TMI Blog2016 (1) TMI 646X X X X Extracts X X X X X X X X Extracts X X X X ..... dence. In these circumstances, the addition is sustained. - Decided against assessee Consultancy charges disallowed - Held that:- Though the assessee has made submission regarding disallowance of consultancy charges in the written submission filed before CIT(A), the assessee did not make take any specific grounds of appeal before the CIT(A). Hence no decision was given by the CIT(A) on this issue. Even before me no specific evidence in this regard was brought to our notice. In these circumstances, we sustain the addition made. - Decided against assessee Interest disallowed - Held that:- The assessee claimed that she has taken loan from her family members which stands at ₹ 24,40,839/- as at 31.03.2005 and she had not paid any interest on the same. The assessee also claimed that she had given interest free loan to the family members which stands at ₹ 11,62,255/- as at 31.03.2005. The assessee contended that she had also borrowed from HSBC Bank: a sum of ₹ 12,13,896/- and this amount was invested in the activity of purchases and sales of Shares & Mutual Funds and the assessee claims a set off of this interest against her incomes. In the Computation of Income, t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (1) of the Act. Subsequently it was found that the Assessee had claimed deduction of interest on loans against her income from insurance commission. There being no nexus between the utilization of loan fund and earning of insurance commission, the AO was of the view that the income of the Assessee had been under assessed. Accordingly a notice u/s.148 was issued. The Assessee filed a letter on 15.5.2007 requesting the AO to return filed on 1.8.2005 be treated as a return filed in response to the notice u/s.148 of the Act. 3.1. The first controversy in this appeal is regarding valid service of notice u/s.143(2) of the Act. The requirements of service of notice u/s.143(2) of the Act is governed by the following provisions of the Income Tax Act, 1961 (Act). 3.2. The following amendments were made in section 143 by the Finance Act, 2002, namely :- (a) for sub-section (2), the following sub-section was substituted with effect from the 1st day of June, 2002, namely:- (2) Where a return has been furnished under section 139, or in response to a notice under sub-section (1) of section 142, the Assessing Officer shall,- (i) where he has reason to believe that any claim of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o force and the requirements of service of notice being a procedural law and not a substantive law, the said amended provisions will apply and therefore the service of notice u/s.143(2) of the Act was within the time as contemplated in law. This view of the AO was also endorsed by the CIT(A). 4. Before us the learned counsel for the Assessee submitted that law applicable will the law that prevailed during the relevant AY for which the assessment is sought to be made and in this regard placed reliance on the following two judicial pronouncements, viz., Krishna Mohan Banik Vs. ITO 232 ITR 339 (Gau.) and Ashok B.Bafna Vs. DCIT (2012) 18 ITR (Trib.) 43 (ITAT) (Mum). We do not deem it necessary to deal with the above decisions for the reason that the learned DR has brought to our notice the statutory provisions of Sec.148 of the Act wherein a situation such as the one prevailing in the present case has been contemplated and suitable provisions made by the legislature. 4.1. There was a controversy whether notice u/s.143(2)of the Act is mandatory when an assessment is made u/s.148 of the Act. The legislature accepted several judicial pronouncements holding that notice u/s.143(2) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... een 1st Oct., 1991 and 30th Sept., 2005, and a notice under s. 143(2) has been served after expiry of twelve months but before making assessment, every such notice shall be deemed to be a valid notice. In CIT vs. Mrs. C. Malathy (2008) 214 CTR (Mad) 173 : (2007) 294 ITR 532 (Mad) it was held that as regards returns filed within the period 1st Oct, 1991 to 30th Sept., 2005, in response to notice under s. 148, by virtue of proviso to s. 148 inserted by the Finance Act, 2006, notice under s. 143(2) issued beyond 12 months from the date of filing return but before expiry of time-limit for making assessment, reassessment or recomputation as specified in sub-s. (2) of s. 153, shall not be invalid. In the present case the return of income in response to notice u/s.148 of the Act was filed on 15.5.2008 i.e., between the period 1-10.1991 to 30.9.2005 and therefore notice could be issued and served beyond 12 months from the date of filing of return but before expirt of time-limit for making assessment, reassessment or recomputation as specified in Sec.153(2) of the Act. Therefore there can be objection on the ground of notice u/s.143(2) of the Act not having been served within the specifi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nnot freely move around to procure insurance agency business and, therefore, she had engaged certain people on a commission basis. This claim of the assessee was not substantiated. The assessee did not give any details of the expenses and was not able to prove the expenses out of the LIC commission received. The CIT(A) therefore confirmed the addition made by the AO. 8.2. Even before me, the Assessee could not substantiate the claim made in this regard by filing the required evidence. In these circumstances, the addition is sustained. 8.3. Consultancy charges: Though the assessee has made submission regarding disallowance of consultancy charges in the written submission filed before CIT(A), the assessee did not make take any specific grounds of appeal before the CIT(A). Hence no decision was given by the CIT(A) on this issue. Even before me no specific evidence in this regard was brought to our notice. In these circumstances, we sustain the addition made. 8.4. Interest:The assessee claimed that she has taken loan from her family members which stands at ₹ 24,40,839/- as at 31.03.2005 and she had not paid any interest on the same. The assessee also claimed that she had ..... X X X X Extracts X X X X X X X X Extracts X X X X
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