials furnished by him, he must give an opportunity to the assessee before making the assessment to explain. In these present cases, when asked for the details though, vide notice dated March 7, 2003, which could be only in order to support of the return. These are "In connection with scrutiny assessment in your case for the assessment year 1997-98, you are hereby requested to please furnish the following details, duly verified and signed by you, so as to reach the undersigned on or before March 15, 2002. 1. Please explain your holdings of shares in the companies named Rupmanglam Investment P. Ltd. and Flovin Plastics P. Ltd. 2. Date of acquisition of shares and cost of shares. 3. Copy of agreement, if any, executed for transfer of shares of the abovereferred shares. 4. Date of transfer of shares as per your records and the records of the company, if any. 5. Amount of sale consideration for the sale of shares and the date-wise payment received. 6. Please explain whether you were beneficial user of the property named Rupmangla Bungalow, situ....
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.... Rup Mangal P. Ltd. by issue of summons to produce following documents connected with the transfer of shares belonging to me. 1. Share transfer from Rup Mangal P. Ltd. C/o. Kashiparekh Associates who are their auditors. 2. Shares certificate (Rup Mangal P. Ltd.) 3. Shares register (Rup Mangal P. Ltd.) 4. Minute books recording transfer of shares of Rup Mangal P. Ltd. 5. Profit and loss account and balance-sheet of Rup Mangal P. Ltd. for the assessment years 1996-97 to 1993-99 (Rup Mangal P. Ltd.) 6. Assessment orders (Rup Mangal P. Ltd.) 7. Audited profit and loss account and balance-sheet of Dhanushya for the financial years 1994-95 to 1998-99. 8. Valuation report given by the auditors Kashiparekh to Rup Mangal P. Ltd. in respect of transfer of these shares. I may also bring to your kind notice that the matter was investigated by the Deputy Commissioner of income-tax Investigation Unit 1(4), Ahmedabad. Information in respect of transaction of shares can be had from his office." 40 The assessee also requested for copies of documents as mentioned above and cross-examination of the parties as mentioned above so that he my may be in a positio....
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....omply with the directions for requirements under section 142(1) of the Act. As observed by the jurisdictional High Court in the case Mahi Valley Hotels [2006] 287 ITR 360, 362 "4. The second contention regarding there being acquiescence and/ or waiver on part of the assessee by participating in the proceedings also does not merit acceptance. It is an admitted position that the return of income was filed on March 30, 1997, for the assessment year 1997-98 and the notice under section 143(2) of the Act came to be issued for the first time only on August 20, 1998. Therefore, the notice was admittedly beyond the period of 12 months which is the statutory period of limitation prescribed under the proviso to sub-section (2) of section 143 of the Act. 5. The scheme of the Act broadly permits the assessment in three formats : (i) acceptance of the returned income ; (ii) acceptance of returned income subject to permissible adjustments under section 143(1) of the Act by issuance of intimation; and (iii) scrutiny assessment under section 143(3) of the Act. This scheme was originally introduced by the Direct Tax Laws (Amendment) Act, 1989, with effect from April 1, 1989. The issuance of n....