TMI Blog2010 (2) TMI 660X X X X Extracts X X X X X X X X Extracts X X X X ..... - GUJARAT High Court)has explained in details the difference between S/s. 154 viz-a-viz 147 – As per said decision there is no bar to evoke sec. 147 but A.O. has to demonstrate why he was required to do so. Nothing has been demonstrated by A.O. in this case. In our opinion, for the reasons given above, the A.O. was not justified in issuing the notice to the assessee u/s. 148 - proceedings initiated u/s 147 set aside. - ITA NO. 1035 & 1908/MUM/2009 - - - Dated:- 17-2-2010 - R.S. SYAL, ACCOUNTANT MEMBER R.S. PADVEKAR, JUDICIAL MEMBER ORDER Per R.S. Padvekar, J.M. These two cross appeals, one by the assessee and another by the Revenue are filed challenging the impugned order of the Ld. CIT(A)-XXII, Mumbai dt. 17.11 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 670/-. It is also seen from the P L account that the assessee has credited rental income of ₹ 17,09,000/- to the P L account and arrived at a Net profit of ₹ 20,21,291/-. As per Explanation 3 below section 40(b) of the Act, Book Profit for the purpose of computing remuneration to partners is to be computed under Chapter IVD i.e., Profits and gains of business or profession. The Net Profit of ₹ 20,21,291/- includes rental income of ₹ 17,09,000/-which should have been excluded while arriving at the Book Profit as per Explanation 3 below section 40(b) of the Act, as the same does not fall within the ambit of Business Income and the same is required to be assessed under the head Income from House Property . The a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lid reason for the A.O. for initiating the proceedings u/s. 147 and thereby issuing the notice to the assessee u/s. 148 and hence, the assessee is in appeal before us. 6. The Ld. Counsel for the assessee vehemently submitted that admittedly, the assessee was consistently declaring the rental income as part of his business activity in the past and in this year also, the assessee declared income in his regular return as a part of business income. It is argued that for safer side, the assessee filed the return of income declaring the rental income as an income from the house property in the return filed in response to the notice u/s. 148 of the Act, but the assessee challenged the legality and validity of the notice issued u/s. 148 before ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .O. has initiated the proceedings u/s. 154, it is not necessary that the issue should be concluded in same proceedings and then only can resort to proceeding under sec. 147 of the Act. Moreover the A.O. has full power to opt for alternative proceeding to bring to tax escaped income. Ld. D.R. relied on the decision of the Hon ble High Court of Gujarat in Damodar H. Shah v. ACIT 245 ITR 0774 (Guj). The Ld. D.R. strongly supported the action of the A.O. 8. We have given our anxious considerations to the rival submissions of the parties. We have also considered the precedents relied on by the Parties and perused the record. In this case, it is not disputed that the return filed by the assessee was accepted u/s. 143(1) and there was no regula ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... effect from 1-4-1989, as also sections 148 to 152 are substantially different from the provisions as they stood prior to such substitution. Under the old provisions of section 147, separate clauses (a) and (b) laid down the circumstances under which income escaping assessment for the past assessment years could be assessed or reassessed. To confer jurisdiction under section 147(a) two conditions were required to be satisfied firstly the Assessing Officer must have reason to believe that Income from profits or gains chargeable to income tax have escaped assessment, and secondly he must also have reason to believe that such escapement has occurred by reason of either (i) omission or failure on the part of the assessee to disclose fully or tr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e assessee and its enclosures, no other extra material or information was in possession of the A.O. It is true that the assessee filed the return of income in response to the notice issued by the A.O. u/s. 148 of the Act showing the rental income as an income from house property, but the assessee has every right to challenge proceeding initiated by the A.O. under sec. 147 of the Act. Now it is well settled principle by different judicial pronouncements that there cannot be any estople against the statutory provisions. Admittedly, in this case, the mandate of section 147 is not fulfilled for the reasons that the A.O. himself was not sure whether the issue in controversy could be the subject matter of section 154 or the same can be the subj ..... X X X X Extracts X X X X X X X X Extracts X X X X
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