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2016 (1) TMI 646 - ITAT KOLKATA

2016 (1) TMI 646 - ITAT KOLKATA - TMI - Reopening of assessment - Held that:- The reassessment proceedings were validly initiated. The AO noticing that interest on loan was claimed as deduction against the insurance commission can definitely form a belief regarding escapement on income. The return filed by the assessee was not the subject matter on regular assessment u/s 143(3) and only an intimation u/s 141 has been issued. There is no merit in the ground raised by the assessee - Decided agains .....

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addition made by the AO. Even before us, the Assessee could not substantiate the claim made in this regard by filing the required evidence. 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 dec .....

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ers 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, the assessee had claimed the deduction of interest paid on O.D. account at Rs.l,29,649/- against the LIC Commision received but in the appellate proceed .....

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vidence in this regard was forthcoming. In the circumstances, we uphold the order of the CIT(A) in this regard. - Decided against assessee

Demat Charges disallowed - Held that:- The assessee has claimed that she had wrongly disallowed the demat charges of ₹ 1l6/-. The assessee claimed dividend on shares of ₹ 3,15,593/- and it was taken as exempt income. The demat charges are directly related to this non taxable income and therefore this claim was also rejected by the CIT(A .....

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e For the Respondent : Shri Amitav Bhattacharjee, JCIT, Sr.DR ORDER This is an appeal by the assessee against the order dated 23.03.2015 of CIT(A)-11, Kolkata relating to A.Y.2005-06. 2. Ground No.2 raised by the assessee reads as follows :- 2. For that the notice u/s 143(2) of the Act is not served within the stipulated time prescribed in the Act resulting in the reassessment order is without jurisdiction, opposed to requirement of law and bad in law. 3. The Assessee is an individual. She deriv .....

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e 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 followin .....

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e assessee a notice specifying particulars of such claim of loss, exemption, deduction, allowance or relief and require him, on a date to be specified therein to produce, or cause to be produced, any evidence or particulars specified therein or on which the assessee may rely, in support of such claim; (ii) notwithstanding anything contained in clause (i), if he considers it necessary or expedient to ensure that the assessee has not under-stated the income or has not computed excessive loss or ha .....

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ection (2), in clause (ii), for the proviso, the following proviso was substituted, "Provided that no notice under clause (ii) was served on the assessee after the expiry of six months from the end of the financial year in which the return is furnished.". 3.3. It can be seen from the aforesaid provisions that notice u/s.143(2) has to be served within a period of 12 months from the end of the month in which the return of income was filed. The return of income in this case is deemed to h .....

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rvice of notice u/s.143(2) would be 6 months from the end of the financial year in which the return of income was filed. That time would expire only on 30.9.2008. The AO was of the view that at the relevant time when notice u/s.143(2) was issued the aforesaid amended provisions has come into 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 t .....

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th 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) of the Act is nece .....

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r, 2005 in response to a notice served under this section, and (b) subsequently a notice has been served under sub-section (2) of section 143 after the expiry of twelve months specified in the proviso to sub-section (2) of section 143, as it stood immediately before the amendment of said sub-section by the Finance Act, 2002 (20 of 2002) but before the expiry of the time limit for making the assessment, reassessment or recomputation as specified in sub-section (2) of section 153, every such notic .....

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43, but before the expiry of the time limit for making the assessment, reassessment or recomputation as specified in sub-section (2) of section 153, every such notice referred to in this clause shall be deemed to be a valid notice."; After the second proviso as so inserted by clause (i), the following Explanation was inserted and was deemed to have been inserted with effect from the 1st day of October, 2005, namely:- "Explanation.-For the removal of doubts, it is hereby declared that n .....

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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 sp .....

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f the Act not having been served within the specified time and consequently the assessment being invalid. We therefore reject the relevant ground of appeal of the Assessee in this regard. 6. Ground No.1 raised by the assessee reads as follows :- 1. For that the reopening of the assessment u/s 147/148 of the Act is not tenable in law, opposed to requirement of law and bad in law. 7. Ground No.1 raised by the assessee is with regard to validity of initiation of proceedings u/s 148 of the Act again .....

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to bring to tax any income that escapes assessment. On the facts and circumstances in the present case I am of the view that the reassessment proceedings were validly initiated. The AO noticing that interest on loan was claimed as deduction against the insurance commission can definitely form a belief regarding escapement on income. The return filed by the assessee was not the subject matter on regular assessment u/s 143(3) and only an intimation u/s 141 has been issued. There is no merit in the .....

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15,000/- u/s 88 of the Act. 8.1. Brokerage paid on Commisison ₹ 44,453/-: The assessee had claimed gross receipt of commission at ₹ 2,16,443/- but had claimed a deduction of brokerage paid at ₹ 44,453/-. The A.O. disallowed this claim of deduction in absence of any evidence and details thereof. In the appellate proceedings, the assessee had claimed that being a lady she cannot freely move around to procure insurance agency business and, therefore, she had engaged certain people .....

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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 a .....

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