SHRI RAMESH RAO NANARAO MARATHA,NEEMUCH vs. THE ITO, NEEMUCH

आदेश / O R D E R

PER KUL BHARAT, J.M: This appeal by the Assessee is directed against the order of Ld. Commissioner of Income Tax (Appeals), Ujjain, (in short ‘CIT(A)’), dated 03.07.2014 pertaining to the A.Y. 1997-98. The Assessee has raised the following grounds of appeal: “1. The Ld. CIT(A) has erred in confirming the time barred assessment as the captioned notice u/s 148 was not served

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upon the assessee within the time prescribed under the IT Act., 1961. 2. That Ld. CIT(A) has erred in confirming the action of the Ld. AO for reopening the assessment u/s 147 on the ground that the Ld. CIT(A) in proceedings u/s. 263 in the case of Shri Parasmal Gopawat has held that he is a name lender. 3. No such direction or conclusion were arrived at by the Ld. CIT(A) in action u/s 263. He merely set aside the assessment for investigation in the matter about genuineness of entries, which does not mean that he was proved to be name lender. 4. The assessment in the case of Shri Parasmal Gopawat was made u/s 263 without making any enquiry. The assessment was made on protective basis. 5. The Ld. CIT(A) has erred in confirming the action of the Ld. AO for reopening of the reassessment is bad in law since the assessee has filed all the material required for the purpose of assessment. The assessment framed since bad in law be set aside/annulled. 6. The Ld. CIT(A) has erred in confirming the addition of Rs.4,00,000/- knowing the facts that loan was taken through account payee cheque and also paid through account payee cheque. And further erred in confirming the interest paid thereon at Rs.60,000/-.” 2. Briefly stated the facts are that the case of the assessee was reopened and the assessment u/s 143(3)/147 of the Income Tax Act, 1961(hereinafter called as ‘the Act’) was framed vide order dated 31.03.2005. The AO made addition on account of cash credit including interest at Rs.5,75,000/- and Rs.23,000/- on account of low withdrawal for house hold expenses. Aggrieved by this the assessee preferred an appeal before the Ld. CIT(A) who after considering the submissions partly allowed the appeal. Thereby, the Ld. CIT(A) confirmed the addition of Rs.4,75,000/- made on account of cash credit and restricted the

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addition on account of low withdrawals for household at Rs.23,000/-.Aggrieved by this the assessee is in present appeal. 3. Ground No. 1 is against the validity and legality of the reassessment made by the AO. The Ld. counsel for the assessee reiterated the submissions as made before the Ld. CIT(A). Ld. DR opposed the submissions and supported the order of the authorities below. 4. We have heard the rival contentions and perused material available on record and gone through the orders of the authorities below. The contention of the assessee are two fold, first the assessee has stated that the notice u/s 148 was not served upon the assessee within the time prescribed under the Act. The assessment year involved is 1997-98, as per the assessment order notice u/s 148 dated 31.03.2004 was sent by speed post on 31.03.2004, which was returned un-served. The notice was finally served on 23.11.2004 by way of affixture. The assessment was concluded on 31.03.2005, the reason for reopening of the assessment was that the assessee had claimed loan of Rs.2,00,000/- from Shri Parasmal Gopawat on 01.07.1996. It is observed by AO that Shri Parasmal Gopawat was merely a name lender and real beneficiary was the assessee. It is contended on behalf of the assessee that the entire material was furnished before the Assessing Officer during the original proceedings. Hence, the re-opening is merely on the basis of change of opinion that is not permissible under law. Preliminary, issue is whether the assessment was reopened u/s 147 within the

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time as prescribed under the Act. For the sake of clarity section 148 is reproduced as under: “Before making the assessment reassessment or re-computation 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 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 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)n 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, reassessment or re-computation 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 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 143, but before the expiry of the time limit for making the assessment, reassessment or re-computation 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 4

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on or after the 1st day of October, 2005 in responses 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.

Further section 149 of the Act prescribes time limit of issuance of such notice which is reproduced as under: “(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) [for clause(c)} b) If four year, 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] c) If four years, but not more than sixteen years, have elapsed from the end of the relevant assessment year unless the income in relation to any asset (including financial interest in any entity) located outside India, chargeable to tax, has escaped assessment. Explanation- In 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 re- computation 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 years. Explanation_ for the removal of doubts, it is hereby clarified that the provisions of sub-section (1) and (3) as amended by

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the Finance Act, 2012, shall also be applicable for any assessment year beginning on or before the 1st day of April, 2012.} 5. The Ld. CIT(A) has decided this issue of limitation in para 4.1 as under: “ Through these grounds the appellant has challenged the notice issued u/s 148 of the I.T. Act. In the assessment order it has been mentioned by the AO that the notice u/s 148 has been issued on 31.03.2004. The notice returned unserved with the remark from the postal authorities. The AO has sent the notice by speed post on 31.03.2004. As per the postal act the same is considered served on 31.03.2004. Therefore the notice u/s 148 is not time barred. The proceedings u/s 263 of the I.T. Act in the case of Shri Parasmal Kumawat is within the power of CIT and same is not requires any adjudication here. The AO can issue the notice u/s 148 of the I.T. Act if something adverse comes to his knowledge when the information is gathered from other assessee. Therefore, action of the AO is confirmed. The appeal of these ground is dismissed.

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“4. In the present case, the return was filed on October 31, 2001, and in terms of section 143(2) the notice had to be served on the assessee on or before October 31, 2002. The argument is that there were two modes of service, i.e., by speed post as well as by a process server. The date of service, so far as speed post is concerned, is said to be November 1, 2002, but so far as the process server is concerned it is stated to have been affected on October 31,2002. The Tribunal has accepted the contention of the assessee that the date of service through speed post was November 1,2002. Even before us, the appellant has not produced any material to suggest that the notice sent by speed post was served on any earlier date. On the other hand, it is sought to be contended that since the notice was dispatched by speed post on October 30, 2002, that should be the deemed date of service. We are unable to agree. So far as service by speed post is concerned, one point stands covered against the Revenue in CIT v. Lunar Diamonds Ltd. (2006) 281 ITR 1(Delhi).”

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Sd/- Sd/- (MANISH BORAD) (KUL BHARAT) ACCOUNTANT MEMBER JUDICIALMEMBER Indore; �दनांक Dated : 09/ 03/2018 ctàxÄ? P.S/.�न.स.

Copy to: Assessee/AO/Pr. CIT/ CIT (A)/ITAT (DR)/Guard file. By order Private Secretary/DDO, Indore