Income tax assessment
Radhakrishnan K.V.
(Querist) 02 May 2013
This query is : Resolved
A.O. issued notice u/s 148 for assessment on an assessee who failed to file return under sec.139(1) or 139(4). Is it a proper proceedings as the assessee was not issued with a notice u/s 142(1) or any other notices calling for return earlier. In other words, can original assessment be made u/s 147 straight away without resorting to the usual assessment procedures.
Vineet
(Expert) 11 May 2013
Notice u/s 142(1) calling for return can be issued by AO within the tie prescribed for filing belated return without recording any reason. Beyond that time if AO has reasons to believe that income has escaped assessment, he can issue notice u/s 148 and continue with assessment u/s 147.
So the answer is, yes. IT Act authorises AO to proceed with assessment u/s 147 if normal period for filing belated return has expired.
Radhakrishnan K.V.
(Querist) 11 May 2013
I fully agree with you sir. But in a recent decision of ITAT Cochin it is stated that without completing assessment there cannot be escaped income. Since section 147 refers to escaped income what can be the implication of decision dated 30-01-2013 of ITAT Cochin in Kadachira service co-operative bank case?
Vineet
(Expert) 12 May 2013
In the referred case AO had already issued notice u/s 142(1) and assessment proceedings were pending. The assessees were contending that AO should have regularised their belated filed returns by issuing notice u/s 148 rather than proceeding with completing assessment u/s 144. ITAT rightly held that pending assessment proceedings, AO has no jurisdiction to invoke 147.
In your query there is no such proceeding pending and regular assessment comes to end by natural process of law as no belated return can be filed u/s 139. Hence AO has no option but to invoke 147 if he has reasons to believe that income has escaped assessment.
Radhakrishnan K.V.
(Querist) 27 May 2013
ITAT observes:"The question arises for consideration is - at what point of time the income would be considered to be escaped assessment. To consider any income chargeable to tax as escaped assessment, the assessment proceedings shall have to come to an end either by order u/s 143(3) or otherwise by operation of law." I feel that this is a generalised view and is independent of the context which means that completion of assessment u/s 143(3) or otherwise is a precondition to invoke sec.147. In other words,assessment u/s 147 can be made only on escaped income which escapped from an assessment made earlier.
Failure of assessee to file return cannot be taken as a sole ground to invoke sec.147.
Please ponder on this question of law.
Vineet
(Expert) 27 May 2013
If you are so convinced, no need to come to this forum to seek advice. Try to persuade your AO or appeal authorities with this order of ITAT and your innovative interpretation. I wish you success.
Radhakrishnan K.V.
(Querist) 28 May 2013
Sorry to say that I doubt if this is a professional approach. My client who is a small co-operative society with a meagre profit of a few hundred rupees failed to comply with sec.139(1)since they thought they were exempted from filing return. Co-operative societies do not have any threshold limit of exemption limit but instruction for filling ITR-5 shows that income of Rs.10000/- are exempted for co-operative societies. This lead them to confusion and to non-filing of return.
Now, after a lapse of about 4 years in a fine morning my client recieved notice u/s 148. I try to explore whether the co-operative society can claim immunity from this notice in the light of observation made by ITAT Kochi or any other such decisions.
I do feel this is the right forum to have such discussion of professionals. If anybody does not feel comfortable with this fact finding exercise need not respond. I am sure there will be somebody who are interested. Thanks for the input sirs.
