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17-03-2020, Mohan Clothing Co, Section 148, 153, 147, Tribunal Delhi

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4 months 2 weeks ago #12385 by amit
Section - 148, 153, 147, 149
Order Date - 17-03-2020
Favouring - Revenue
Court - Tribunal Delhi
Appellant - Mohan Clothing Co. Pvt. Ltd
Respondent - ACIT
Justice - BHAVNESH SAINI JM & O.P. KANT AM
Citation - 320Taxpundit756
Appeal No. - ITA No.4304/Del./2011
Asstt. Year - 2003-04

Order

PER : O.P. KANT, AM:

Out of the above two appeals, the appeal bearing ITA No. 6093/Del./2010 for assessment year 2002-03 has arisen due to remission back by the Hon’ble Delhi High Court vide decision dated 29/08/2012 for deciding on merit. The appeal bearing ITA No. 4304/Del./2011 for assessment year 2003-04 has been preferred by the assessee against the order dated 09/08/2011 passed by the Learned CIT(Appeals)-VIII, New Delhi [in short ‘the Ld. CIT(A)’]. In both these appeals of same assessee, identical issues are involved, therefore, both were hard together and disposed off by the of this consolidated order for convenience.

ITA No.6093/Del/2010
Assessment Year: 2002-03

2. First we take up the appeal of the assessee bearing ITA No. ITA No.6093/Del./2010 for assessment year 2002-03. The grounds raised by the assessee are reproduced as under:

“That on the facts and in the circumstances of the case and in law the learned CIT(A) erred in confirming the following actions of the Assessing Officer:-

(i) initiating proceedings u/s 147 of the Income Tax Act and completing the assessment u/s 147/143(3) of the Act on income of Rs.43,68,472/-;

(ii) making an addition of Rs.38,99,527/- on account of alleged undisclosed purchase on surmises and conjectures; and

(iii) making an addition of Rs.38,995/- as unexplained expenditure allegedly by way of commission paid even though there was no material in support of such allegations.

2.1 This appeal was earlier decided by the Tribunal vide order dated 14/10/2011 wherein the first ground of appeal was decided in favour of the assessee and it was held that issuance of notice u/s 148 and the communication and furnishing of the reasons would go hand-in-hand. It was further held that the reasons were to be supplied to the assessee before the expiry of the period of the six years. The Tribunal quashed the reassessment on the ground that reasons were not supplied before the expiry of the six years from the end of the relevant assessment year. The Tribunal did not adjudicate the ground Nos. (ii) & (iii) of the
appeal. On further appeal by the Revenue, the Hon’ble Delhi High Court vide decision dated 29/08/2012, after considering various precedents on the issue in dispute, set aside the order of the Tribunal and remanded the matter back to the Tribunal for deciding on merit, observing as under:

“7. This Court has considered the arguments of the parties. The decisions cited by the learned counsel for the revenue are exactly on the issue that arises in this case. The relevan provisions to the extent they are material, are reproduced below:

"147. If the Assessing Officer has reason to believe that any income chargeable to ta has escaped assessment for any assessment year, he may, subject to the provisions of sections 148 to 153, assess or reassess such income and also any other income chargeable to tax which has escaped assessment and which comes to his notice subsequently in the course of the proceedings under this section, or recompute the loss or the depreciation allowance or any other allowance, as the case may be, for the assessment year concerned (hereafter in this section and in sections 148 to 153 referred to as the relevant assessment year) : **

"148. 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... ***"

149 (1) No notice under section 148 shall be issued for the relevant assessment year,--

(a) if four years have elapsed from the end of the relevant assessment year, unless the case falls under clause (b);

(b) if four years, but not more than six years, have elapsed from the end of the relevant assessment year unless the income chargeable to tax which has escaped assessment amounts to or is likely to amount to one lakh rupees or more for that year. ***

The Supreme Court emphasized the need to issue notice, within the prescribed period, in R.K. Upadhyaya v. Shanabhai P. Patel [1987] 166 ITR 163 (SC), in the following terms:

"Section 148(1) provides for service of notice as a condition precedent to making the order of assessment. Once a notice is issued within the period of limitations, jurisd ction becomes vested in the Income-tax Officer to proceed to reassess. The mandate of Section 148(1) is that reassessment shall not be
made until there has been service. The requ rement of issue of notice is satisfied when a notice is actually issued. In this case, admittedly, the notice was issued within the prescribed period of limitation as March 31, 1970, was the last day of that period. Service under the new Act is not a condition precedent to conferment of jurisdiction in the Income-tax Officer to deal with the matter but it is a condition precedent to making of the order of assessment. The High Court in our opinion lost sight of the distinction and under a wrong basis felt bound by the judgment in [1964]53ITR100(SC) ." In G.K.N. Driveshafts (supra), it was held that:

"[W]e clarify that when a notice under Section 148 of the Income Tax Act is issued, the proper course of action for the notice is to file return and if he so desires, to seek reasons for issuing notices. The Assessing Officer is bound to furnish easons within a reasonable time. On receipt of reasons, the notice is entitled to file objections to issuance of notice and the Assessing Officer is bound to dispose of the same by passing a speaking order."

A.G.Holdings (supra) held that:

"There is no requirement in Section 147 or Section 148 or Section 149 ITA 317/2012 Page 5 that the reasons recorded should also accompany the notice issued under Section 148. The requirement in Section 149(1) is only that the notice under Section 148 shall be issued. There is no requirement that it should also be served on the assessee before the period of limitation. There is also no requirement in Section 148(2) that the reasons recorded shall be served along with

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