TaxTMI 
TaxTMI 
2017 (8) TMI 567
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....ial question of law : 'Whether AO can proceeds with extraordinary power U/s. 147, particularly when normal procedure of assessment of Income U/s. 143(3) are available which are otherwise within time?' 3. On 14.12.1999 the appellant filed her return of income for the subject assessment year 1999-2000 declaring nil income. On 07.01.2000 the Revenue processed the return of income under Section 143(1)(i) of the Act by Intimation. 3. On 25.01.2000 Assessing Officer issued a notice under Section 148 of the Income Tax Act seeking to reopen the proceeding for the subject assessment year 1999-2000. Thereafter, in response respondent/assessee did not file any return of income, nor did she attend the hearing before Assessing Officer. This ....
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.... was always subject to assessment and without prejudice to the rights of the Assessing Officer to proceed against the assessee under sub-section (2) of Section 143 of the Act. In these circumstances, the exercise of jurisdiction under Section 148 of the Act by the Assessing Officer is completely illegal. (b) The reliance in the impugned order upon the Explanation 2(b) of the Act is misplaced. The Explanation it is submitted is a safeguard against an assessee taking up a stand that as no assessment has been done, it is not open to the Assessing Officer to reach a conclusion that income chargeable to tax has escaped assessment. The Explanation 2(b) of the Act deems various cases wherein it is deemed that income chargeable under the Act has e....
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....fying the sum so payable, and such intimation shall be deemed to be a notice of demand issued under section 156 and all the provisions of this Act shall apply accordingly; and (ii)....................... Provided that except as otherwise provided in this subsection, the acknowledgment of the return shall be deemed to be an intimation under this subsection where either no sum is payable by the assessee or no refund is due to him : Provided further that no intimation under this subsection shall be sent after the expiry of two years from the end of the assessment year in which the income was first assessable.] (2) Where a return has been made under section 139, or in response to a notice under subsection( 1) of section 142, the Assessi....
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....ver he has reason to believe that income chargeable to tax has escaped assessment. This power under Section 147/148 of the Act is subject to various limitation provided therein. The power of reopening of assessment can be exercised where assessment has not been completed under Section 143(3) of the Act or even where intimation under Section 143(1)(i) of the Act has been issued provided the time to take further proceeding by issuing notice under Section 143(2) of the Act to complete assessment under Section 143(3) have already expired. So long the time is available to complete an assessment under Section 143(3) of the Act after having issued intimation under Section 143(1) of the Act, there can be no occasion for the Assessing Officer to hav....
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.... filed, but no assessment has been made. The aforesaid explanation seeks to clarify that merely because no assessment has been made even after filing a return, it will not be open to suggest that no income chargeable to tax has escaped assessment. This covers issue where there is no possibility of making an assessment on the date when the notice under Section 147/148 of the Act is issued. So long as the time to issue notice under Section 143(2) of the Act is available, it cannot be said that no assessment has been made as the possibility of making an assessment is always available. The Assessing Officer is obliged to complete assessment under Section 143(3) of the Act by issuing a notice under Section 143(2) of the Act, if he is of the view....
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....eve that the income chargeable to tax has escaped assessment. It is in such cases that the Assessing Officer would not be prohibited under Section 147/148 of the Act from seeking to recover tax on income which has escaped assessment. It is clear that no reassessment proceedings can be initiated so long assessment proceedings on the basis of return of income filed by the assessee is pending. The assessment proceedings would cease to be pending either by passing of an order under Section 143(3) of the Act or by expiry of time to issue a notice under Section 143(2) of the Act, to complete an assessment under Section 143(3) of the Act. So long as the above event has not passed, the Assessing Officer cannot render the provision of Section 143(2)....