1.  M/s. Malwinder Singh Vs. ITO, I.T.A. No. 749/CHD/2012, Date of Order: 17.09.2014, ITAT - Chandigarh

Can AO issue notice u/s 148 of Income-tax Act, 1961, where time limit for issuing notice u/s 143(2) of the Income –tax Act, 1961 has not expired? 

Held Yes

Assessee an individual filed his return of income on 15/02/2010. There after AO received some information that assessee spent Rs. 15,00,110 on his daughter’s marriage and believe that income to that extant has escaped assessment. AO record reason for reopening u/s 147 and issued notice u/s 148 of the Act on 05/03/2010. Assessee contend that the notice issued for re-assessment u/s 148 of the Act is not valid for the reason that time period for issuing notice u/s 143(2) of the Act has not expired.

Hon’ble ITAT placed reliance on decision of Punjab & Haryana High Court in case of Punjab Tractors and held that AO has the information of escapement of income in the hands of the assessee, the recording of reasons by the AO u/s 147 and issue of notice for re-assessment proceedings u/s 148 of the Act is valid.

In the result, the appeal of the assessee is dismissed.

(Please click here for judgment)

2.  Elan Equity Services Pvt. Ltd. Vs. ITO, I.T.A. No. 5135/Del/2012, Date of Order: 14.08.2014, ITAT - New Delhi

In case of share broker business date of commencement of business will be the date on which assessee filed application for registration with NSE instead of the date on which registration is granted.

Facts of the case that assessee on 25-04-2005 applied for registration with NSE and same is granted by NSE on 16-01-2006. While filling the return of income assessee claimed entire expenses of setting up of business as business expenses. During the assessment proceeding AO disallow the expenses maid prior to the date of registration, for the reason that date of commencement of business will be the date on which registration was granted by NSC and initiate penalty proceeding u/s 271(1)(c) of the Act.

Hon’ble ITAT held that the nature of business of assessee is such that without complying with various requirements, the assessee could not make application for registration. The assessee having complied with all the requirements was sanguine of getting registration and therefore treated its business as being set up from the date of making application. In view of above discussion, the disallowance made by AO is unjustified. Hence penalty levied u/s 271(1)(c) is deleted.

(Please click here for judgment)