TMI Blog2023 (2) TMI 1054X X X X Extracts X X X X X X X X Extracts X X X X ..... arge her onus, as the amount stood credited in her bank account , and she has to explain satisfactorily sources of credit in the said account. Thus, in our considered view, the assessee has failed to discharge her onus and the additions were rightly made by the AO and confirmed by ld. CIT(A), and we hold that the assessee fails to satisfactorily explain the sources of credit in her bank account maintained with ICICI Bank, Sigra , Varanasi as is required under the 1961 Act, and thus , we dismiss the appeal filed by the assesse on the merits of the addition . We order accordingly. Best judgment Assessment u/s 144 read with section 147 - non issuance of notice u/s 143(2) - AO duly complied with the mandate of provisions of Section 144 which deals with a different class of assessment viz. best judgment assessment. Had the assessee filed return of income in pursuance to notice dated 29.03.2016 issued by AO u/s 148, or even in compliance of terms of issue of notice u/s 142(1)dated 02.12.2016 , then Section 143(2) would have got triggered and then the AO would have been obligated to frame assessment u/s 143(3) read with Section 147, and not best judgment assessment u/s 144 read wit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ance of notice u/s 143(2). Decided against assessee. - ITA Nos. 213 & 214/VNS/2019 - - - Dated:- 28-12-2022 - SHRI VIJAY PAL RAO, JUDICIAL MEMBER AND SHRI RAMIT KOCHAR, ACCOUNTANT MEMBER For the Assesseeby: Sh.ArvindShukla, Adv. Sh. AsimZafar, Adv. For the Revenue by: ShriA.K. Singh, Sr.DR ORDER PER SHRI RAMIT KOCHAR, ACCOUNTANT MEMBER: These two appeals filed by the assessee, being ITA Nos.214 213/VNS/2019 for assessment year s 2009-10 and 2010-11 respectively , are directed against the common appellate order dated 11.07.2019 passed by learnedCommissioner of Income Tax(Appeals), Varanasi(hereinafter called the CIT(A) ) in Appeal Nos. 10455/CIT(A)/VNS/2016-17/195 for assessment year 2009-10 and Appeal No. 10457/CIT(A)/VNS/2016-17/196 for assessment year 2010-11, the appellate proceedings had arisen before Learned CIT(A)from two separate assessment orders , one dated29.12.2016passed by learned Assessing Officer (hereinafter called the AO ) under Section 144r.w.s. 147of the Income-tax Act, 1961 (hereinafter called the Act ) for assessment year 2009-10 , second dated 28.12.2016 passed by AOunder Section 144 r.w.s. 147 of the 1961 Act for asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... served on the assessee. The case of the assessee was reopened on the ground that - An information has been received from the ADIT(Inv.) Unit-3(4), Kolkata that there was a large numbers of credits receipts of Rs. 1.37 crore in her account No. 031001518299 maintained with ICICI Bank through various funds transferred originated over the internet and the only debit to this account have been by way of transfer to Oven Commerce Private Limited totaling to Rs. 1.37 Crs. During the F.Y. 2008-09. The Co. M/s Oven Commerce Private Limited is engaged as a corporate agent in the insurance business as per company website. The above account having transaction of Rs. 1.37 crores has not been disclosed in the ITR. 3b. Hence, the AO initiated proceedings against the assessee u/s 147/148 of the 1961 Act and the AO issued notices under Section 148 dated 29th March, 2016 to the assessee, which as per AO was duly served on the assessee,and the assesseewas required to file return of income in response to the aforesaid notice issued by AO u/s 148, but the assessee did not comply with the aforesaid notice and no return of income in pursuance to notice u/s 148 was filed by the assessee. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce of the case the assessment order passed by learned A.O. is bad in law and deserves to be annulled. 2 Addition of Rs. 137,00,000/- u/s 69A Sir, Ld. AO has added a sum of Rs. 137, 00,000/-under section 69A of the It is submitted that the appellant has not filed any return of income as her income was not taxable. Sir, in the back ground of the case it is submitted that once the appellant had applied for a job in M/s Oven Commerce Private Ltd, 56/2 Kings Road, Howrah, Kolkata but she was not offered any job from the said company. Later on, the above company fraudulently used her certificate and photo etc. and opened a bank account in her name. The appellant had no knowledge about opening of bank account and alleged business done in her name. She came to know only when an order u/s 144 was received from the Income Tax Department. From the perusal of bank statement your honor will appreciate that after depositing the money in appellants' account same has been transferred to same M/s Oven Commerce Private Limited itself. The appellant has no connection with this company nor any business done in her name. The appellant has filed a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n other banks. (ii) Credits from various other individuals -holding accounts in the bank. (iii) Transfers from accounts of Gaadheya Developers Put. Ltd. and Sagar Township Pvt. Ltd. (iv) Large cash withdrawals totaling close to Rs. 1 crore. The head office of Oven Commerce is at Howrah, and as per the company website it is engaged as a corporate agent in the insurance business. Incidentally both the accounts of Gaadheya Developers and Sagar Township have been opened in Howrah around the same time in September 2008, have the same address as Oven Commerce, and transaction in both these accounts are apparently linked to insurance companies. 3. In this case proceeding u/s 147/148 was initiated and notice u/s 148 dated 29.03.2016 was issued and duly served upon the assessee. Further another opportunity dated 06.07.2016 was given to the assessee but no compliance were made by the assessee to the said notices. A show cause notice u/s 144 of the 1.T. Act, 1961 dated 02.12.2016 was affixed at her home, The AO has given more opportunities through notices dated 29.03.2016, 06.07.2016, 02.12.2016 to assessee to discuss her case but no one appeared nor any reply wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lso asking the nature and source of commission received by the Smt. MausamiChaodhary with complete account details for the period of 30.04.2008 to till date along with agent code. No compliance was made by the said company, hence identity of these two members of Reliance Nippon Life Insurance Co. Ltd. (LIC) is remains unverified. 6. Looking after the fact it is clear that involvement of the assessee in all transactions done by net banking and it proves that assessee is aware for said account. According to income tax return filed on 26.02.2011 for the A.Y. 2009- 10 (copy enclosed) the assessee admitted that she is liable to maintain accounts as per section 44AA and her account is audited by Mr. SandipModak (Membership no. of the auditor- 056407). The assessee is under obligation to produce the nature and source of income. The assessee during the course of assessment proceedings could not produce nature and source of income, the assessee is trying to misguide the department. Hence, the amount of Rs. 1,37,00,000/- is remains unverified. 7. Onus of proving the source of a sum of money found to have been received by an assessee is on him/her. When the nature and sources of a recei ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d by her from the Income tax department. She has already lodged an FIR against the said company and investigation from police department is going on. A copy of the FIR was submitted before your honor for kind perusal and consideration. 3. From the report of the Assessing Officer your honor will see that AO himself has noted that mostly transactions were made with Oven Commerce Pvt. Ltd. The alleged commission received were simultaneously transferred in the account of the said company i.e. M/s Oven Commerce Private Limited. This fact is proved from the bank statement submitted before your honor and also as verified by A.O. under section 133(6) from the ICICI Bank. This clearly indicates that appellant had no knowledge about any such bank transactions. Hon'ble sir a prudent person cannot do business for the benefit of others and will think about herself only. From the bank statement it is clear that money so earned have been simultaneously transferred to the said company. Sir, the appellant is innocent house wife and is not able to perform any business because she is not skilled and not conversant about business activities, Sir, the living standard and financial position of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at the assessee has claimed that the said company used the Photo, ID and other documents of the assessee, and without her knowledge opened a bank account in which amounts were deposited and subsequently transferred to the bank account of the company M/s Oven Commerce Pvt. Ltd. . The ld. CIT(A) also observed that the assessee has filed an online FIR against the said company with SHO, Sigra, Varanasi on 21.08.2018 , that is much after the date of assessment order which was passed on 29th December, 2016 by the AO and and also the appeal filed with ld. CIT(A) on 30th January, 2017. It was also observed by ld. CIT(A) that inremand proceedings , the AO conducted enquiries from ICICI Bank about the KYC submitted for opening the account , and it was reported thatthe bank account was opened on 30th April, 2008 and presently the same is closed. The ld. CIT(A) observed that this bank account is salary/agent account which was authenticated by Mr. Nikhil Kulshretha, CCE and ShailendraKaksena, ABSM (CDA) of the Reliance Life Insurance Company Ltd. The learned CIT(A) observed that the assessee contention that the bank account was opened fraudulently by M/s Oven Commerce Pvt. Ltd. remained unprove ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e has already registered on-line FIR against this . The said FIR is placed on record in paper book at page 16-18/paper book. Our attention was also drawn by ld. Counsel for the assessee to legal notice issued against the said company, which is placed in paper book at page number 19-20 /paper book. Our attention wasalso drawn by ld. Counsel for the assesseeto page no. 35 onwards of the paper-book filed by the assessee and it was submitted that the department has obtained copy of the account opening form submitted for opening of the bank account with ICICI Bank in the name of the assessee .It was submitted that M/s Oven Commerce Pvt. Ltd. has misused the Adhaar Card / photograph of the assessee and opened the bank account in the name of the assessee. Our attention was also drawn to Page Nos. 67 to 70 of the paper book filed by the assessee,and it was submitted that these are the cheques which have been issued from the ICICI Bank account in favour of M/s. Oven Commerce Pvt. Ltd. , and it was also submitted that the entire amount from this bank account has been transferred to M/s Oven Commerce Pvt. Ltd. . It was submitted that even the assessee filed an application under RTI Act, with ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nce to notice issued u/s 148. Finally, notice was served by the AO through Affixture, but the assessee never responded. The AO made additions to the tune of Rs. 1.37 crores in the hands of the assessee towards unexplained money u/s 69A, as nature and source of credit of Rs. 1.37 crores in the bank account was never explained by the assessee. The ld. CIT(A) upheld the addition of Rs. 1.37 crores as was made by the AO. The Ld. Sr. DR relied upon the appellate order passed by learned CIT(A) and prayers were made by ld. Sr. DR to uphold the additions as were made by the AO and confirmed by ld. CIT(A). 5e. The Ld. Counsel for the assessee submitted that the assessee was duped by some persons who opened bank account in the name of assesseewith ICICI Bank, and then deposited amounts in the said bank account opened in her name. It was also submitted that the assessee filed affidavit before learned CIT(A) narrating all the facts and background. The FIR was also lodged against such persons who misused her name and opened bank account fraudulently in the name of the assessee. It was submitted that even legal notices were also issued by Advocates on behalf of the assessee, to said M/s Oven ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t the income of the assessee to the tune of Rs. 1,37,00,000/- chargeable to income-tax has escaped assessment based on information received by AO from ADIT(Inv.) ,Kolkatta, on the grounds that: An information has been received from the ADIT(Inv.) Unit-3(4), Kolkata that there was a large numbers of credits receipts of Rs. 1.37 crore in her account No. 031001518299 maintained with ICICI Bank through various funds transferred originated over the internet and the only debit to this account have been by way of transfer to Oven Commerce Private Limited totaling to Rs. 1.37 Crs. During the F.Y. 2008-09. The Co. M/s Oven Commerce Private Limited is engaged as a corporate agent in the insurance business as per company website. The above account having transaction of Rs. 1.37 crores has not been disclosed in the ITR. The reasons for reopening were duly recorded by the AO and proposal for obtaining approval for initiating proceedings against the assessee u/s 147 of the 1961 Act , was moved by the AO after recording reasons for reopening of assessment on 14th March, 2016, which was approved by the competent authorities finally by learned Principal Commissioner of Income-tax, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessment for ay: 2009-10 at column no. 11 of the proposal moved by AO, the AO recorded detailed reasons, as under: An information has been received from the ADIT(Inv.) Unit -3(4) , Kolkatta that there was large numbers of credit receipts of Rs. 1.37 crore in her account no. 031001518299 maintained with ICICI Bank through various funds transferred originated over the internet and the only debit to this account have been by way of transfer to Oven Commerce Pvt Ltd.totalling to Rs. 1.37 crore during the F.Y.2008-09. The Co. M/s Oven Commerce Pvt. Ltd. is engaged as a corporate agent in the insurance business as per company website. The above account having transaction of Rs. 1.37 crore has not been disclosed in the ITR. Therefore I reason to believe that the income of Rs. 1.37 crore chargeable to tax has escaped assessment. Thus, the reopening of the concluded assessment was done by AO by invoking provisions of Section 147 after recording of reasons and after obtaining approval of learned PCIT, Varanasi, as was required u/s 151. We donot find any fault in the satisfaction recorded /approval granted by ld. PCIT, for reopening of the concluded assessment.The reli ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the relevant assessment year, unless any income chargeable to tax has escaped assessment for such assessment year by reason of the failure on the part of the assessee to make a return under section 139 or in response to a notice issued under sub-section (1) of section 142 or section 148 or to disclose fully and truly all material facts necessary for his assessment, for that assessment year: [Provided further that nothing contained in the first proviso shall apply in a case where any income in relation to any asset (including financial interest in any entity) located outside India, chargeable to tax, has escaped assessment for any assessment year:] [Provided [also] that the Assessing Officer may assess or reassess such income, other than the income involving matters which are the subject matters of any appeal, reference or revision, which is chargeable to tax and has escaped assessment.] Explanation 1. Production before the Assessing Officer of account books or other evidence from which material evidence could with due diligence have been discovered by the Assessing Officer will not necessarily amount to disclosure within the meaning of the foregoing proviso. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... provisions of this section, as amended by the Finance Act, 2012, shall also be applicable for any assessment year beginning on or before the 1st day of April, 2012.] Issue of notice where income has escaped assessment. 148. [(1)] Before making the assessment, reassessment or recomputation under section 147, the Assessing Officer shall serve on the assessee a notice requiring him to furnish within such period, [* * *] as may be specified in the notice, a return of his income or the income of any other person in respect of which he is assessable under this Act during the previous year corresponding to the relevant assessment year, in the prescribed form and verified in the prescribed manner and setting forth such other particulars as may be pres-cribed; and the provisions of this Act shall, so far as may be, apply accordingly as if such return were a return required to be furnished under section 139 :] [Provided 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ee to the tune of Rs. 1,37,00,000/- as the assessee could not explain nature and source of these credit entries in her bank account no. 031001518299 with ICICI Bank,Sigra, Varanasi, and hence the AO treated the said amount of Rs. 1,37,00,000/- as unexplained money and deemed to be income of the assessee u/s 69A , which stood added to her income by the AO vide assessment order dated 29.12.2016 passed u/s 144 read with Section 147 of the 1961 Act. The assessee filed first appeal with ld. CIT(A) . The assessee appeared in person along with her counsel before the ld. CIT(A). The assessee made her submissions before ld. CIT(A) , who forwarded the assessee s submissions to AO for his comments . The AO during remand report proceedings collected all the information and documents from the ICICI Bank, Sigra, Varanasi. The AO submitted remand report to ld. CIT(A). The said remand report was forwarded by ld. CIT(A) to assessee for rebuttal.The assessee submitted her rejoinder to remand report before ld. CIT(A) .The ld. CIT(A) after considering submissions of the assessee dismissed the appeal of the assessee, both on legal grounds as well on merits of the issue s raised by the assessee in her a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... some other person. The assessee has submitted in her defense an affidavit , that bank account was opened in her name and the said account was misused by M/s Oven Commerce Private Limited.She has filed an online FIR against M/s Oven Commerce Private Limited as well legal notice was also sent to said company. The assessment order was passed in December 2016 and an appeal was filed with ld. CIT(A) by the assessee in January, 2017, while the proceedings were initiated by assessee by filing FIR, legal notice as well affidavit ,belatedly in August-October, 2018. Thus, the proceedings so initiated are suffering from delay and latches on the part of the assessee. There is no material brought on record by the assessee to prove as to further steps were taken by the assessee to get ultimately the charge sheet filed against the accused/culprits in the Court to get the accused/culprits punished/convicted through the process of law. Merely taking initial steps and that too which are suffering from delay and latches, and then not persuing them to bring to logical conclusion, does not support the stand of the assessee. On being asked by the Bench, the ld. Counsel for the assessee admitted during ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... said ICICI bank account of the assessee maintained with ICICI , Sigra Branch, Varanasi. The assessee has not even rebutted these allegation of department and merely bald statement is made that she never opened this bank account with ICICI Bank and it was opened fraudulently by M/s Oven Commerce Private Limited and misused by said company. The nexus of the assessee s husband working with Oven Commerce Private Limited, stands proved. The assessee never produced her husband before department for recording of his statement and examination by income-tax authorities , so that truth could have been unraveled. The assessee never filed any affidavit of the husband before the income-tax authorities. The assessee never asked department to record statement of Mr. Ajay Seth , an employee of ICICI bank who completed KYC while opening bank account with ICICI Bank nor asked department to produce him for his cross examination by her. The assessee never asked department to record statement of Mr. Nikhil Kulshrestha , CCE and Mr. Shailendra Saksena , ABSM(CDA) of Reliance Life Insurance Company Limited who authenticated the aforesaid ICICI bank account as salary/agent account nor asked department to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt for almost 2 years.The assessee has claimed that she married against the wishes of her parents in 2004 through court marriage, and she is living with her husband in tenanted property in Varanasi, and that she is not having good relation with her parents and she rarely visit her parents. Thus, the claim is set up that the notices etc. sent by department during reassessment proceedings were never handed over to her by her parents due to strained relations. The assessee s address recorded with bank as well with department is N 11/107, ZA , Ranipur, Mahmoorganj, Varanasii, U.P. 221010, which is claimed by the assessee is that this address is of the assessee s parent with whom she has strained relations and she rarely visit them. First of all it was the obligation of the assessee to have changed the address to her actual/correct address where she was staying with her husband in a tenanted property in Varanasi, in the data base of Income tax department by filing PAN correction form as well getting the address changed in Aadhar Card data base, and thus there was a failure on the part of the assessee to discharge her obligation, for which department cannot be penalized . The department ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pulates: Section 106. Burden of proving fact especially within knowledge When any fact is especially within the knowledge of any person , the burden of proving the fact is upon him. Section 114 Court may presume existence of certain facts The Court may presume the existence of any fact which it thinks likely to have happened, regard being had to the common course of natural events, human conduct and public and private business, in their relation to the facts of the particular case. Illustrations *** *** (g) that evidence which could be and is not produced would, if produced, be unfavourable to the person who withholds it; The notices were also sent by department at the registered address of the assessee as is existing in the data base of the department which happens to be the address of her parents, and infact this address is continuing as of date , further as even in the appellate proceedings before ld. CIT(A) as well before tribunal, same address is mentioned by the assessee as her correspondence address. If the assessee was having any circumspection about her parents that they will not hand over to her communications / couriers/speed po ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... notice issued by the AO u/s 148, and hence the AO rightly invoked provisions of Section 144 and framed best judgment assessment. The AO duly issued notices u/s 142(1) as well SCN u/s 144 , dated 02.12.2016, and hence the mandate of Section 144 was duly complied with. Section 148 clearly stipulates the provisions of this Act shall, so far as may be , apply accordingly as if such return were return required to be furnished u/s 139 .But, the assessee never filed return of income in pursuance to notice issued u/s 148. Had the assessee filed return of income u/s 148, then the AO was obligated to issue notice u/s 143(2), but since no return of income was filed in pursuance to notice u/s 148, the AO rightly invoked provisions of Section 144 of the 1961 Act, passed best judgment assessment u/s 144 read with Section 147, dated 29.12.2016.Before proceeding further , it will be profitable to refer to relevant provisions of Section 139, 142 ,143 and 144 of the 1961 Act as were in force at the relevant time , which are reproduced hereunder: CHAPTER XIV PROCEDURE FOR ASSESSMENT Return of income. 139. [(1) Every person, (a) being a company [or a firm]; or (b) b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t in India within the meaning of clause (6) of section 6, who is not required to furnish a return under this sub-section and who at any time during the previous year, (a) holds, as a beneficial owner or otherwise, any asset (including any financial interest in any entity) located outside India or has signing authority in any account located outside India; or (b) is a beneficiary of any asset (including any financial interest in any entity) located outside India, shall furnish, on or before the due date, a return in respect of his income or loss for the previous year in such form and verified in such manner and setting forth such other particulars as may be prescribed: Provided also that nothing contained in the fourth proviso shall apply to an individual, being a beneficiary of any asset (including any financial interest in any entity) located outside India where, income, if any, arising from such asset is includible in the income of the person referred to in clause (a) of that proviso in accordance with the provisions of this Act:] [Provided also that every person, being an individual or a Hindu undivided family or an association of persons or a body of in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is section beneficiary in respect of an asset means an individual who derives benefit from the asset during the previous year and the consideration for such asset has been provided by any person other than such beneficiary.] [(1A) Without prejudice to the provisions of sub-section (1), any person, being an individual who is in receipt of income chargeable under the head Salaries may, at his option, furnish a return of his income for any previous year to his employer, in accordance with such scheme as may be specified by the Board in this behalf, by notification in the Official Gazette, and subject to such conditions as may be specified therein, and such employer shall furnish all returns of income received by him on or before the due date, in such form (including on a floppy, diskette, magnetic cartridge tape, CD-ROM or any other computer readable media) and manner as may be specified in that scheme, and in such case, any employee who has filed a return of his income to his employer shall be deemed to have furnished a return of income under sub-section (1), and the provisions of this Act shall apply accordingly.] [***]] [(1B) Without prejudice to the provision ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sment year, the reference to one year aforesaid shall be construed as a reference to two years from the end of the relevant assessment year.] The following sub-section (4) shall be substituted for the existing sub-section (4) of section 139 by the Finance Act, 2016, w.e.f. 1-4-2017 : (4) Any person who has not furnished a return within the time allowed to him under sub-section (1), may furnish the return for any previous year at any time before the end of the relevant assessment year or before the completion of the assessment, whichever is earlier. [ [(4A) Every person in receipt of income derived from property held under trust or other legal obligation wholly for charitable or religious purposes or in part only for such purposes, or of income being voluntary contributions referred to in sub-clause (iia) of clause (24) of section 2, shall, if the total income in respect of which he is assessable as a representative assessee (the total income for this purpose being computed under this Act without giving effect to the provisions of sections 11 and 12) exceeds the maximum amount which is not chargeable to income-tax, furnish a return of such income of the previous ye ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... itution, fund or trust or university or other educational institution or any hospital or other medical institution or trade union [or body or authority or Board or Trust or Commission or infrastructure debt fund [or Mutual Fund or securitisation trust or venture capital company or venture capital fund]] is assessable, without giving effect to the provisions of section 10, exceeds the maximum amount which is not chargeable to income-tax, furnish a return of such income of the previous year in the prescribed form and verified in the prescribed manner and setting forth such other particulars as may be prescribed and all the provisions of this Act shall, so far as may be, apply as if it were a return required to be furnished under sub-section (1).] [(4D) Every university, college or other institution referred to in clause (ii) and clause (iii) of sub-section (1) of section 35, which is not required to furnish return of income or loss under any other provision of this section, shall furnish the return in respect of its income or loss in every previous year and all the provisions of this Act shall, so far as may be, apply as if it were a return required to be furnished under sub-se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... diture exceeding the prescribed limits incurred by him under prescribed heads and such other outgoings as may be prescribed. (6A) Without prejudice to the provisions of sub-section (6), the prescribed form of the returns referred to [in [***] this section, and in clause (i) of sub-section (1) of section 142] shall, in the case of an assessee engaged in any business or profession, also require him to furnish [the report of any audit [referred to in section 44AB, or, where the report has been furnished prior to the furnishing of the return, a copy of such report together with proof of furnishing the report], the] particulars of the location and style of the principal place where he carries on the business or profession and all the branches thereof, the names and addresses of his partners, if any, in such business or profession and, if he is a member of an association or body of individuals, the names of the other members of the association or the body of individuals and the extent of the share of the assessee and the shares of all such partners or the members, as the case may be, in the profits of the business or profession and any branches thereof.] (7) [***] [ (8) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g] Officer shall serve on the assessee, a notice of demand in the prescribed form specifying the sum payable, and such notice of demand shall be deemed to be a notice under section 156 and the provisions of this Act shall apply accordingly; (ii) in a case where the interest is reduced, the excess interest paid, if any, shall be refunded.]] [(c) The provisions of this sub-section shall apply in respect of the assessment for the assessment year commencing on the 1st day of April, 1988, or any earlier assessment year, and references therein to the other provisions of this Act shall be construed as references to the said provisions as they were applicable to the relevant assessment year.] [(9) Where the 3[Assessing] Officer considers that the return of income furnished by the assessee is defective, he may intimate the defect to the assessee and give him an opportunity to rectify the defect within a period of fifteen days from the date of such intimation or within such further period which, on an application made in this behalf, the [Assessing] Officer may, in his discretion, allow; and if the defect is not rectified within the said period of fifteen days or, as the ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urn is accompanied by copies of (i) manufacturing account, trading account, profit and loss account or, as the case may be, income and expenditure account or any other similar account and balance sheet; (ii) in the case of a proprietary business or profession, the personal account of the proprietor; in the case of a firm, association of persons or body of individuals, personal accounts of the partners or members; and in the case of a partner or member of a firm, association of persons or body of individuals, also his personal account in the firm, association of persons or body of individuals; (e) where the accounts of the assessee have been audited, the return is accompanied by copies of the audited profit and loss account and balance sheet and the auditor's report 46[and, where an audit of cost accounts of the assessee has been conducted, under section 233B47 of the Companies Act, 1956 (1 of 1956), also the report under that section]; (f) where regular books of account are not maintained by the assessee, the return is accompanied by a statement indicating the amounts of turnover or, as the case may be, gross receipts, gross profit, expenses and net pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ] Officer may make such inquiry as he considers necessary. [(2A) If, at any stage of the proceedings before him, the [Assessing] Officer, having regard to [the nature and complexity of the accounts, volume of the accounts, doubts about the correctness of the accounts, multiplicity of transactions in the accounts or specialised nature of business activity of the assessee, and] the interests of the revenue, is of the opinion that it is necessary so to do, he may, with the previous approval of the [[Principal Chief Commissioner or] Chief Commissioner or [Principal Commissioner or] Commissioner], direct the assessee to get the accounts audited by an accountant, as defined in the Explanation below sub-section (2) of section 288, nominated by the [[Principal Chief Commissioner or] Chief Commissioner or [Principal Commissioner or] Commissioner] in this behalf and to furnish a report of such audit in the prescribed form duly signed and verified by such accountant and setting forth such particulars as may be prescribed and such other particulars as the [Assessing] Officer may require : [Provided that the Assessing Officer shall not direct the assessee to get the accounts so audi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent for the assessment year commencing on the 1st day of April, 1988, or any earlier assessment year and references in this section to the other provisions of this Act shall be construed as references to those provisions as for the time being in force and applicable to the relevant assessment year.] Assessment. 143. [(1) Where a return has been made under section 139, or in response to a notice under sub-section (1) of section 142, such return shall be processed in the following manner, namely: (a) the total income or loss shall be computed after making the following adjustments, namely: (i) any arithmetical error in the return; [or] (ii) an incorrect claim, if such incorrect claim is apparent from any information in the return; The following sub-clauses (iii) to (vi) shall be inserted after sub-clause (ii) of clause (a) of sub-section (1) of section 143 by the Finance Act, 2016, w.e.f. 1-4-2017 : (iii) disallowance of loss claimed, if return of the previous year for which set off of loss is claimed was furnished beyond the due date specified under sub-section (1) of section 139; (iv) disallowance of expenditure indicated in the audit rep ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (i) of an item, which is inconsistent with another entry of the same or some other item in such return; (ii) in respect of which the information required to be furnished under this Act to substantiate such entry has not been so furnished; or (iii) in respect of a deduction, where such deduction exceeds specified statutory limit which may have been expressed as monetary amount or percentage or ratio or fraction; (b) the acknowledgement of the return shall be deemed to be the intimation in a case where no sum is payable by, or refundable to, the assessee under clause (c), and where no adjustment has been made under clause (a). (1A) For the purposes of processing of returns under sub-section (1), the Board may make a scheme67 for centralised processing of returns with a view to expeditiously determining the tax payable by, or the refund due to, the assessee as required under the said sub-section. (1B) Save as otherwise expressly provided, for the purpose of giving effect to the scheme67 made under sub-section (1A), the Central Government may, by notification67 in the Official Gazette, direct that any of the provisions of this Act relating to processing of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... come or loss accordingly, and determine the sum payable by the assessee on the basis of such assessment; (ii) issued under clause (ii) of sub-section (2), or as soon afterwards as may be, after hearing such evidence as the assessee may produce and such other evidence as the Assessing Officer may require on specified points, and after taking into account all relevant material which he has gathered, the Assessing Officer shall, by an order in writing, make an assessment of the total income or loss of the assessee, and determine the sum payable by him or refund of any amount due to him on the basis of such assessment:] [Provided that in the case of a (a) [research association] referred to in clause (21) of section 10; (b) news agency referred to in clause (22B) of section 10; (c) association or institution referred to in clause (23A) of section 10; (d) institution referred to in clause (23B) of section 10; (e) fund or institution referred to in sub-clause (iv) or trust or institution referred to in sub-clause (v) or any university or other educational institution referred to in sub-clause (vi) or any hospital or other medical institution refe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... year, if the provisions of the first proviso to clause (15) of section 2 become applicable in the case of such person in such previous year, whether or not the approval granted to such trust or institution or notification issued in respect of such trust or institution has been withdrawn or rescinded.] [(4) Where a regular assessment under sub-section (3) of this section or section 144 is made, (a) any tax or interest paid by the assessee under sub-section (1) shall be deemed to have been paid towards such regular assessment ; (b) if no refund is due on regular assessment or the amount refunded under sub-section (1) exceeds the amount refundable on regular assessment, the whole or the excess amount so refunded shall be deemed to be tax payable by the assessee and the provisions of this Act shall apply accordingly. Best judgment assessment. 144. [(1)] If any person (a) fails to make the return required [under sub-section (1) of section 139] and has not made a return or a revised return under sub-section (4) or sub-section (5) of that section, or (b) fails to comply with all the terms of a notice issued under sub-section (1) of section 142 [ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... expiry of four years from the end of the relevant assessment year, unless any income chargeable to tax has escaped assessment for such assessment year by reason of the failureon the part of the assessee to make a return under section 139 or in response to a notice issued under sub-section (1) of section 142 or section 148 or to disclose fully and truly all material facts necessary for his assessment, for that assessment year: [Provided further that nothing contained in the first proviso shall apply in a case where any income in relation to any asset (including financial interest in any entity) located outside India, chargeable to tax, has escaped assessment for any assessment year:] [Provided [also] that the Assessing Officer may assess or reassess such income, other than the income involving matters which are the subject matters of any appeal, reference or revision, which is chargeable to tax and has escaped assessment.] Explanation 1. Production before the Assessing Officer of account books or other evidence from which material evidence could with due diligence have been discovered by the Assessing Officer will not necessarily amount to disclosure within the mea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it is hereby clarified that the provisions of this section, as amended by the Finance Act, 2012, shall also be applicable for any assessment year beginning on or before the 1st day of April, 2012.] Issue of notice where income has escaped assessment. 148. [(1)] Before making the assessment, reassessment or recomputation under section 147, the Assessing Officer shall serve on the assessee a notice requiring him to furnish within such period, [* * *] as may be specified in the notice, a return of his income or the income of any other person in respect of which he is assessable under this Act during the previous year corresponding to the relevant assessment year, in the prescribed form and verified in the prescribed manner and setting forth such other particulars as may be precribed; and the provisions of this Act shall, so far as may be, apply accordingly as if such return were a return required to be furnished under section 139 :] [Provided 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... determining income chargeable to tax which has escaped assessment for the purposes of this sub-section, the provisions of Explanation 2 of section 147 shall apply as they apply for the purposes of that section.] (2) The provisions of sub-section (1) as to the issue of notice shall be subject to the provisions of section 151. (3) If the person on whom a notice under section 148 is to be served is a person treated as the agent of a non-resident under section 163 and the assessment, reassessment or recomputation to be made in pursuance of the notice is to be made on him as the agent of such non-resident, the notice shall not be issued after the expiry of a period of [six] years from the end of the relevant assessment year. [Explanation. For the removal of doubts, it is hereby clarified that the provisions of sub-sections (1) and (3), as amended by the Finance Act, 2012, shall also be applicable for any assessment year beginning on or before the 1st day of April, 2012.] Sanction for issue of notice 151. (1) No notice shall be issued under section 148 by an Assessing Officer, after the expiry of a period of four years from the end of the relevant assessmen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessee s file their return of income wherein total income of the assessee are declared in the return of income filed with the department. The return of income is required to be furnished by the assessee s before the due date as prescribed u/s 139(1). In case the assessee s for some reasons are not being able to file return of income within due date as prescribed u/s 139(1) , then they are allowed to file return of income belatedly within the time prescribed u/s 139(4) . Section 139(4) provides that any person who has not furnished a return within the time allowed to him under sub-section (1), may furnish the return for any previous year at any time before the end of the relevant assessment year or before the completion of the assessment, whichever is earlier . (As amended by Finance Act, 2016 w.e.f. 01.04.2017) Thus, it is true that even if return of income is not filed within the time prescribed u/s 139(1), still the return of income can be filed by the assessee at any before the end of the relevant assessment year or before the completion of the assessment, whichever is earlier. Thus, it merely provides that the return of income belatedly can be filed as provided u/s 139(4) and t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 144 deals with Best judgment Assessment, thus these are two altogether different classes of assessment stipulated under the 1961 Act , with a similar objective to assess and compute total income of the assessee s chargeable to income-tax, one is a regular assessment u/s 143 while the other is best judgment assessment u/s 144. Section 143(1) stipulates processing of return of income filed u/s 139 , or in response to notice issued u/s 142(1), in the manner provided therein. We are presently not concerned with processing of return of income u/s 143(1). Then there is a regular scrutiny assessment conducted by Revenue , wherein return of income furnished by the assessee u/s 139, or in response to notice u/s 142(1) are scrutinized by AO in order to assess and compute total income chargeable to income-tax, if he consider it necessary or expedient to ensure the assessee has not understated the income or has not computed excessive loss or has not underpaid the tax, then the AO is required to issue notice u/s 143(2) requiring assessee to produce evidence to substantiate its return of income. The assessment order is then passed by AO u/s 143(3) wherein total income of the assessee is assessed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (a) fails to make the return required [under sub-section (1) of section 139] and has not made a return or a revised return under sub-section (4) or sub-section (5) of that section, or (b) fails to comply with all the terms of a notice issued under sub-section (1) of section 142 [or fails to comply with a direction issued under sub-section (2A) of that section], or (c) having made a return, fails to comply with all the terms of a notice issued under subsection (2) of section 143, *** *** *** *** *** *** *** *** All the three clauses are distinguished by word or , i.e. they are mutually exclusive and independent of each other , and these three scenario s are independent of each other , wherein the AO shall be free to make best judgment assessment provided all the stipulated conditions are met. Clearly, the case of the assessee does not fall under clause (c) above of Section 144(1), while it falls under clause (a) and (b) of Section 144(1). The assessee having failed to file return of income in pursuance to notice dated 29.03.2016 issued by AO u/s 148, and Section 148 of the 1961 Act ,inter-alia, stipulating that the provisions of this Act sha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ch deals with a different class of assessment viz. best judgment assessment. Had the assessee filed return of income in pursuance to notice dated 29.03.2016 issued by AO u/s 148, or even in compliance of terms of issue of notice u/s 142(1)dated 02.12.2016 , then Section 143(2) would have got triggered and then the AO would have been obligated to frame assessment u/s 143(3) read with Section 147, and not best judgment assessment u/s 144 read with Section 147 . If the assessee did not file return of income in response to notice u/s 148 , then the AO will be competent to frame best judgment assessment and no notice u/s 143(2) would have been required. The second situation is clause (b) to Section 144(1), where there was failure on the part of the assessee to comply with the terms of notice issued by the AO u/s 142(1), and hence the AO shall be competent to frame best judgment assessment u/s 144 and no notice u/s 143(2) shall be required. We are seized presently to the situation which falls under clause (a) and (b) of Section 144(1). The third situation envisaged u/s 144(1) clause (c) is the situation where the assessee having filed return of income, fails to comply with all the terms ..... X X X X Extracts X X X X X X X X Extracts X X X X
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