TMI Blog2014 (11) TMI 283X X X X Extracts X X X X X X X X Extracts X X X X ..... o the reopening notice u/s 148 of the Act. Once the original return filed by the assessee was subject to processing u/s 143(1) of the Act, the procedure of assessment pursuant to such a return, in our opinion came to an end, since AO did not issue any notice within the 6 months period mentioned in proviso to section 143(2)(ii) - if the income has been understated or the income has escaped assessment, an AO is having the power to issue notice u/s 148 of the IT Act - Notice u/s 148 of the Act, issued to the assessee required it to file a return within 30 days from the date of service of such notice - any issue of notice prior to that date cannot be treated as a notice on a return filed by the assessee pursuant to a notice u/s 148 of the Act - there was no valid issue of notice u/s 143(2) of the IT Act, and the assessments were done without following the mandatory requirement u/s 143(2) of the IT Act – it rendered the subsequent proceedings all invalid - CIT(A) had only adjudicated on a position where there was no service of notices u/s 143(2) of the IT Act – thus, the assessment order of the CIT(A) is set aside – Decided in favour of assessee. - ITA No. 242 & 243(Bang) 2013 - - ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the extent prejudicial to the appellant, be quashed. Or in the alternative i) Sum received under the share subscription and shareholders agreement amounting to ₹ 1.00 Crore be held as not chargeable to tax. ii) Interest levied under section 234B be deleted. 2. As is clear from the above, one of the grounds raised by the assessee is non-service of notice u/s 143(2) of the IT Act, 1961 (in short The Act ). The learned counsel for the assessee submitted that assessee had filed returns for the impugned assessment years on 10-07-2007 and 15-07-2008 respectively. According to the learned AR, in the computation filed alongwith such returns a net capital receipt of ₹ 97,80,000/- and ₹ 3,85,67,825/- were specifically mentioned as exempt from income-tax. 3. As per the learned AR returns were initially processed u/s 143(1) of the Act. Thereafter, on 24-12-2009 notice u/s 148 of the Act were issued re-opening the assessment for the impugned assessment years. Further, as per the learned AR, an authorized representative of the assessee had appeared before the AO on 05-10-2010, and stated that the returns filed originally could be treated as returns filed pursua ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sment even in a case where there was failure on the part of the assessee to respond to a notice issued u/s 148 of the Act. Learned DR placed reliance on the judgment of the Hon ble Madras High Court in the case of Areva T and D India Ltd.,Vs ACIT 294 ITR 233 and submitted that the requirement u/s 143(2) was only procedural in nature. 5. Adlibitum reply of the learned AR was that AO could not treat a return filed prior to issue of notice u/s 148 of the Act as a return filed by the assessee, pursuant to such notice unless and until assessee had given a direction or request on these lines. As per the learned AR, operation of Section 143(2) of the Act was with reference to a return filed by the assessee. The assessment for both the years, as per the learned AR was completed u/s 143(3) r.w.s.147 of the Act and not u/s 144 of the Act. Unless and until the assessee had either filed a return pursuant to the notice u/s 148 of the Act or made a request for treating the earlier return filed by it to be one filed pursuant to notice u/s 148 of the Act. AO could not proceed with an assessment u/s 143(3) of the Act. As per learned AR there could be no presumption that a return filed prior to a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of Hotel Blue Moon (supra). At para-24 of the judgment their Lordship has held that Section 143(2) was applicable to a proceedings u/s 147/148 also, since proviso to section 148 of the Act, granted certain specific liberties to the revenue, with regard to extension of time for serving such notices. No doubt, Hon ble Madras High Court in the case of Areva T and D India Ltd.,(supra) had held that issue of notice u/s 143(2) was procedural in nature. However, Co-ordinate Bench in the case of M/s Amit Software Technologies Pvt. Ltd.,(supra) after considering the decision of the Hon ble Madras High Court as well as Delhi High Court had held that Section 143(2) of the Act, was a mandatory requirement and not a procedural one. Of course, in the case before us, a notice u/s 143(2) of the Act has been issued to the assessee, but on the date when such notice was issued viz., 23-09-2010 assessee had not filed any return pursuant to the reopening notice under section 148 of the Act. First instance when the assessee requested the AO to treat the returns originally filed by it as returns filed pursuant to the notices u/s 148 of the Act, was on 05-10-2010 which is clear from the narration in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the 6 months period mentioned in proviso to section 143(2)(ii). No doubt, if the income has been understated or the income has escaped assessment, an AO is having the power to issue notice u/s 148 of the IT Act. Notice u/s 148 of the Act, issued to the assessee required it to file a return within 30 days from the date of service of such notice. There is no provision in the Act, which would allow an AO to treat the return which was already subject to a processing u/s 143(1) of the IT Act, as a return filed pursuant to a notice subsequently issued u/s 148 of the Act. However, once an assessee itself declare before the AO that his earlier return could be treated as filed pursuant to notice u/s 148 of the IT Act, three results can follow. Assessing Officer can either say no, this will not be accepted, you have to file a fresh return or he can say that 30 days time period being over I will not take cognizance of your request or he has to accept the request of the assessee and treat the earlier returns as one filed pursuant to the notice u/s 148 of the IT Act. In the former two scenarios, AO has to follow the procedure set out for a best of judgment assessment and cannot make an assessm ..... X X X X Extracts X X X X X X X X Extracts X X X X
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