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2009 (3) TMI 642 - AT - Income TaxReassessment u/s 147 - Validity of notice issued u/s.148 before expiry of time limit for issue of notice u/s.143(2) - Income escaping assessment - HELD THAT:- We hold that notice issued u/s 148(1) can be issued even where notice u/s 143(2) has been pending and not closed. We hold that by processing the return and by issuing acknowledgement as token of accepting the return, the proceedings initiated by filing the return are terminated and no proceedings, therefore, remain pending. It has been held by the Hon’ble Supreme Court in the case of Rajesh Jhaveri [2007 (5) TMI 197 - SUPREME COURT] itself that intimation is not an assessment. Following the above proposition of law, as sending of intimation or issuing acknowledgement is not an assessment, proceedings initiated by filing the return of income are concluded when return is processed and/or acknowledgement is issued as token of acceptance of the return. No proceeding is pending thereafter and also no assessment is made in view of interpretation of the term ‘intimation’ by Apex Court. This situation is directly covered in Explanation 2(b) to section 147 and, therefore, issuance of notice u/s 148(1) after processing is completed/acknowledgement issued would be covered by the deeming provision in Explanation 2(b). The argument of ld. AR that reassessment presupposes that assessment should have been framed and intimation is not an assessment, therefore, assessment is not framed and, therefore, reassessment could not be initiated is not acceptable because deeming provision of Explanation 2(b) to section 147 does not contemplate that an assessment of the nature as done u/s 143(3) should be completed for invoking that clause of the explanation. It only says that the assessee has understated the income or has claimed excessive loss, deduction, allowance or relief in the return. Thus, AO has to only point out, or it should come to his notice on the basis of examination of the return that assessee has under-stated the income or claimed excessive loss, deduction, allowance or relief. It nowhere presupposes that assessment of the type prescribed u/s 143(3) should have been completed for deeming escapement of income. The word ‘assessment’ has not been used at all in Explanation 2(b), therefore, it will over all the situations where assessment is not framed. This situation will include the situation where only intimation is sent or processing is done or even nothing is done after filing the return. The opening words of section 147 "if AO has reason to believe that any income chargeable to tax has escaped the assessment for any assessment year....." cannot be read without considering Explanation 2 which defines and prescribes the scope and limit of all deemed escapement of income under the situation mentioned in three clauses. Thus, we reject the contention of the ld. AR for the assessee AO could not have issued the notice u/s 148(1) within twelve months of filing of the return which is the period when AP should have issued notice u/s 143(2) which has not been issued. There is one more aspect in this issue which requires consideration. One more condition is apparently proposed to be inserted in section 147 by reading into it the provisions of section 143(2) that, if time period for issuance of notice u/s 143(2) has not expired then notice u/s 148(1) could not be issued. Section 147 is a procedure for assessing escaped income (original or deemed) and for this, it has prescribed condition for conferring jurisdiction on AO. This is a complete code in itself and if conditions laid down in section 147 are satisfied then to look elsewhere as to whether other conditions laid down in other provisions are fulfilled or not and thereby to decide whether the AO could have assumed jurisdiction u/s 147/148 in spite of conditions laid down in this section is totally fulfilled will not be legally correct. In our considered view, in the matter of jurisdiction, the provision should be construed strictly. It can neither be extended nor reduced by reading other provisions into the provisions of section 147, unless it is so specifically provided either in other sections or in section 147. As a result, we hold that issuance of notice u/s 148(1) was valid. The appeals will be posted for hearing on merits.
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