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TMI Blog2020 (6) TMI 239X X X X Extracts X X X X X X X X Extracts X X X X ..... Because, in such cases the AO might have verified the original return of income at the time of issue of notice u/s148 of the act, if he does not find such information in the return, then only he issues notice u/s 148 of the act. Otherwise, why he would issue a notice if the information is available in the original return it. We do not agree with the proposition that even in such a situation as mentioned by us above, the notice issued u/s143 (2) of the act by the Ld. AO on the same date of the date of filing of the return can be found fault with. In the present case, the return of income filed by the assessee was accompanied with the competition of income, the trading and profit and loss account as well as the balance sheet of the assessee along with the fixed assets account and capital account. At the time of issue of notice, the AO was merely having information about cash deposit of ı 1297900 in his savings bank account maintained with Indusind Bank Limited. AO did not have any information about what kind of business assessee is doing, whether the bank account in which alleged is deposited, whether that appears in the balance sheet of the assessee. Whether the level of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessee in cash in his bank account, which were added by the Ld. assessing officer, has unexplained credit u/s68 of the income tax act. e. Ground number [5] of the appeal challenges the action of revenue in making an addition of ı 88,000 on account of alleged love profit. f. Ground number [6] of the appeal relates to the charging of interest u/s234A 234B. 3. Assessee also moved an application for admission of the additional ground as per letter dated 22 May 2020. The additional grounds raised under (i) That the notice u/s143 (2) of the act dated 9/11/2016 is invalid as the same was issued and served on the spot on the date of filing of return of income and therefore the impugned order of assessment dated 28/12/2016 u/s147/143 (3) of the act is without jurisdiction and deserves to be quashed as such. (ii) That addition made and disputed in the present appeal on account of alleged unexplained cash credit of u/s 68 of the act and alleged low net profit are beyond the scope of assessment as determined in the reasons recorded u/s148 (2) of the act and therefore illegal and untenable 4. Assessee submitted that additional ground number [1] raised speaks that asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d. AO initiated action u/s 147 of The Income Tax Act on the basis of annual information return [AIR] information available on the ITD system that assessee has made cash deposit of ı 12,97,900/ in his savings bank account maintained with Indusind Bank during financial year 2009 10 relevant to assessment year 2010 11.Ld. AO also noted that assessee has not filed his return of income for relevant assessment year and therefore after recording reasons in this regard and after obtaining necessary approval, ITO Ward 5, Hissar issued notice u/s148 of the act on 14/3/2016. Subsequently the case was transferred to the present AO ITO Ward-2, Hissar. Notice u/s142 (1) of the Act was issued on 6/7/ 2016 asking assessee to file a return of income and furnish requisite information. It did not evoke any response from assessee and therefore another notice was issued u/s142 (1) on 05/7/2016. In response to that, counsel of assessee requested for adjournment however, no compliance was made. As there was, no compliance on the part of assessee, ld. AO issued show cause notice u/s144 of The Act on 7/8/2016. In response to that assessee furnished his income tax return on 9/11/2016 declaring inc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rriage but a hydraulic excavator machine, it does not fall in the category of vehicle used in plying and transportation business. Therefore he applied provisions of section 44AD and estimated the profit at the rate of 8% of the total receipts amounting to ı 1,74,604/-. As assessee has declared a profit of ı 8 6576 only, balance addition of ı 88,000/- was made to total income of assessee. Consequently, total income of assessee was assessed at ı 10,68,580/ against returned income of ı 86,580/ . Assessment order was passed u/s147 read with section 143 (3) of the act on 20 April 2016. 6. Assessee aggrieved with the order of Ld. AO, assessee preferred an appeal before the Ld. CIT (A) Hissar, dismissed it as per order on 25/3/2019. Therefore, assessee is aggrieved with that order has preferred appeal before us. 7. Coming to the first additional ground raised by the assessee, which is that notice issued u/s143 (2) of the act dated 9/11/2016 is invalid. As per assessee, it was issued on the spot on the date of filing of return of income along with questionnaire. As per him, ld. AO should have applied his mind before issue, so which cannot be applied if notic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d on 9/11/2016 itself for fixing hearing on 15/11/2016 and served upon the assessee s counsel on the spot. This action of the Ld. AO has been challenged by the assessee. It is that provisions of section 143 (2) provides that where the return has been furnished u/s139, or in response to a notice under subsection (1) of section 142 can be issued by AO, if, considers it necessary or expedient to ensure that assessee has not understated the income or has not computed the excessive loss or has not under paid the tax in any manner, serves on the assessee a notice requiring him on a date to be specified therein, either to attend the office of the AO or to produce or cause to be produced before the AO any evidence on which the assessee may rely in support of the return. Therefore, Moment return of income is filed the Ld. AO is required to apply his mind to ascertain whether it is considered necessary or expedient to ensure that assessee a. has understated the income or b. has not computed excessive loss or c. has not under paid the tax then only he shall serve the notice to the assessee. Thereby it implies that the AO has to apply his mind before issuing notice u/s143 (2) of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... m the end of the financial year in which the return is furnished.] 11. The most important is that before issue of Notice u/s 143 (2), he must apply his mind whether he considers it necessary or expedient. Possibly, he can do so the moment, he goes through the return of income, or possibly, he may exhaust the full time allowed to him, i.e. six months from the end of the AY in which return is filed. Section 143 (2) contemplates making an assessment of the income of the assessee by issue of notice. The two important words used are necessary and expedient . the word expedient is more comprehensive and generally deals with the wider range of situations than necessary . Circumstances warranting expedience is incapable of putting in to a compass box; generally it would cover wide range of criteria for selection of cases such as scrutiny assessment. The word necessary is limited in its sphere compared to expedient and is applicable generally in the cases where reassessment or any other mandatorily warranted assessments to be made. 12. Now the moot question that arises whether AO could have applied his mind on the return of income furnished by the assessee and considered ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ly, the said contention cannot be raised before us for the first time. 9. However, even if we accept what the learned counsel for the appellant / revenue submits, it does not make the case any better for him. In para 3.4 of the memorandum of appeal, the appellant has stated that the return was filed by the assessee on 27.03.2000 and the notice under Section 143(2) was served upon the Authorized Representative of the assessee by hand when the Authorized Representative of the assessee came and filed return. However, the date of the notice was mistakenly mentioned as 23.03.2000. 10. Assuming the aforesaid to be true, the notice was served on the Authorized Representative simultaneously on his filing the return which clearly indicates that the notice was ready even prior to the filing of the return. . 11. The provisions of Section 143(2) make it clear that the notice can only be served after the Assessing Officer has examined the return filed by the assessee. Whereas what para 3.4 indicates is that when the assessee came to file the return, the notice under Section 143(2) was served upon the Authorized Representative by hand. Thus, even if we take the statement of the As ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that AO may on looking at the notice itself find it necessary to issue the notice u/s 143(2) of the act. Thus imputing waiting time to the AO for issue of notice u/s143 (2) of the act is perhaps not justified. Because, in such cases the AO might have verified the original return of income at the time of issue of notice u/s148 of the act, if he does not find such information in the return, then only he issues notice u/s 148 of the act. Otherwise, why he would issue a notice if the information is available in the original return it. All the decisions, cited before us by assessee, fall into the second situation narrated by us. The decisions cited by the Ld. authorized representative are all of SMC whereas the division bench (same combination) has taken a view in Surana Enterprises V ITO ( ITA no 5414/Del/2018) dated 26/5/2020 as under:- 21. The assessee has raised an over argument that on the date of compliance with the notice of 148 issued by the assessing officer, the AO has issued the Delhi Cooperative Thrift Credit Society Ltd Vs. ITO, ITA No. 2894/Del/2018 (Assessment Year: 2014-15) Page 15 notice u/s143 (2) of the act on the same date. Therefore, the notice issued by th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion available with him. If in such cases, when assessee files return, issuing notice u/s143 (2) of the act to the assessee on the spot perhaps shows that AO has not applied his mind on the return furnished by the assessee. Naturally AO will have to look at the AIR information or any other tangible material based on which notice u/s 148 of the act is issued, compare it with the details available in the return of income, then he can say that it is necessary to issue notice to the assessee. It may happen that assessee might have filed the return incorporating the income covered in 148 notices. Thus, the issue is in such circumstance AO may need some time for verification. 18. The present case is one-step higher than third situation. In the present case, the return of income filed by the assessee was accompanied with the competition of income, the trading and profit and loss account as well as the balance sheet of the assessee along with the fixed assets account and capital account. At the time of issue of notice, the AO was merely having information about cash deposit of ı 1297900 in his savings bank account maintained with Indusind Bank Limited. AO did not have any informat ..... X X X X Extracts X X X X X X X X Extracts X X X X
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