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Notice gives jurisdiction to ITO – Issuance of notice within period of limitation gives jurisdiction to Assessing Officer to proceed to make reassessment.
It is difficult to sustain the notice issued u/s. 148. The audit objection is only an inference that the royalty payment resulted in a capital benefit; such an opinion expressed by the audit cannot constitute tangible material on the basis of which the assessment can be reopened.
Only aspect mentioned in the reasons recorded is about the requirement of inclusion or non-inclusion of cenvat/modvat credit in closing stock. The Assessing Officer stated in his reasons inter alia that on perusal of break up the loans and advances in the balance-sheet, it was found that the assessee had at the end of previous year a particular amount of cenvat credit not utilised and that the assessee had not credited the said amount to the profit & loss account.
The petitioner has been claiming that he is dealing in hedging besides in the wholesale business of gold and silver ornaments. To insure against price fluctuations, he has been hedging in such metals in MCX. The claim of the assessee, therefore, had to be examined in terms of clause (a) to sub-section (5) to section 43 of the Act. If for some reason such claim was not sustainable,
In the present case, the assessee disclosed the factum of housing project, the construction of shops and the profit derived therefrom. These were the primary facts sufficient for the Assessing Officer to proceed in its assessment process. He had undertaken such a process and applied the facts to the provisions of law by applying his mind.
Section 148 mandates issue of notice before assessment, reassessment or computation u/s 147. As per section 148, it is mandatory that the Assessing Officer shall serve on the assessee a notice required him to furnish a return. The expression “Assessing Officer” used in the section 148 means ‘the Assessing Officer vested with the jurisdiction over the assessee as stipulated in the definition u/s 2(7A) by virtue of the directions / orders passed u/s 120, sub-section (1) & (2)’.
We notice that in the return filed by the petitioner, in addition to claiming deduction of gross income of interest and dividend of Rs.1,81,27,606 under Section 80P(2)(d) of the Act, the petitioner further provided various details. For example, in the Annexure-VII to the return, such deduction under Section 80P(2)(d) was bifurcated into dividend income of Rs. 53,71,450 and interest income of Rs. 1,27,56,156.
It will be relevant to record that the primary objection noticed by the assessing authority while serving notice upon the assessee as provided U/s 148 of the Act, 1961 was in regard to dis-allowance of salary of Rs.1,50,000/- to the Managing Director of the assessee company on 30th March, 2002 in cash and Rs.5 Lacs towards advance salary for the assessment year 2002-03 in cash on 10.04.2002 and since it was payment of salary in cash exceeding Rs.20,000/-, the above expenses were dis-allowable as provided U/s 40A(3) of the Act, 1961.
From such exchange of information between the Assessing Officer and the assessee, we need to gather whether the question of taxability of a receipt of Rs. 5,56,000/- from the members by the petitioner was under consideration by the Assessing Officer.
First proviso to Section 158BC (a) required no notice under Section 148 for making a block assessment, merely because the notice required to be issued under Section 158BC (a) calling for the block return is analogous to the notice under Section 148 to reopen an assessment, is without any basis, either on principle or on authority.
