TaxTMI 
TaxTMI 
2016 (7) TMI 743
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....est on loans against her income from insurance commission. There being no nexus between the utilization of loan fund and earning of insurance commission, the AO was of the view that the income of the Assessee had been under assessed. Accordingly a notice u/s.148 was issued. The Assessee filed a letter on 15.5.2007 requesting the AO to return filed on 1.8.2005 be treated as a return filed in response to the notice u/s.148 of the Act. 3. The first controversy that arose for consideration in the appeal was with regard to service of notice u/s.143(2) of the Act within the time limit specified therein. The admitted factual position was that notice u/s.143(2) was served on the Assessee only on 5.9.2008. As per the provisions of Sec.143(2) as substituted by the Finance Act, 2002, the period within which notice u/s.143(2) of the Act has to be served is 12 months from the end of the month in which the return of income was filed by the Assessee. The Assessee in the present case is deemed to have filed her return of income on 15.5.2007 when a letter was filed before AO requesting the return originally filed on 1.8.2005 to be treated as a return filed in response to notice u/s.148 of the Ac....
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.... the return is furnished.". 4. Since the assessment proceedings were pending before him when the amendment by the Finance Act, 2008 came into force, the AO was of the view that as per the amended provisions of Sec.143(2) by the Finance Act, 2008 referred to above, the limitation of time for service of notice u/s.143(2) would be 6 months from the end of the financial year in which the return of income was filed. That time would expire only on 30.9.2008. The AO was of the view that at the relevant time when notice u/s.143(2) was issued the aforesaid amended provisions has come into force and the requirements of service of notice being a procedural law and not a substantive law, the said amended provisions will apply and therefore the service of notice u/s.143(2) of the Act was within the time as contemplated in law. This view of the AO was also endorsed by the CIT(A). 5. The submission of the learned counsel before the Tribunal was that law applicable will the law that prevailed during the relevant AY for which the assessment is sought to be made or at best the law applicable will be the law as it prevailed when the Assessee filed return of income and in this regard placed reli....
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....nance Act, 2006 have been set out in paragraph 4.1 and 5 of the order of the Tribunal which reads thus: "4.1. There was a controversy whether notice u/s.143(2)of the Act is mandatory when an assessment is made u/s.148 of the Act. The legislature accepted several judicial pronouncements holding that notice u/s.143(2) of the Act is necessary even in proceedings u/s.148 of the Act for assessment of income which has escaped assessment. The amendment to Sec.148(2) of the Act By the Finance Act, 2006, in section 148, in sub-section (1),-the following provisos were inserted and were deemed to have been inserted with effect from the 1st day of October, 1991, namely:- "Provided that in a case- (a) where a return has been furnished during the period commencing on the 1st day of October, 1991 and ending on the 30th day of September, 2005 in response to a notice served under this section, and (b) subsequently a notice has been served under sub-section (2) of section 143 after the expiry of twelve months specified in the proviso to sub-section (2) of section 143, as it stood immediately before the amendment of said sub-section by the Finance Act, 2002 (20 of 2002) ....
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....d therefore notice could be issued and served beyond 12 months from the date of filing of return but before expiry of time-limit for making assessment, reassessment or recomputation as specified in Sec.153(2) of the Act. Therefore there can be objection on the ground of notice u/s.143(2) of the Act not having been served within the specified time and consequently the assessment being invalid. We therefore reject the relevant ground of appeal of the Assessee in this regard." 9. It can be seen from the above observations that the date of filing of return in response to notice u/s.148 by the Assessee has been wrongly mentioned as "15.5.2008" whereas the correct date is "15.5.2007". This is the first apparent factual error in the order of the Tribunal. The second error is that the tribunal after noticing the time limit for service of notice u/s.143(2) of the Act for return of income filed in response to notice u/s.148 of the Act between the period 1.10.1991 to 30.9.2005 has wrongly applied that time limit to the case of the Assessee. Such time limit was not applicable to the case of the Assessee at all because the Assessee filed return of income in response to notice u/s.148 of the ....