AI Drafter 
TaxTMI 
TaxTMI 
2020 (6) TMI 239
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....rder was passed by the Ld. income tax officer Ward - 2 Hissar. c. Ground number [3] challenges the addition of ı 6 94000/- with respect to the loan obtained by the assesse from five different persons added by the ld. AO. d. Ground number [4] challenges the addition on account of ı 2 lakhs deposited by the assessee in cash in his bank account, which were added by the Ld. assessing officer, has unexplained credit u/s68 of the income tax act. e. Ground number [5] of the appeal challenges the action of revenue in making an addition of ı 88,000 on account of alleged love profit. f. Ground number [6] of the appeal relates to the charging of interest u/s234A & 234B. 3. Assessee also moved an application for admission of the additional ground as per letter dated 22 May 2020. The additional grounds raised under (i) That the notice u/s143 (2) of the act dated 9/11/2016 is invalid as the same was issued and served on the spot on the date of filing of return of income and therefore the impugned order of assessment dated 28/12/2016 u/s147/143 (3) of the act is without jurisdiction and deserves to be quashed as such. (ii) Th....
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....ention and perused application of assessee for admission of additional grounds. We find that additional grounds raised go to the root of the matter, are legal in nature, no fresh facts are required to be adjudicated, and therefore, deserves to be admitted. Therefore, we admit both additional grounds raised. 5. Briefly stated the facts of case shows that Ld. AO initiated action u/s 147 of The Income Tax Act on the basis of annual information return [AIR] information available on the ITD system that assessee has made cash deposit of ı 12,97,900/- in his savings bank account maintained with Indusind Bank during financial year 2009 - 10 relevant to assessment year 2010 - 11.Ld. AO also noted that assessee has not filed his return of income for relevant assessment year and therefore after recording reasons in this regard and after obtaining necessary approval, ITO Ward 5, Hissar issued notice u/s148 of the act on 14/3/2016. Subsequently the case was transferred to the present AO ITO Ward-2, Hissar. Notice u/s142 (1) of the Act was issued on 6/7/ 2016 asking assessee to file a return of income and furnish requisite information. It did not evoke any response from assessee and ther....
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....ly which gives net profit ratio of 4% of the total receipt. He noted that rate that profit shown by the assessee is ridiculously low, though machine is run on rent, which is charged on hourly basis. He noted that assessee has opted for presumptive rate of taxation u/s44AD of The Income Tax Act. Ld. AO noted that, as assessee is not operating any goods carriage but a hydraulic excavator machine, it does not fall in the category of vehicle used in plying and transportation business. Therefore he applied provisions of section 44AD and estimated the profit at the rate of 8% of the total receipts amounting to ı 1,74,604/-. As assessee has declared a profit of ı 8 6576 only, balance addition of ı 88,000/- was made to total income of assessee. Consequently, total income of assessee was assessed at ı 10,68,580/- against returned income of ı 86,580/-. Assessment order was passed u/s147 read with section 143 (3) of the act on 20 April 2016. 6. Assessee aggrieved with the order of Ld. AO, assessee preferred an appeal before the Ld. CIT (A) Hissar, dismissed it as per order on 25/3/2019. Therefore, assessee is aggrieved with that order has preferred appeal before us....
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....essee did not comply with the notice u/s148 of The Income Tax Act. However, subsequently, assessee filed his return of income on 9/1/2016vide acknowledgement number 709091116002527 with ITO Ward - 2, Hissar. Ld. AO noted at paragraph number 2 of assessment order that after receiving return, notice u/s143 (2)/ 142 (1) along with questionnaire was issued on 9/11/2016 itself for fixing hearing on 15/11/2016 and served upon the assessee's counsel on the spot. This action of the Ld. AO has been challenged by the assessee. It is that provisions of section 143 (2) provides that where the return has been furnished u/s139, or in response to a notice under subsection (1) of section 142 can be issued by AO, if, considers it necessary or expedient to ensure that assessee has not understated the income or has not computed the excessive loss or has not under paid the tax in any manner, serves on the assessee a notice requiring him on a date to be specified therein, either to attend the office of the AO or to produce or cause to be produced before the AO any evidence on which the assessee may rely in support of the return. Therefore, Moment return of income is filed the Ld. AO is required to a....
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.... the assessee a notice requiring him, on a date to be specified therein, either to attend the office of the Assessing Officer or to produce, or cause to be produced before the Assessing Officer any evidence on which the assessee may rely in support of the return: Provided that no notice under this sub-section shall be served on the assessee after the expiry of six months from the end of the financial year in which the return is furnished.]" 11. The most important is that before issue of Notice u/s 143 (2), he must apply his mind whether he "considers it necessary or expedient." Possibly, he can do so the moment, he goes through the return of income, or possibly, he may exhaust the full time allowed to him, i.e. six months from the end of the AY in which return is filed. Section 143 (2) contemplates making an assessment of the income of the assessee by issue of notice. The two important words used are 'necessary' and 'expedient'. the word expedient is more comprehensive and generally deals with the wider range of situations than 'necessary'. Circumstances warranting 'expedience" is incapable of putting in to a compass box; generally it would cover wide range of criteria ....
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...., therefore, the assessment completed on the basis of the notice was also invalid and was consequently set aside. It is for the first time before us that the learned counsel for the appellant contends that the notice, in fact, was issued on 27.03.2000 and not on 23.03.2000, the date, which is recorded on the notice itself. No such contention was raised before the Lower Appellate Authorities. Consequently, the said contention cannot be raised before us for the first time." "9. However, even if we accept what the learned counsel for the appellant / revenue submits, it does not make the case any better for him. In para 3.4 of the memorandum of appeal, the appellant has stated that the return was filed by the assessee on 27.03.2000 and the notice under Section 143(2) was served upon the Authorized Representative of the assessee by hand when the Authorized Representative of the assessee came and filed return. However, the date of the notice was mistakenly mentioned as 23.03.2000. 10. Assuming the aforesaid to be true, the notice was served on the Authorized Representative simultaneously on his filing the return which clearly indicates that the notice was ready....
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....ice, perhaps, in that situation, it may not take much of the time for the AO to issue notice u/s143 (2) of the act to the assessee. This is so because the a. AO has original return of income and b. assessee also wants to substitute that original return also in return in response to notice u/s148 therefore, the available information in the return is already on record with the assessing officer. Such a situation, it is possible that AO may on looking at the notice itself find it 'necessary" to issue the notice u/s 143(2) of the act. Thus imputing waiting time to the AO for issue of notice u/s143 (2) of the act is perhaps not justified. Because, in such cases the AO might have verified the original return of income at the time of issue of notice u/s148 of the act, if he does not find such information in the return, then only he issues notice u/s 148 of the act. Otherwise, why he would issue a notice if the information is available in the original return it. All the decisions, cited before us by assessee, fall into the second situation narrated by us. The decisions cited by the Ld. authorized representative are all of SMC whereas the division bench (same combinatio....
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....sion of the coordinate bench, we do not agree with the proposition that even in such a situation as mentioned by us above, the notice issued u/s143 (2) of the act by the Ld. AO on the same date of the date of filing of the return can be found fault with. 17. However, another situation that arises, the assessee has not at all filed any return of income. Notice u/s148 in that case is issued to the assessee. AO does not have any other information except the AIR information available with him. If in such cases, when assessee files return, issuing notice u/s143 (2) of the act to the assessee on the spot perhaps shows that AO has not applied his mind on the return furnished by the assessee. Naturally AO will have to look at the AIR information or any other tangible material based on which notice u/s 148 of the act is issued, compare it with the details available in the return of income, then he can say that it is 'necessary" to issue notice to the assessee. It may happen that assessee might have filed the return incorporating the income covered in 148 notices. Thus, the issue is in such circumstance AO may need some time for verification. 18. The present case is one-step higher tha....