INCOME TAX ACT, 1961

Section 147 Section 143((2)

Reassessment - Validity - Assessee pleading non-issuance of section 143(2) notice by AO -

In compliance to notice under 148, no return of income has been initially filed and thereafter, in response to notice under section 142(1), return of income which was filed on 12-12-2018. AO had not taken cognizance of the return of income so filed by assessee on 12-12-2018 stating that such a return of income was filed beyond stipulated time frame of thirty days as specifeid in the notice under section 148 for filing such return of income. Therefore, AO passed best judgment order under section 144 without taking cognizance of return of income so filed by assessee. Assessee's case was that in response to notice under section 148 assessee filed its return of income on 12-12-2018, however, AO did not issue any notice under section 143(2) and proceeded to complete reassessment under section 144 read with section 147/143(3) on 28-12-2018 and in absence of notice under section 143(2), reassessment order so passed could not be sustained and was bad-in-law. Held: Legal necessity to issue notice under section 143(2) arises where AO considers it necessary or expedient to ensure that assessee has not understated income or has not computed excessive loss or has not under-paid the tax in any manner. In the instant case, it is an admitted and undisputed position that in return of income filed by assessee, had claimed losses of Rs 1,88,72,993 pertaining to assessment year 2013-14 only and had not claimed any losses of Rs 1,77,38,920 pertaining to assessment year 2005-06 to be carry forward. The reason for initiating reassessment proceedings under section 147 was precisely said wrong and incorrect claim of carry forward of losses for assessment year 2005-06 while filing original return of income on 22-10-2013 which was assessed under section 143(3) dated 13-1-2016. Therefore, assessee by filing return of income and not claiming carry forward of losses pertaining to assessment year 2005-06 admitted to the wrong claim made and assessed earlier. Thereafter, reassessment had been completed under section 147 where only finding of AO was that only losses for assessment year 2013-14, and not of any earlier years, could be carried forward accepting the very position taken by assessee in the return so filed on 12-12-2018. Therefore, in the facts of the present case, where return filed by assessee was accepted and reassessment order was passed under section 147 accepting the returned income and there was no variation or addition made by AO to the returned income, there was no any necessity for AO to call for the explanation from assessee and for the purpose, issue notice under section 143(2).

REFERRED :

FAVOUR : Against the assessee.

A.Y. : 2013-14

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