TMI Blog2001 (6) TMI 163X X X X Extracts X X X X X X X X Extracts X X X X ..... d to tax. The Assessing Officer was of the belief that the assessee's income wag above taxable limit and by not filing the return of income, his income has escaped assessment. So, he issued notice under section 148 of the Act on 8-11-1989 for filing the return of income. In response to such notice, the assessee filed return of income on 30-11-1990 disclosing the taxable income of Rs. 1,65,000. The tax on the returned income was also paid. Fresh assessment proceedings started thereafter. However, the assessee got stay of the proceedings from the Hon'ble Allahabad High Court vide order dated 24-2-1992. However, the Hon'ble Allahabad High Court held that assessment proceedings or this year may continue. In his assessment order under section 144 of the Act, the Assessing Officer relied on his order under section 132(5) of the Act and computed the assessee's income at Rs. 22,73,000, which was also computed in the order under section 132(5). 2.2 On appeal, it was inter alia claimed that the assessment order was ab initio void as the notice under section 148 was not served on the assessee. Reliance was placed in the case of Laxmi Narain Anand Prakash [1980] UPTC 125. It was also claimed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o argued that it was mandatory on the part of the Assessing Officer to serve the notice on the assessee and not merely to issue the notice. Reliance was placed on the decision of Hon'ble Allahabad High Court reported in 46 STC (All.) (FB) It was stated that the service of the notice can be affected on the family members only when the assessee was in capacitated from receiving the notice. There is no report by the Assessing officer or any authority to the effect that the assessee was incapacitated. Hence, there was no valid service of the notice. It was also stated that merely because the assessee has filed return of income in response to notice under section 148, it will not confer any jurisdiction on the Assessing Officer to make fresh assessment. Reliance was placed on the decisions reported in Shib Charan v. Emperor 1931 AIR All. 49; CIT v. Maharaja Pratap Singh Bahadur [1956] 30 ITR 484 (Pat.); P. V Doshi v. CIT [1978] 113 ITR 22 (Guj.) and [1984] ALJ (NOC) 28 (All.). Further reliance was placed on the decisions reported in Sewlal Daga v. CIT [1965] 55 ITR 406 (Cal.); Madanlal Agarwal v. CIT [1983] 144 ITR 745/13 Taxman 120 (All.); ITO v. Chandi Prasad Modi [1979] 119 ITR 340 ( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and filed the return of income in response to such notice. He also paid the taxes on the returned income. The ld. counsel's arguments have been to the effect that by filing return of income and paying tax, the assessee has waived his right by giving concession of jurisdiction to the Assessing Officer for making the fresh assessment. He had relied on certain decisions wherein it was held that no concession regarding conferring jurisdiction to make fresh assessment can be granted by the assessee. We have therefore, perused some of these decisions. 2.5 In the case of Maharaja Pratap Singh Bahadur, the Assessing Officer issued notice under section 34 of the Income-tax Act, 1922 without complying with the conditions laid down in the proviso to section 48 of the old Act as amended on 8-9-1948. The Hon'ble Patna High Court held that a notice under section 34 without complying with the conditions laid down in the proviso was invalid. When the decision is applied to the assessee's case, we find that there is no lack of jurisdiction with the Assessing Officer. What the assessee has challenged is the service of notice. Thus, it is admitted position that the conditions for invoking provisi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessing Officer himself treated this notice as irregular and cancelled it. He issued another notice on 24-3-1954 and got it served by fixture on 25-3-1954. The question was whether the service of notice by fixture was valid or not. The Hon'ble Court held such service of notice to be valid. 2.8 In the case of P. V Doshi, the facts were that the conditions precedent for initiating: reassessment proceedings were (1) reasonable belief reached by Assessing Officer under Clauses (a) or (b) of section 147; (2) Recording of reasons by the Assessing Officer under section 148(2) and (3) sanction before issuing the notice of reassessment by the higher authorities under section 151 of the Act. The question was that when the Assessing Officer did not record any reasons for initiating the proceedings under section 148 of the Act, whether it can be said that notice under section 148 was invalid notice giving jurisdiction to Assessing Officer to make reassessment. Hon'ble Court, therefore, held, as under: 'that as a jurisdictional provision which was mandatory and enacted in public interest could never be waived and the want of jurisdiction was discovered by the Appellate Assistant Commissio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that he can defend himself from the impending action. This view has been expressed earlier also. We also find that section 282 has used the word "may'. This word gives certain liverage to the Assessing Officer regarding service of notice. We also find that section 282 has not indicated the procedure for service of notice in case of an individual. If somebody goes by the logic of the Id. counsel, no notice can be served on the employees of the individual. That was never the intention of section 282. 2.12 We also found that the assessee has challenged the validity of notice under section 148 on the ground that in the notice the status of the assessee has not been mentioned. We do not find any merit in the these arguments. The notice has been addressed in the name of the assessee. In response to such notice the return has been filed by the same person to whom the notice has been addressed. The assessment has also been made in the same status. Thus, the status of the assessee as an individual is not in dispute. Hence, we reject the submissions of the Id. counsel in this regard. 2.13 Second issue relates to the service of notice under section 143(2) of the Act. Proviso to section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... plicable to the returns filed in response to notice under section 148 of the Act. As this is substantive provision of law, we hold that the ld. counsel's submissions in this regard have no force and the same are rejected. Accordingly, we hold that the notice under section 143(2) was validly served within limitation. 2.15 Both the grounds raised by the assessee are therefore, dismissed. 3. Ground no. 3 raised by the assessee relates to the addition on account of unexplained deposits in the bank. As mentioned earlier while making various additions, the Assessing Officer has relied on his order under section 132(5) of the Act dated 16-5-1989. At the time of proceedings under section 132(5), the Assessing Officer noted that various sums have been deposited in the bank a/c No. C-309 maintained in the Allahabad Bank. He aggregated these deposits at Rs. 9,1 1,000 and as no sources of such deposits were explained, the Assessing Officer addled the same to the income of the assessee as unexplained cash deposits. on appeal, the CIT(Appeals) confirmed the same. The assessee is in appeal before us against the findings of the CIT(Appeals). 3.1 During the course of Ws arguments, the lear ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment in the purchase of NSCs was only to the extent of Rs. 12,000. We are of the view that as the assessee's wife had independent sources of income, she was in a position to make investment in the NSCS. Accordingly, the addition of Rs. 12,000 sustained by CIT(Appeals) is deleted. 4.3 This ground of appeal is allowed. 5. Ground No. 5 which relates to the addition on account of unexplained investment in Indira Vikas Patra has not been pressed. Hence, the same is dismissed. 6. Ground No. 6 raised by the assessee relates to the levy of interest under sections 139(8) and 217 of the Act. As this ground is consequential in nature the Assessing Officer is directed to charge interest, if any, on the basis of income determined as per our order. 7. In the result, the appeal directed by the assessee is partly allowed. 8. Now, we will take up the appeal directed by the revenue. 8.1 The first ground of appeal directed by the revenue is against the deletion of the addition of Rs. 10 lacs made by Assessing Officer on account of unexplained investment in money lending business. At the time of passing the order under section 132(5), the Assessing Officer observed that since the ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of appeal raised by the revenue. 9. Ground No. 2 raised by the revenue relates to the deletion of the addition of Rs. 1,35,000 out of addition of Rs. 3 lacs made by the Assessing Officer on account of interest income and business income. At the time of order under section 132(5) of the Act, the Assessing Officer estimated the interest income of the assessee for the year under consideration at Rs. 1 lac. Similarly, he estimated the business income at Rs. 2 lacs. In his order under section 143(3), the Assessing Officer estimated the same. On appeal, the CIT(Appeals) restricted the addition to Rs. 1,65,000. The revenue is in appeal against the findings of the CIT(Appeals). While the learned D.R. supported the order of the Assessing Officer, the learned counsel supported the order of the CIT(Appeals). 9.1 We have considered the rival submissions. We have also perused the orders under section 132(5) passed by Assessing Officer which is the basis for estimating the interest income as well as the business income by the Assessing Officer for year under consideration. Such income is based on estimate only. The CIT(Appeals) has reduced the addition, which is also based on the estimate ..... X X X X Extracts X X X X X X X X Extracts X X X X
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