TMI Blog2005 (3) TMI 402X X X X Extracts X X X X X X X X Extracts X X X X ..... tices under section 143(2) of the Act up to 31-10-2001. Since there was no intention to convert the case into a scrutiny case, no such notice was issued by the Assessing Officer and thus the proceedings have reached finality. The only option open to the Assessing Officer to make any addition or the disallowance to the returned income was to issue a notice under section 148 of the Act. 2. By the Finance Act, 2001, section 14A was inserted whereby expenditure which has a direct connection with the exempted income is not allowable as deduction against the taxable income. The Legislature intended to bring out amendment retrospectively w.e.f. 1-4-1962 to set at rest the existing controversy on this issue. But in order to avoid harassment to th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lication to the instant case inasmuch as it applies to a case where an assessment was made and reached finality before April, 2001 whereas in the instant case, the return of income was merely processed under section 143(1)(a) and thus the assessment did not reach finality before April, 2001. He also observed that the assessments were reopened on 30-3-2002 which date falls before insertion of the proviso to section 14A and thus the clarificatory amendment does not render ineffective the earlier proceedings initiated before enactment of the proviso. Under these circumstances, the Assessing Officer completed the reassessment proceedings by disallowing the claim of deduction by invoking section 14A of the Act. The first appellate authority affi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essed either under section 143(1) or under section 143(3) of the Act for any assessment year beginning on or before the 1st day of April, 2001. The language employed in the proviso does not make a distinction between assessments completed under section 143(3) and the returns processed under section 143(1) of the Act. It is not the intention of the Legislature that the cases reopened by issuing a notice under section 148 prior to introduction of the proviso are not attracted by the proviso. The expression "pass an order" indicate that even if the proceedings are validly initiated prior to the coming into effect the proviso to section 14A of the Act, the Assessing Officer is not empowered to pass an order enhancing income or reducing refund. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r before the 1st day of April, 2001. Admittedly, the two years under consideration fall within the period specified in the proviso and thus there is a statutory prescription to the Assessing Officer to accept such cases. The Legislature has not made out a distinction between an assessment as made under section 143(3) of the Act and a return which is processed under section 143(1) of the Act inasmuch as the emphasis is on the finality of the proceedings and not on the completion Of assessment. The memorandum explaining the provisions in the Finance Bill, 2002, declared that new section was introduced not with an intention to unsettle the cases by raising an issue afresh. Such being the intention of the statute makers, I am of the firm view t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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