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2016 (7) TMI 743 - ITAT KOLKATA

2016 (7) TMI 743 - ITAT KOLKATA - TMI - Rectification of mistake - validity of service of notice u/s.143(2) of the act and decide the said issue afresh after giving proper opportunity of being heard to the Assessee - Held that:- The date of filing of return in response to notice u/s.148 by the Assessee has been wrongly mentioned as 15.5.2008 whereas the correct date is 15.5.2007. This is the first apparent factual error in the order of the Tribunal. - The second error is that the tribuna .....

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lone apply. The Tribunal has taken the date of filing of the return as 1.8.2005 which was the original return of income filed by the Assessee and applied the amendment to the provisions of Sec.148(2) which was applicable for return filed between the period 1.10.1991 to 30.9.2005. The date of filing of the return referred to in Sec.148(2) is the date of filing of the return in response to notice u/s.148 of the Act, which in the present case is 15.5.2007 and not 1.8.2005. This was a mistake appare .....

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er the insertion of proviso to Sec.143(2)(ii) of the Act by the finance Act, 2008, w.e.f. 1.4.2008 whereby the time limit for service of notice was 6 months from the end of the financial year in which the return of income was filed by the Assessee i.e., on or before 30.9.2008. - Therefore the order of the Tribunal suffers from a mistake apparent on the face of the record. The order dated 09.12.2015 is recalled in so far as it relates to validity of service of notice u/s 143(2) of the Act. Th .....

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said appeal dated 9.12.2015 may be rectified by recalling the said order in so far as it relates to validity of service of notice u/s.143(2) of the act and decide the said issue afresh after giving proper opportunity of being heard to the Assessee. 2. The Assessee is an individual. She derives income in the form of commission from acting as Agent for selling insurance policies. She filed return of income for AY 2005-06 on 1.8.2005 declaring total income of ₹ 3,35,970/-. The same was proces .....

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nse to the notice u/s.148 of the Act. 3. The first controversy that arose for consideration in the appeal was with regard to service of notice u/s.143(2) of the Act within the time limit specified therein. The admitted factual position was that notice u/s.143(2) was served on the Assessee only on 5.9.2008. As per the provisions of Sec.143(2) as substituted by the Finance Act, 2002, the period within which notice u/s.143(2) of the Act has to be served is 12 months from the end of the month in whi .....

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tances, there would have been no difficulty in coming to the conclusion that the period of limitation for service of notice u/s.143(2) of the Act was 31.5.2008 but the same was served only on 5.9.2008 and therefore the entire assessment has to be held to be bad in law for non-service of notice u/s.143(2) of the Act within the period of limitation laid down therein. However there was an amendment to the law by the Finance Act, 2008 w.e.f.1-4-2008. The provisions of Sec.143(2) as it existed prior .....

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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 has not under-paid the tax in any manner, serve .....

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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.". 4. Since the assessment proceedings were pending before him when the amendment by the Finance Act, 2008 came into force, the AO was of the view that as per the amended provisions of Sec.143(2) by the Finance Act, 2008 referred to above, the limitation of time for service of noti .....

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ntemplated in law. This view of the AO was also endorsed by the CIT(A). 5. The submission of the learned counsel before the Tribunal was that law applicable will the law that prevailed during the relevant AY for which the assessment is sought to be made or at best the law applicable will be the law as it prevailed when the Assessee filed return of income and in this regard placed reliance on the following two judicial pronouncements, viz., Krishna Mohan Banik Vs. ITO 232 ITR 339 (Gau.) and Ashok .....

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Assessee that instead of deciding the aforesaid argument, the Tribunal proceeded to decide the validity of service of notice u/s.143(2) on the assumption that the amendment to the provisions of Sec.148(2) by the Finance Act, 2006 was applicable to the present case and as per the said amendment the service of notice u/s.143(2) of the Act can be made at any time before expiry of time limit for completion of assessment u/s.153(2) of the Act and accordingly held that there was a valid service of not .....

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has overlooked this aspect and proceeded on an erroneous assumption that the period of service of notice u/s.143(2) of the Act by way of amendment to Sec.148(2) of the Act by the Finance Act, 2006, was applicable to the case of the Assessee. Such provisions were not applicable to the case of the Assessee as the return of income was not filed by the Assessee in the present case between the periods 1.10.1991 to 30.9.2005 in response to notice u/s.148 of the Act. 7. The learned counsel for the Asse .....

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e Act. The legislature accepted several judicial pronouncements holding that notice u/s.143(2) of the Act is necessary even in proceedings u/s.148 of the Act for assessment of income which has escaped assessment. The amendment to Sec.148(2) of the Act By the Finance Act, 2006, in section 148, in sub-section (1),-the following provisos were inserted and were deemed to have been inserted with effect from the 1st day of October, 1991, namely:- "Provided that in a case- (a) where a return has b .....

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ng the assessment, reassessment or recomputation as specified in subsection (2) of section 153, every such notice referred to in this clause shall be deemed to be a valid notice: Provided further that in a case- (a) where a return has been furnished during the period commencing on the 1st day of October, 1991 and ending on the 30th day of September, 2005, in response to a notice served under this section, and (b) subsequently a notice has been served under clause (ii) of sub-section (2) of secti .....

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he 1st day of October, 2005, namely:- "Explanation.-For the removal of doubts, it is hereby declared that nothing contained in the first proviso or the second proviso shall apply to any return which has been furnished on or after the 1st day of October, 2005 in response to a notice served under this section.". 5. Proviso inserted in s. 148 by the Finance Act, 2006 provides that where a return has been furnished in pursuance of notice under s. 148, between 1st Oct., 1991 and 30th Sept., .....

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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 expiry of time-limit for making assessment, reassessment or recomputat .....

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007 . This is the first apparent factual error in the order of the Tribunal. The second error is that the tribunal after noticing the time limit for service of notice u/s.143(2) of the Act for return of income filed in response to notice u/s.148 of the Act between the period 1.10.1991 to 30.9.2005 has wrongly applied that time limit to the case of the Assessee. Such time limit was not applicable to the case of the Assessee at all because the Assessee filed return of income in response to notice .....

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