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2020 (9) TMI 924 - HC - Income TaxValidity of the reopening of assessment - validity of the notice u/s 148 - wrong understanding of the legal position - Whether assessee was estopped from challenging the validity of the notice under Section 148? - HELD THAT:- CIT(A) issued a direction in the order to the Assessing Officer to assess the turnover as commission received. There were two options open to the assessee. One was to prefer an appeal against the order passed by the CIT(A) dated 20.10.2005, which, in fact, was an order in an appeal filed for the assessment year 2002-03. The other option open to her was to contest the matter before the Assessing Officer upon issuance of the notice under Section 148 of the Act. The assessee, in the case on hand, chose the second option, which, in law, was permissible to be done by the assessee. Therefore, both the CIT(A) as well as the Tribunal fell in error in holding that the assessee was estopped from challenging the validity of the notice under Section 148 of the Act dated 22.12.2005. Period of limitation exceeded on the date of issuance of the notice u/s 148 - As per Section 149 of the Act as it stood prior to amendment by the Finance Act 2001 with effect from 01.6.2001, the limitation provided under Section 149(b)(iii) of the Act was seven years, but not more than 10 years from the end of the relevant assessment year unless income chargeable to tax, which has escaped assessment, amounts to or is likely to amount to ₹ 50,000/- or more for that year. After amendment, in terms of Section 149(1)(b) of the Act, no notice under Section 148 shall be issued for the relevant assessment year if four years, but not more than six years have lapsed from the end of the relevant assessment year unless the income chargeable to tax, which has escaped assessment, amounts to or is likely to amount to one lakh rupees or more for that year. Admittedly, the notice under Section 148 of the Act was issued by the AO on 22.12.2005 and the law applicable as on date prescribed the limitation of four years, but not more than six years. Thus, the notice issued on or after 31.3.2004 would suffer from lack of jurisdiction as it is clearly hit by the limitation prescribed under the Statute. Unfortunately, the Tribunal failed to take note of this very important legal issue, which has been settled by the Hon'ble Supreme Court. In fact, the assessee, at the earliest point of time, referred to the decision of the Hon'ble Supreme Court in the case of K.M.Sharma [2002 (4) TMI 7 - SUPREME COURT] which was erroneously distinguished by the Assessing Officer, the CIT(A) and the Tribunal and they committed an error in gross violation of the Statute. - Decided in favour of assessee.
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