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TMI Blog2010 (2) TMI 776X X X X Extracts X X X X X X X X Extracts X X X X ..... 15-2-2010 - D.R. Singh, R.C. Sharma, JJ. N.K. Chand, Sr DR for the Appellant K.C. Singhal, Adv., for the Respondent ORDER R.C. Sharma: This is an appeal filed by the Revenue against the order of CIT(A) dated 29.12.2008 for the AY 2005-06 in the matter of order passed u/s 144/147 of the IT Act. Following grounds of appeal have been taken by the Revenue:- "1. On the facts and in the circumstances of the case, the ld. CIT(A) has erred on facts and in law in quashing the reassessment u/s 147 on the ground of no satisfaction by JCIT as it is the case of an Assessing Officer below the rank of JCIT or DCIT as per the provisions of Section 151 disregarding the facts that the assessee's case does not fall under the purview of sub-section 1 of section 151 as any Assessing Officer can issue notice u/s 148 himself upto 4 years from the end of relevant assessment year where no assessment order has been passed u/s 143(3) or 147. 2. On the facts and in the circumstances of the case, was the ld. CIT(A) right on facts and in law in quashing the reassessment u/s 147 being invalid and refused to consider the additions in the reassessment on merits? 3. That the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessee on 18-19/01/2006, in response to which the assessee filed the return on 14.02.2006 declaring the income of Rs.3,49,790/- as found in audited accounts. Thereafter, the AO issued the notices u/s 143(2) and 142(1) with a detailed letter dated 25.07.2006 and in response to which the counsel of the assessee filed objections with regard to reasons for reopening on 07.08.2006, and the same were disposed off by the AO by a detailed letter dated 10.08.2006. The AO also issued notices u/s 142(1) and 143(2) alongwith the letter dated 18.09.2006 giving a final opportunity for compliance. Finally, the counsel of the assessee appeared on 09.10.2006 and submitted his reply. 3. After considering assessee's contention and reply filed by him, the AO framed assessment u/s 144/148 wherein addition was made by computing 8% profit on total turnover of Rs.1,54,49,500/-, unexplained loan of Rs.13.77 lakhs, unexplained investment in the construction business at Rs.14.44 lakhs. Thus, after taking into account the income declared by the assessee and the addition so made, the total income was assessed at Rs.41,88,100/-. In an appeal filed before the CIT(A), the CIT(A) annulled the assessment by obs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ies. 5. Shri N.K. Chand, Sr. DR appeared on behalf of the Revenue and contended that since the original return was not filed within the time stipulated u/s 139(1), there was no authority for filing the revised return u/s 139(5) of the IT Act. He further drew our attention to the fact that neither in the acknowledgement of return filed on 28.5.2005', there was any mention of return having been filed under audit or in the computation of income so enclosed with the return. He further submitted that the revised return so filed after survey having been carried out and incorporating the income found during the course of survey, will not amount to revised return as contemplated u/s 139(5). In support of this proposition, he relied on the decision of Hon'ble Kerala High Court in the case of A.Sreenivasa Pai -242 ITR 29. 6. Learned DR also placed on record explanatory memorandum of Finance Bill 2009 wherein it was observed that Explanation to Section 147 was inserted to have a retrospective amendment w.e.f. 1.4.1989 empowering the AO to assess or reassess the income in respect of any issue which comes to his notice subsequently in the course of proceedings under this Section, notwit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct that it was a case of audited return u/s 44AB. We have verified the acknowledgement of the return filed on 28th September, 2005 as well as computation of income enclosed with the return which nowhere indicate that it was an audited return. In this return, the source of business income of Rs.1,20,000/- has been disclosed as out of purchase and sale of residential house, whereas as per the revised return, the income was disclosed on account of construction and sale of flats at Rs.3,20,000/-. After filing of original return on 28.9.2005, there was survey at the assessee's business premises on 17.11.2005 wherein audited balance sheet and profit and loss account were found wherein turnover of the assessee was shown at Rs.1.54 crores and net profit was shown at Rs.3.20 lakhs. As per the audited balance sheet found during survey, loans payable were shown at Rs.13.77 lakhs. However, the books of account were not produced but thereafter statement of the auditor of accounts were recorded wherein he confessed that he has audited the books of account and the same were presented before him. Since evidence found during the survey revealed that the assessee had undertaken construction work on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the AO should have finally ascertained the fact by legal evidence or conclusion. Under Section 147, as substituted w.e.f. 1.4.1989, if the AO had reason to believe that income had escaped assessment, it confers jurisdiction to reopen the assessment where the case is not covered by the proviso to Section 143. Mere filing of return after survey by including the amount found to be not disclosed in the original return cannot be equated with disclosure of income by the assessee suo-moto. 10. In the instant case, the original return which was to be filed u/s 139(1) on or before 30th August 2005, was filed on 28.9.2005, which is apparently belated, there is no authority to file revised return u/s 139(5) of the Act. As we have already observed that it was not a case of audited return, the return filed on 28.9.2005 was a belated return, which can not be revised u/s 139(5) of IT Act. Furthermore, in terms of decision of Kerala High Court in case of A.Sreenivasa Pai - 242 ITR 29, the return filed after survey incorporating the income of construction business as per audited profit and loss account found during survey does not amount to revised return in accordance with provision of Se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nal return filed on 28.9.2005. While deciding in favour of the assessee, the CIT(A) has relied on the proposition of law laid down by the Hon'ble Jurisdictional High Court in the case of Vipan Khanna (supra). During the course of hearing, learned DR placed on record the subsequent decision of the Hon'ble Jurisdictional High Court in the case of Shakuntala Devi (supra) wherein after considering the law laid down in the case of Vipan Khanna (supra), the Hon'ble High Court held that even during pendency of proceedings u/s 143(2) for which the time has not elapsed, recourse could be had to the provisions of Section 147. It was further held that in view of Explanation to Section 2(b) of Section 147 as substituted by Direct Tax Laws (Amendment) Act, 1987 w.e.f. 1.4.1989, the reopening of the assessment was valid. With regard to the contention of learned AR that Explanation to Section 2(b) of Section 147 cannot be invoked, we find that in the explanatory memorandum in the Finance Bill, 2009 relating to clarificatory amendment in respect of reassessment proceedings u/s 147, it was provided that AO may assess or reassess income in respect of any issue which comes to his notice subsequently ..... X X X X Extracts X X X X X X X X Extracts X X X X
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