Section 148 Archives - Tax Heal

Section 148 Income Tax Act Notice if Income escaped assessment.

CA Satbir Singh — Thu, 02 Mar 2023 04:37:59 +0000

Section 148 Income Tax Act 1961 of India as Amdnended by Finance Act 2022

Section 148 Income Tax Act is for Issue of notice where income has escaped assessment.

CA satbir Singh (Contact us Taxheal@gmail.com )

Summary of Section 148 Income Tax Act

Section 148 Income tax is used for issue of notice where income has escaped assessment.
The Assessing Officer shall, before issuing any notice under section 148, conduct the enquiries and provide the opportunity of hearing to the taxpayer as per Section 148A Income Tax Act w.e.f 01.04.2021.
Section 148 Income Tax Act is substituted by the Finance Act, 2021, w.e.f. 1-4-2021. Prior to its substitution, section 148 is given in Notes 1 below.
For Section 148 Income tax You also needs to refer
- Order F.No. 225/40/2021/ITA II, dated 4-3-2021 (Instruction regarding selection of cases for issue of notice u/s 148) and
- Order F.No. 225/40/2021-ITA II, dated 15-3-2021 (Instruction regarding selection of ‘Potential cases’ for issue of notice under section 148 and rationalisation of workload in International Taxation Charges).
Second Provisio in Section 148 of Income tax is Inserted by the Finance Act, 2022, w.e.f. 1-4-2022.
In Explanation No 1 of Section 148 Income Tax , Clauses (ii) to (v) substituted for clause (ii) by the Finance Act, 2022, w.e.f. 1-4-2022. Prior to its substitution, clause (ii) was as given in Note 4 below .
In Explanation No 2 of Section 148 Income Tax, in Clause (ii) Words “or sub-section (5)” omitted by the Finance Act, 2022, w.e.f. 1-4-2022.. Refer Note 5 below.
In Explanation No 2 of Section 148 Income Tax, Words “where ” is Substituted for “for the three assessment years immediately preceding the assessment year relevant to the previous year in which” by the Finance Act, 2022, w.r.e.f. 1-4-2021. Refer Note 6 below.

Section 148 Income Tax Act

¹[Issue of notice where income has escaped assessment.

148. Before making the assessment, reassessment or recomputation under section 147, and subject to the provisions of section 148A, the Assessing Officer shall serve on the assessee a notice, along with a copy of the order passed, if required, under clause (d) of section 148A, requiring him to furnish within such period, as may be specified in such 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 prescribed; 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 no notice under this section shall be issued unless there is information with the Assessing Officer which suggests that the income chargeable to tax has escaped assessment in the case of the assessee for the relevant assessment year and the Assessing Officer has obtained prior approval of the specified authority to issue such notice:

²[Provided further that no such approval shall be required where the Assessing Officer, with the prior approval of the specified authority, has passed an order under clause (d) of section 148A to the effect that it is a fit case to issue a notice under this section.]

Explanation 1.—For the purposes of this section and section 148A, the information with the Assessing Officer which suggests that the income chargeable to tax has escaped assessment means,—

(i)		any information 3[***] in the case of the assessee for the relevant assessment year in accordance with the risk management strategy formulated by the Board from time to time;
⁴[(ii)		any audit objection to the effect that the assessment in the case of the assessee for the relevant assessment year has not been made in accordance with the provisions of this Act; or
(iii)		any information received under an agreement referred to in section 90 or section 90A of the Act; or
(iv)		any information made available to the Assessing Officer under the scheme notified under section 135A; or
(v)		any information which requires action in consequence of the order of a Tribunal or a Court.]

Explanation 2.—For the purposes of this section, where,—

(i)		a search is initiated under section 132 or books of account, other documents or any assets are requisitioned under section 132A, on or after the 1st day of April, 2021, in the case of the assessee; or
(ii)		a survey is conducted under section 133A, other than under sub-section (2A) ⁵[***] of that section, on or after the 1st day of April, 2021, in the case of the assessee; or
(iii)		the Assessing Officer is satisfied, with the prior approval of the Principal Commissioner or Commissioner, that any money, bullion, jewellery or other valuable article or thing, seized or requisitioned under section 132 or section 132A in case of any other person on or after the 1st day of April, 2021, belongs to the assessee; or
(iv)		the Assessing Officer is satisfied, with the prior approval of Principal Commissioner or Commissioner, that any books of account or documents, seized or requisitioned under section 132 or section 132A in case of any other person on or after the 1st day of April, 2021, pertains or pertain to, or any information contained therein, relate to, the assessee,

the Assessing Officer shall be deemed to have information which suggests that the income chargeable to tax has escaped assessment in the case of the assessee 6[where] the search is initiated or books of account, other documents or any assets are requisitioned or survey is conducted in the case of the assessee or money, bullion, jewellery or other valuable article or thing or books of account or documents are seized or requisitioned in case of any other person.

Explanation 3.—For the purposes of this section, specified authority means the specified authority referred to in section 151.]

Notes on Amendment in Section 148 Income Tax Act

Substituted by the Finance Act, 2021, w.e.f. 1-4-2021. Prior to its substitution, section 148, as amended by the Direct Tax Laws (Amendment) Act, 1987, w.e.f. 1-4-1989, Direct Tax Laws (Amendment) Act, 1989, w.e.f. 1-4-1989, Finance (No. 2) Act, 1996, w.r.e.f. 1-4-1989, Finance Act, 2006, w.r.e.f. 1-10-1991 and Finance Act, 2006, w.r.e.f. 1-10-2005, read as under :

“*148.** Issue of notice where income has escaped assessment.—(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 prescribed; 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 been served under sub-section (2) of section 143 after the expiry of twelve months specified in the proviso to sub-section (2) of section 143, as it stood immediately before the amendment of said sub-section by the Finance Act, 2002 (20 of 2002) but before the expiry of the time limit for making the assessment, re-assessment or recomputation as specified in sub-section (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 section 143 after the expiry of twelve months specified in the proviso to clause (ii) of sub-section (2) of section 143, but before the expiry of the time limit for making the assessment, reassessment or recomputation as specified in sub-section (2) of section 153, every such notice referred to in this clause shall be deemed to be a valid notice.

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.

(2) The Assessing Officer shall, before issuing any notice under this section, record his reasons for doing so.”

Inserted by the Finance Act, 2022, w.e.f. 1-4-2022.
Word “flagged” omitted by the Finance Act, 2022, w.e.f. 1-4-2022.

Clauses (ii) to (v) substituted for clause (ii) by the Finance Act, 2022, w.e.f. 1-4-2022. Prior to its substitution, clause (ii) read as under:

“(ii)

any final objection raised by the Comptroller and Auditor General of India to the effect that the assessment in the case of the assessee for the relevant assessment year has not been made in accordance with the provisions of this Act.”

5.Words “or sub-section (5)” omitted by the Finance Act, 2022, w.e.f. 1-4-2022.

6. Substituted for “for the three assessment years immediately preceding the assessment year relevant to the previous year in which” by the Finance Act, 2022, w.r.e.f. 1-4-2021.

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section 148,income tax notice,section 148 of income tax,section 148 notice,notice under section 148,notice issued under section 148,

No Reassessment if provision for bad & doubtful debts is disclosed in ITR : HC

CA Satbir Singh — Fri, 19 Apr 2019 14:48:14 +0000

Madras High Court

CIT Vs. M/s. Indian Potash Ltd.

Tax Case Appeal No.1363 of 2008

Date of Judgement/Order : 11/09/2018

Related Assessment Year : 1998-99

This appeal filed by the Revenue is directed against the order passed by the Income Tax Appellate Tribunal Bench A, Chennai, in I.T.A.No.2025/Mds/2006, dated 14.03.2008 for the Assessment Year 1998-1999.

2. The appeal has been admitted vide order dated 01.09.2008 on the following substantial question of law:

Whether in the facts and circumstances of the case, the Tribunal was right in holding that the Tribunal erred in holding that the reassessment under Section 143(3) r/w 147 is bad in law ?

3. We have heard Mr.Karthik Ranganathan, learned counsel for the appellant/Revenue and Mr.R.Vijayaraghavan, learned counsel for the respondent/Assessee.

4. The only issue, which falls for consideration, is whether the Tribunal was right in holding that reassessment under Section 147 of the Income Tax Act, 1961 was bad in law ?

5. We have gone through the facts of the case as well as the findings rendered by the Tribunal. The Tribunal has recorded a factual finding that the Assessee has disclosed the figure of provision for bad debts and doubtful debts and interest income also in the Profit and Loss Account submitted along with the return of income. Therefore, the Tribunal held that there is no failure on the part of the Assessee to disclose fully and truly all material facts. Furthermore, it was pointed out that the figures and reasons for reopening were picked up from the assessee’s accounts submitted along with return. In the said factual position, the Tribunal placed reliance on the decision in the case of CIT V Elgi Finance Ltd., (2006) 286 ITR 674 (Mad) and held that the assumption of jurisdiction in the instant case is barred by limitation.

6. We are fully in agreement with the view expressed by the Tribunal. From the facts of the case, it is evidently clear that the reopening was a change of opinion. When there is no allegation that the Assessee is not fully and truly disclosed all the materials, the question of reopening the assessment does not arise. The duty of the Assessee rests only to fully and truly disclose all facts in the return, which has been done by the respondent/Assessee. It is not for the respondent/Assessee to tell the Assessing Officer has to how he has to frame the assessment and in the instant case, it is evidently clear that the reopening was because of change of opinion.

T.S.SIVAGNANAM, J.

and

V.BHAVANI SUBBAROYAN, J.

7. Thus, for the aforesaid reasons, we are of the considered view that there is no error in the order passed by the Tribunal. Accordingly, the appeal filed by the Revenue is dismissed and the substantial question of law is answered in favour of the Assessee and against the Revenue. No costs.

Notice can not be issued in name of dead person to reopen assessment : HC

Re-assessment notice invalid as not sanctioned by proper authority : HC

Reopening of assessment of Sonia Gandhi and Rahul Gandhi is valid : Delhi HC

Reassessment invalid if not proved that advance received was undisclosed income : ITAT

No reassessment because assessee failed to disclose bank a/c if it was submitted during assessment : Bombay High Court

Assessing officer can make preliminary inquiries before issuing notice of reassessment : GUJARAT HC

AO Jurisdiction couldn’t be questioned after expiry of 1 month from date of service of reassessment notice : Delhi HC

No reassessment because capital gain shown by another co-owner is different : GUJARAT HC

No Reassessment on basis of disallowance in succeeding years ,if disclosure was made : ITAT Chandigarh

AO could not issue reassessment Notice if he did not have jurisdiction over assessee

Caveat -Section 148A Code of Civil Procedure 1908

CA Satbir Singh — Wed, 26 Oct 2016 04:37:04 +0000

Caveat

Section – 148A, Code of Civil Procedure, 1908

Right to lodge a caveat.[Inserted by Amendment Act, 1976, w.e.f. 1-5-1977.]

148A . (1) Where an application is expected to be made or has been made, in a suit or proceeding instituted, or about to be instituted, in a Court, any person claiming a right to appear before the Court on the hearing of such application may lodge a caveat in respect thereof.

(2) Where a caveat has been lodged under sub-section (1), the person by whom the caveat has been lodged (hereinafter referred to as the caveator) shall serve a notice of the caveat by registered post, acknowledgment due, on the person by whom the application has been, or is expected to be, made under sub-section (1).

(3) Where, after a caveat has been lodged under sub-section (1), any application is filed in any suit or proceeding, the Court shall serve a notice of the application on the caveator.

(4) Where a notice of any caveat has been served on the applicant, he shall forthwith furnish the caveator, at the caveator’s expense, with a copy of the application made by him and also with copies of any paper or document which has been, or may be, filed by him in support of the application.

(5) Where a caveat has been lodged under sub-section (1), such caveat shall not remain in force after the expiry of ninety days from the date on which it was lodged unless the application referred to in sub-section (1) has been made before the expiry of the said period.]

Analysis of Caveat :-

What is caveat:‘Caveat’ literally means “let him beware” [Aiyer’s Concise Legal Dictionary, (1995)]. Caveat petition is a precautionary measure which is undertaken by people usually when they are having very strong apprehension that some case is going to be filed in the court regarding their interest in any manner. A caveat is a caution or warning giving notice to the court not to take any step without notice being given to the party lodging the care at. Section 148-A of the code of civil procedure provides for lodging of a caveat. A caveat protects the caveator’s interest. The caveator is already ready to face the suit or proceedings which is expected to be instituted by his opponent. Hence no ex-parte order shall be passed against the caveator.
Purpose of Caveat:– In Nirmal chandra v. Girindra narayan, AIR 1978 Cal 492, the Calcutta High Court it was observed that the object of the introduction of Section 148 A for caveat in the Code was
- To afford an opportunity of hearing to a person as against whom a proceeding is likely to be instituted This was obviously with a view to avoid multiplicity of proceedings and
- To give an opportunity to the person as against whom proceedings have been lodged in the court of hearing so that injustice was not done to him and an order was not obtained or procured by hiding the facts which may have a relevance on the decision of the controversy.

In Seethaiah v. Govt. of A.P, AIR 1983 AP 443, too this view was supported that the intention of the legislature in making this provision is to enable the caveator-respondent to be heard before any orders are passed and no orders are passed by the Court ex parte that this is the intention of the legislature.

Rights and Duties of caveator: once a party is admitted to the status of a caveator, he is clothed with certain rights and duties. It is his duty to serve a notice of the caveat lodged by him by registered post on the person or persons by whom an application against the caveator for an interim order has been or is expected to be made. [Nirmal chandra v. Girindra narayan, AIR 1978 Cal 492.]
Rights and Duties of of applicant :- It is the duty of the applicant to furnish to the caveator forthwith at the caveator’s expense a copy of the application made by him along with the copies of papers and documents on which he relies. This provision thus makes it obligatory for the applicant to serve his application along with all copies and documents filed or intended to be filed in support of his application.[Reserve Bank of India Employees Association v. Reserve Bank Of India, AIR 1981 AP 246]
Rights and Duties of Court :-Once a caveat had been lodged, it is the duty of the court to issue a notice of that application on the caveator. This duty has been cast on the court obviously for the purpose of enabling the caveator to appear and oppose the granting of an interim relief in favour of the applicant. Although the expression, ‘notice of application’, has not been defined in the Code, it would include the date of hearing. It must, therefore, be taken that it is the duty of the court to give sufficiently reasonable and definite time to the caveator to appear and to oppose the application filed by the applicant. This duty of the court is in addition to the duty of the applicant under sub-section (4) and non-compliance with it defeats the very object of introducing Section 148-A and the breach thereof vitiates the order. Therefore, merely because the caveator refuses to accept the copy of the application from the applicant, the court is not absolved from serving the notice of the application to the caveator.[Siddalingappa v. Veeranna,AIR 1981 Kant 242].

Territorial jurisdiction issue can’t be raised after 30 days issuance of reassessment notice

CA Satbir Singh — Mon, 12 Sep 2016 14:03:18 +0000

Held

Section 124(3) stipulates a bar to any contention about lack of jurisdiction of an AO. It is not as if the provisions of the Act disable an assessee from contending that in the given circumstances the AO lacks jurisdiction; rather Section 124(3) limits the availability of those options at the threshold. The assessee upon receipt of notice of the kind mentioned in Clause (a) and (b) of sub- section 3 has the option to urge the question of jurisdiction; the expressed tenor and terms of the provisions clarify that such objections are to be articulated at the threshold or at the earlier points of time. The two points of time specified in section 124(3)(a) are as under:

(i)		Within one month from the date of service of notice or;
(ii)		After completion of assessment – whichever is earlier.”

HIGH COURT OF CALCUTTA

Elite Pharmaceuticals

Income-tax Officer, Ward 46(1), Kolkata

GIRISH CHANDRA GUPTA AND ARINDAM SINHA, JJ.

GA NO. 709 OF 2016
APO NO. 97 OF 2016
WP NO. 1172 OF 2015

AUGUST 3, 2016

R.N. Dutt and Mrs. Sutapa Roychowdhury, Advocates for the Appellant. Soumitra Mukherjee, Advocate for the Respondent.

ORDER

1. The facts and circumstances of the case are as follows :—

The appellants had earlier filed a writ petition challenging the survey conducted under Section 133A of the Income-tax Act on 6th February, 2015. Notices issued under Section 131 of the Income-tax Act also on 6th February, 2015; an order under Section 133A (3)(i)(a) dated 24th February, 2015 and a notice dated 27th March, 2015 issued under Section 148 of the Income-tax Act pertaining to the assessment years 2012-13, 2013-14 and 2014-15 were also challenged on the ground that the respondent nos.1 and 2 “had no jurisdiction over the case of the petitioners on and from 15th November, 2014 in view of the Notification dated 22nd October, 2014.”

2. The writ petitioner alleged that he had demanded justice by letters dated 12th February, 2015, 29th April, 2015 and 12th May, 2015 but the same had been denied to him.

3. The said writ petition was registered as WP No.655 of 2015 and the same was disposed of by an order dated 14th July, 2015 by the following order:—

“In such circumstances, this writ petition is disposed of with a direction upon the Income Tax Officer, Ward 46(1), Kolkata, to respond to the petitioner’s letter dated 29th April, 2015. Till such time the concerned authority responds, no consequential effect shall be given in respect of the survey conducted under section 133A of the Income Tax Act.”

4. The letter dated 29th April, 2015 was replied to by a letter dated 17th August, 2015 stating as follows:—

Item No.	Information sought for	Comments
1.	Reasons, if any, recorded for issuance of Notice u/s 148 of the Act	Reasons for reopening were already communicated to you through Post for the A.Y. 2012-13, 2013-14 & 2014-15
2.	CBDT’s Notifications, if any, showing that you have jurisdiction over the case after the aforesaid notification effective from 15.11.2014	Survey was conducted in the business premises of the assessee at No.74 and 75A, Narasingha Dutta Road, Howrach-711101 on 6th & 7th February, 2015 with proper authorization from the higher authority and the authorization was duly signed by the Joint Commissioner of Income Tax, Range-46, Kolkata. There was no challenge of jurisdiction at that time and the survey was concluded after impounding various materials as per list of books of accounts and/or other documents found in the premises of the assessee duly signed by Mr. Santosh Kr. Kundu, Partner of the Firm. Before, receiving the notice u/s 148 of the Act for A.Y. 2012-13, 2013-14 & 2014-15, the partner of the assessee had made various correspondences to the office of ITO, Ward-46(1), Kolkata by sending letters through speed post, wherein no challenge of jurisdiction was made. But after receiving the notice u/s148 of the Act for A.Y. 2012-13, 2013-14 & 2014-15, the issue of challenge of jurisdiction were came to their mind to avoid the penal action initiated by the department. You have also submitted a written submission to this office to treat the return for A.Y.2012-13, 2013- 14 & 2014-15 as return in responses to the notice u/s 148 of the Act on 12/05/2015 which is after expiry of 30(thirty) days from the date (27.03.2015) of service of notice, so you have no right to challenge the jurisdiction of Assessing Officer as per section 124(3) of the Act. Moreover, your firm had filed IT return for A.Y. 2014-15 through on line on 25th January, 2015, which is after the restructuring of the Income Tax Department. Therefore, you have intentionally filed you IT return after knowing the restructuring of the Department and hence your plea for challenging jurisdiction of this case does not hold. Hence, the service of notice u/s 148 of the Act remains valid and the proceedings initiated by way of servicing notice u/s 148 of the Act on the assessee for A.Y. 2012-13, 2013-14 & 2014-15 remain fully legal proceedings under the provisions of IT Act. On regards to Section 124(3) of the IT Act, the violation of CBDT’s Notifications does not arise in this particular case.
3.	Copy of satisfaction obtained from Ld. Commissioner of Income Tax, Kolkata-16, Central Board of Direct Taxes, if any, before issuance of such notice.	Section 151 of the Act provides the power to Assessing Officer, in this case ITO, Ward-46(1), Kolkata to issuance notice u/s 148 of the Act for A.Y. 2012-13, 2013-14 & 2014-15. Therefore, no need for satisfaction of the Commissioner of Income Tax, Kolkata-16, Kolkata in this particular case arises.

5. Challenging the aforesaid letter dated 17th August, 2015 and subsequent notice issued under Section 142(1) of the Income-tax Act on 9th September, 2015, WP No.1172 of 2015 was filed which was dismissed by an order dated 23rd February, 2016 by holding as follows:-

“Since it is evident that the petitioning assessee was precluded by Section 124(3)(b) of the Act from questioning the authority of the assessing officer who had issued the notices under Section 148 of the Act dated March 27, 2015 to the petitioning assessee on April 29, 2015, the contents of the letters dated April 29, 2015 and the objection as to jurisdiction contained therein had been rightly disregarded by the ITO, Ward-46(1), Kolkata.

Accordingly, WP No.1172 of 2015 is dismissed and the department is left free to take appropriate steps against the petitioners in accordance with law ”

6. Challenging the aforesaid order dated 23rd February, 2016, the appeal was filed. The question for determination is whether the aforesaid view taken by the learned Trial Court is correct in law ?

7. Evidently the learned Trial Court has agreed with the views expressed in the letter dated 17th August, 2015 by the assessing officer.

8. Mr. Dutt, learned Advocate appearing for the appellants, submitted that the assessee did not raise any objection contending that the assessing officer issuing notice under Section 148 had no jurisdiction and that somebody else had jurisdiction to do so. If this were the case, the question of determining as to which of the two assessing officers had jurisdiction to issue notice under Section 148 might have arisen. But the contention of the writ petitioner was that jurisdiction of the assessing officer who had issued notice under Section 148 and had also conducted other various activities prior thereto had been taken away by this circular issued by the CBDT on 22nd October, 2014 which became effective on 15th November, 2014. Therefore, the contention was that any step taken by the assessing officer subsequent to 15th November, 2014 was without jurisdiction. He submitted that in deciding the question whether the steps taken by the assessing officer were without jurisdiction, Section 124 did not give any assistance. Therefore, reliance placed upon sub-section (3) of Section 124 by the assessing officer and subsequently upheld by the learned Trial Court are both erroneous.

9. He in support of his submission relied on a Judgement of the Apex Court in the case of Raza Textiles Ltd. v. ITO [1973] 87 ITR 539 wherein the following views expressed:—

“The question whether the jurisdictional fact has been rightly decided or not is a question that is open for examination by the High Court in an application for a writ of certiorari. If the High Court comes to the conclusion, as the learned single judge has done in this case, that the Income-tax Officer had clutched at the jurisdiction by deciding a jurisdictional fact erroneously, then the assessee was entitled for the writ of certiorari prayed for by him. It is incomprehensible to think that a quasi-judicial authority like the Income-tax Officer can erroneously decide a jurisdictional fact and thereafter proceed to impose a levy on a citizen. In our opinion, the Appellate Bench is wholly wrong in opining that the Income-tax Officer can “decide either way”.

10. We have not been impressed by the submissions advanced by Mr. Dutt.

11. The objection raised by the appellants was in essence an objection to the territorial jurisdiction of the assessing officer who had issued the notice under Section 148 and before that had conducted various proceedings including search, seizure and survey. Sub-section 3 of Section 124 precludes an assessee from questioning the jurisdiction of an assessing officer except in the manner laid down therein. It will be convenient to notice sub-Section 3 of Section 124, which reads as follows:—

“(3) No person shall be entitled to call in question the jurisdiction of an Assessing Officer-

(a)		where he has made a return [under sub-section (1) of section 115WD or ] under sub-section (1) of section 139, after the expiry of one month from the date on which he was served with a notice under sub-section (1) of section 142 or [sub-section (2) of section 115WE or] sub-section (2) of section 143 or after the completion of the assessment, whichever is earlier;
(b)		where he has made no such return, after the expiry of the time allowed by the notice under [sub-section (2) of section 115WD or sub-section (1) of section 142 or under sub-section (1) of section 115WH or under section 148 for the making of the return or by the notice under the first proviso to section 115WF or under the first proviso to section 144] to show cause why the assessment should not be completed to the best of the judgement of the Assessing Officer, whichever is earlier;
[(c)		where an action has been taken under section 132 or section 132A, after the expiry of one month from the date on which he was served with a notice under sub-section (1) of section 153A or sub-section (2) of section 153C or after the completion of the assessment, whichever is earlier.]”

12. Admittedly, the objection was not raised by the appellants within 30 days even from the date of issuance of notice under Section 148. The objection was raised by a letter dated 29th April, 2015 and the notices under Section 148 were received on 27th March, 2015. It is not also possible to contend that the period of limitation shall commence only from the date of issuance of the notice under Section 148. Notice under Section 148 was issued because prior thereto search and seizure was conducted and thereafter survey was conducted presumably leading to incriminating discovery. Thereafter documents were impounded and it is on the basis of these steps that the notice under Section 148 was issued. Each one of these steps was taken subsequent to 15th November, 2014 but the writ petitioner did not raise any objection.

13. Mr. Dutt submitted that the writ petitioner-appellants did not raise any objection because he had no knowledge of the change of jurisdiction made by the notification issued by the CBDT referred to above. It may be true that the writ petitioners did not have knowledge of the aforesaid notification but limitation on that account shall not remain suspended nor can the period during which the writ petitioner- appellant was ignorant about the change of jurisdiction can be excluded because that would be contrary to Section 124(3).

14. The judgement in the case of Raza Textiles Ltd. (supra) is not applicable to the facts and circumstances of this case. What had happened in that case was that a demand for more than Rs. 1.39 lakhs was made from the assessee on the ground that he had paid Rs. 2 lakhs on account of commission to a non-resident. It was contended that the assessee, therefore, was liable to deduct tax. But the assessee’s case was that the payment was not made to a non-resident.

The Learned Single Judge of the High Curt was of the opinion that the payment was not made to a non-resident. In an appeal preferred by the revenue, the Division Bench held that:—

“In the present case the question before the Income-tax Officer, Rampur, was whether the firm Nathirmal and Sons was non-resident or not. There was material before him on this question. He had jurisdiction to decide the question either way. It cannot be said that the officer assumed jurisdiction by a wrong decision on this question of residence.”

This finding of the Division Bench did not find favour from Their Lordship of the Apex Court. Their Lordship were of the opinion that a quasi-judicial authority like the Income-tax officer could not assume jurisdiction by deciding a jurisdictional fact wrongly. Here, no question arose of deciding any jurisdictional fact wrongly.

15. The assessee had questioned the territorial jurisdiction of the assessing officer and the assessing officer held that the assessee had lost the right to raise the objection by efflux of time. We, as such, find no substance in the case of the appellant.

16. Mr. Mukherjee, learned Advocate appearing for the revenue, drew our attention to a judgement of the Delhi High Court in the case of CIT v. Shri Shyam Sunder Infrastructure (P.) Ltd. [IT Appeal No. 236 of 2014] wherein the following views were taken :—

“Facially, Section 124(3) stipulates a bar to any contention about lack of jurisdiction of an AO. It is not as if the provisions of the Act disable an assessee from contending that in the given circumstances the AO lacks jurisdiction; rather Section 124(3) limits the availability of those options at the threshold. The assessee upon receipt of notice of the kind mentioned in Clause (a) and (b) of sub- section 3 has the option to urge the question of jurisdiction; the expressed tenor and terms of the provisions clarify that such objections are to be articulated at the threshold or at the earlier points of time. The two points of time specified in section 124(3)(a) are as under:

(i)		Within one month from the date of service of notice or;
(ii)		After completion of assessment – whichever is earlier.”

17. We are in agreement with the view expressed by the Delhi High Court. In that view of the matter, the appeal fails and is dismissed.

18. Parties shall, however, bear their own costs.

All interim orders stand vacated.

Functionality for generation of Scrutiny notice u/s 143(2)/148

CA Satbir Singh — Tue, 02 Aug 2016 11:03:47 +0000

DIRECTORATE OF INCOME TAX (SYSTEM)
ARA Center, Ground Floor, E-2, Jhandewalan Extension,
New Delhi – 110055

ITBA-Assessment Instruction No. 2

F.No. System/ITBA/Instruction/Assessment/16-17/177 Dated: 01/08/2016

The Principal Chief Commissioners of Income-tax/ CCsIT (By Name)

Ahmedabad/ Allahabad/ Amritsar/ Bangalore/ Baroda/ Bhopal/ Bhubaneshwar/ Bareilly/Chandigarh/ Chennai/ Cochin/ Coimbatore/ Dehradun/ Delhi/ Durgapur/ Guwahati/Huhli/ Hyderabad/ Indore/ Jaipur/ Jalpaiguri/ Jodhpur/ Kanpur/ Kolkata/ Lucknow/Ludhiana/ Madurai/ Meerut/ Mumbai/ Nagpur/ Nashik/ Panaji/ Panchkula/ Patna/ Pune/Raipur/ Rajkot/ Ranchi/ Shimla/ Shillong/ Surat/ Thane/ Trichy/ Trivandrum/ Udaipur/Vishakhapatnam; and

The Principal Commissioner of Income-tax/CsIT/CsIT(CO) (By Name)

Agra/ Bikaner/ Calicut/ Dhanhad/ Gandhinagar/ Gwalior/ Jabalpur/ Jalandhar/ Kolhapur/ Muzzaffarpur/ Mysore/ Patiala/ Rohtak/ Sambalpur/ Varanasi/ Vijayawada/ Delhi(C0]/ Mumbai(C0)/ Chennai(C0)/Ahmedabad(C0)/Bangalore(C0)/Bhopal(C0)/ Bhubaneshwar (CO)/ Kolkata(C0)/ Cochin(C0)/ Chandigarh(C0)/ Hyderabad(C0)/ Jaipur(C0)/ Kanpur(C0)/ Patna(C0)/ Pune(C0)/ Guwahati(CO)/ Nagpur(C0)/ Lucknow (CO).

Subject: Launch of Income Tax Business Application (ITBA) – Assessment Module – Phase 2 (Selection of Compulsory/Through Approval Cases and Generation of Notice u/s 143(2) and 148) – Reg

Sir/Madam,

This is in reference to the subject mentioned above. The functionality for selection of cases and for generation of notice u/s 143(2)/148 will be made available w.e.f. 01/08/2016 in Income Tax Business Application (ITBA) as per the following details:

1. The Assessment Module under ITBA can he accessed by entering the following URI, in the browser: http://itba.incometax.gov.in/

The path for Assessment module is: ITBA Portal -Login —> Modules —>Assessment.

Following functionalities available to the User in ITBA-Assessment module:-

a. Define Parameters for Compulsory Selection of Return for Scrutiny – This process will provide the facility to view the consolidated list of parameters defined for scrutiny under compulsory category for all Financial Years and select/add/edit the parameters for current F.Y. Parameters as per Instruction No 4/2016 are available for selection. This process will only be accessible to the CASS Administrator.

b. Selection of Cases for Scrutiny – This process will include selection of cases for scrutiny u/s 143(3) under Compulsory or Through Approval Category and selection of cases u/s 147. (Refer CBDT Instruction No. 04/2016)

c. Approval of Proposed Cases u/s 143(3)/147 – This process will include approval of cases proposed by AO by relevant approving authority through system workflow. However, in case approval is already taken outside the system, then AO will be able to capture the approval details manually without initiating proposal approval workflow in the system.

d. Generation of Notice u/s 143(2)/148 through System – This process will provide generation of notices in bulk/case-wise for all the cases selected for scrutiny , in the system.

e. Generation of Notice u/s 143(2)/148 through Manual to system – This process will provide functionality to upload the scanned copy of notices which have already been issued outside the system.

f. View Notices Generated u/s 143(2)/148 – AO will be able to view the list of notices generated either through system or through manual to system.

g. View/Download Notices/Letters/Orders – AO and their Inspector/Staff will be able to view and download the notices generated u/s 143(2)/148 either through system or uploaded through manual to system.

h. List of Notices, Orders and Letters – AO will be able to re-generate the notices generated earlier u/s 143(2)/148 through system.

i. View/Edit Dispatch Register – AO and their Inspector/Staff will be able to enter the dispatch details for the notices generated u/s 143(2)/148 either through system or uploaded through manual to system.

j. Cancellation of Notices (148/143(2) – Compulsory and Through Approval Category) – AO will he able to cancel the cases pending for notice generation after capturing relevant approving authority details and reason for cancellation.

k. Cancellation of Notices (143(2) – CASS) – CASS Administrator will be able to cancel the cases pending for notice generation after capturing reason for cancellation.

2. CASS Administrator will work in ITBA Assessment module for defining parameters for compulsory selection of ITRs for scrutiny, in the system. Parameters will be defined in the system financial year wise based on the MT’s instruction applicable for the year. Parameters based on Instruction No. 4/2016 are included in the list of Reasons.

3. AO will work in ITRA– Assessment module for selection of cases for scrutiny u/s 143(3) under Compulsory or Through approval category and for selection of cases u/s 147. Further, facility for generation of notice u/s 143(2)/148 for cases selected is also provided. For such cases generation of notice u/s 143(2)/148 in ITD-AST application will not be available.

4. After Go-live, AO will not be able to select cases for scrutiny u/s 143(3)/147 in ITD-AST application. Going forward, no cases are to be selected in AST anymore.

5. Notice should be printed through the system directly. In the rare event that any notice could not be generated through the system, AO should upload the scanned copy of notice issued outside the system through manual to system option.

6. AO Staff/AO Inspector will not be able to generate the notice but will be able to view the notices already generated by the AO for taking a printout of the same, for issue to the assessee.

7. User will be able to enter the dispatch details of notice issued u/s 143(2)/148 in View/Edit Dispatch Register Screen. It is recommended to scan and upload the document of proof of delivery as attachment while entering the service date.

8. AO will also he able to cancel the cases, which for some reason, are mistakenly selected. In case, selection of a case is required to be cancelled after approval , then an offline request is to be made to the Approving authority and after obtaining consent of the Approving authority, same is to be recorded in the system and thereafter such selection will be cancelled. In case a request for selection was pending for approval, then AO can request the Approving authority to return the workitem to AO for clarification and the AO can then cancel such proposal and an FYI will be sent to the Approving authority. No notice will be generated for such cancelled cases.

9. In second phase, only selection of cases and notice generation functionality is available in ITBA. The functionality for completing scrutiny Assessment u/s 143(3)/147 for notices generated in 1TBA (i.e. computation and order passing) will also be enabled in ITBA in the upcoming phases.

10. For cases selected under CASS, in case PAN is transferred prior to issue of notice, pendency will also be transferred from Source AO to Destination AO for notice generation.

11. However, for cases under approval or pending for notice generation u/s 143(2) for Compulsory or Through Approval category or notice u/s 148, pendency will be automatically cancelled by system in case of PAN Transfer. MIS will be created for such cases which were under process of selection and got cancelled prematurely, owing to transfer. The destination AO will have to start selection process afresh.

12.Further, list of liable cases cancelled due to PAN transfer will be available in the form of MIS to Destination AO for initiating selection of cases again.

13. The communication address for notice generation u/s 143(2)/148 by default will he the address in the latest return. However, user will be able to edit the same.

14. AO must ensure that his/her office details – Popular name, designation based email -Id, office phone number, Room number and Room name are correctly displayed so that the Notice u/s143(2)/148 is properly generated. In case of any error or incomplete office particulars, the functionality of updating office information is available in IIRMS through Update Office Information link.

15. User will be able to update the popular name, room number, room name, office phone number and designation based e-mail ID so that correct details will be reflected in Notice u/s 143(2)/148. Data will be updated on click of Submit button. However, popular name will be updated only after approval of RCC admin.

16. There are certain particulars displayed on the notice, letters etc. which cannot be changed by the user himself. In case of any error/changes in the Building name and Building address, user will be required to contact the RCC administrator who has been authorised to make the necessary changes.

17. Existing users of AST module in ITD application will be provided with corresponding roles in ITBA by RCC Administrators. Users will be required to login to the existing ITD application and change their password before logging into ITBA. Refer Directorate’s Letter F.No. System/ITBA/Instruction/Portal/157/2015-16 dated 10.07.2015 for details on accessing ITBA.

18. Relevant users will need their individual name based department e mail IDs and RSA tokens. The username and password will he communicated on their respective name based departmental email ID. The login to the system will be through the username and password (sent on the individual email ID) along with RSA PIN and RSA token over the Taxnet nodes. Users are advised to contact their respective RCC Admin for the name based departmental email ID.

19. Users on Windows XP system are advised to download the Chrome (version 43) or Firefox (version 36) browser (if unavailable) from ITBA Portal Download PreRequisities to access the new ITBA application.

20. Training material including user manual, help content and frequently asked questions (FAQs) are available on the Assessment Module Home Page and on ITBA Portal – Online Training on ITBA. Users can refer these in case of any issues.

21. Users are advised to contact helpdesk in case of any issues in respect of the ITBA.

a. URL of helpdesk – http://itbahelpdesk.incometax.net

b. Help desk number – 0120-2772828 – 42

c. Email Ill – helpdesk_messaging@incometax.gov.in

d. Help desk Timings – 8.30 A.M. – 7.30 P.M. (Monday to Friday)

Yours faithfully,

(Ramesh Krishnamurthi)

AddI.DG(S)-3, New Delhi