Notice u/s 148 quashed as time period to issue notice u/s 143(2) for conducting assessment u/s 143(3) had not expired.
In a recent judgment, Hon’ble Bangalore ITAT has quashed notice u/s 148 as the time period to issue notice u/s 143(2) for conducting assessment u/s 143(3) had not expired. Section 142(1) and section 148 of the act cannot operate simultaneously
ABCAUS Case Law Citation:
ABCAUS 3961 (2024) (04) ITAT
Important Case Laws relied upon:
CIT vs. Dr. G.K. Pendkar reported in (1993) 69 Taxman 107
Collector Land Acquisition Vs. Mst. Katiji & Ors., reported in (1987) 167 ITR 471
National Thermal Power Co. Ltd. Vs. CIT reported in (1998) 229 ITR 383
Jute Corporation of India Ltd. Vs. CIT reported in 187 ITR 688
Qatalys Software Technologies [2009] 308 ITR 249 (Mad HC)
Vardhaman Holdings Ltd., [2016] 158 ITD 843 (Chandigarh Trib)
M/s L T Karle & Co.
The appellant assessee was a trust carrying on activities as per the objects of the trust deed. Admittedly, assessee had not registered itself u/s 12A of the act for the years under consideration. The Assessing Officer (AO) issued notice u/s. 142(1) for both the years under consideration calling upon assessee to file the return of income.
In response to the said notices, the assessee filed its return of income.
Subsequently, on verification of the balance sheet by the AO, it was noticed that the assessee had credited a sum towards Church maintenance fund during the said two assessment years. The AO was of the opinion that he had reason to believe that, income chargeable to tax has escaped assessment, within the meaning of provisions of section 147, since assessee did not have registration u/s. 12A for the years under consideration.
The AO issued notice u/s 148 of the act calling upon the assessee to file Return of Income, in response to the notice issued u/s 148. The assessee intimated the AO that the return filed originally may be treated as return in lieu of notice u/s. 148 of the act.
The AO then issued notice u/s. 143(2) of the act and called upon the assessee to file details in respect of the amount received by assessee that was credited to balance sheet and under reserve and surplus as church maintenance fund. The AO based on the details furnished by the assessee, disallowed the amount received, that was credited to church maintenance fund, as assessee did not furnish details of the loaners as corpus specific.
Before the CIT(A), assessee inter alia challenged the validity of reopening u/s 148 of the act by submitting that, as on the date of issuance of notices u/s. 148, time period to issue notice u/s 142(3) against the original return of income filed by the assessee had not lapsed. It was contended that the AO should not have issued notice u/s 148 under such circumstances. It was submitted that the AO could have issued notices u/s. 148 only when the time limit for issuance of notice u/s 143(2) has expired and the Ld.AO has formed a belief based on tangible information that income of the assessee escaped assessment.
However, the CIT(A) rejected all these arguments of the assessee by holding that, the assessee has co-operated with the reassessment.
The Tribunal noted that the assessee had not filed its original return u/s 139 of the act. However on receipt of the notice u/s 142(1), the assessee filed the return of income on 02.12.2016 for both the years under consideration. Under such circumstances, as per the law during the relevant years, the assessing officer had six months from the end of the financial year in which such return was filed to issue notice u/s. 143(2) of the act.
In view of the above, the Tribunal opined that in the instant case, taking the date of filing of the return of income in response to notice u/s 142(1) of the act, the assessing officer had three month’s time left to issue notice u/s. 143(2) to conduct regular assessment u/s 143(3) of the act. However, notice u/s. 148 of the act was issued to the assessee in both the assessment years.
The Tribunal pointed out that the act does not make any distinction between the return filed u/s. 139(1) of the act or 139(5) of the act or, upon issuance of notice u/s. 142(1) of the act. In any of the above scenario, the Assessing Officer has to treat the return of income as a valid return and a notice u/s 143(2) has to be issued before expiry of six months from the end of the financial year in which the return of income is filed. The AO is also to issue notice u/s. 143(2), in case the return filed in all the above 3 scenarios is repudiated by him.
The Tribunal opined that section 142(1) and section 148 of the act cannot operate simultaneously. The assessment was pending before the AO, as on the date of the issuance of notice u/s 148 of the act. The original assessment proceedings were pending as the time period for issuance of notice u/s 143(2) did not expire.
The Tribunal noted that the Hon’ble Madras High Court held that, if the proceedings are pending u/s. 143 of the act, it looks inappropriate to call for a return u/s 148 of the act because, income cannot be said to have escaped assessment when the assessment proceedings are pending. Hon’ble High Court thus held that, the two provisions governed under different fields and can be exercised only under different circumstances. It was noted that a similar view was taken by the Hon’ble Bombay High Court
Thus, following the judicial precedents by Hon’ble Supreme Court, Hon’ble High Court and Co-ordinate Bench, the opined that there was no need for the Assessing Officer to issue notice u/s 148 as there was time period to issue notice u/s 143(2) of the act for conducting the assessment u/s. 143(3) of the act.
Accordingly, the Tribunal allowed the additional grounds raised by assessee and quashed the notice u/s 148 of the Act
Download Full Judgment ABCAUS 3961 (2024) (04) ITAT Click Here >>
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