ASSESSMENT ORDER NOT CONTAINING SIGNATURE OF ASSESSING OFFICER IS NOT INVALIDATED

[Mr. M. GOVINDARAJAN]

            The Supreme Court in ‘B.J. Shelat V. State of Gujarat’ –AIR 1978SC 1109 discussed about the order.   It held that the order of any authority cannot be said to be passed unless it is in some way pronounced or the party affected has the means of knowing it.   It is not enough if the order is made, signed and kept in the file, because such order may be liable to change at the hands of the authority who may modify it, or even destroy it, before it is made known, based on subsequent information, thinking or change of opinion.   To make the order complete and effective, it should be issued, so as to be beyond the control of the authority concerned, for any possible change or modification therein.   This should be done within the prescribed period though the actual service of the order may be beyond that period. 

                        The Assessment order passed by the Assessing Officer, according to the Supreme Court in ‘Kalyan Kumar Ray V. Commissioner of Income Tax’ – (1991) 191 ITR 634, is not required to be served since the statute does not contemplate service of assessment order.   What is required is service of notice of demand signed by the Assessing Officer. 

                        There is no need for the Department to serve the assessment order on the assessee before the prescribed period of limitation provided for completion of assessment.   The test laid down by the Supreme Court in ‘B.J. Shelat V. State of Gujarat’ (supra) is that in order to establish that assessment has been completed within the time, the Department should have completed the proceeding and dispatched it so that the proceeding is out of the control of the officer issuing it. 

                        Section 292B of the Income Tax Act provides that return of income etc., not to be invalid on certain grounds.   The section provides that no return of income, assessment, notice, summons or other proceeding furnished or made or issued or taken or purported to have been furnished or made or issued or taken in pursuance of any of the provisions of this Act shall be invalid or shall be deemed to be invalid merely by reason of any mistake, defect or omission in such return of income, assessment notice, summons or other proceeding if such return of income, assessment, notice, summons or other proceeding is in substance and effect inconformity with or according to the intent and purpose of this Act. 

                        In ‘Commissioner of Income Tax V. T.O. Abraham And Co’ – (2011) 333 ITR 182 (Ker), the Kerala High Court discussed in detail whether the assessment order requires to be signed.  In this case a search was conducted under Section 132 of the Income Tax Act in the premises of the assessee under various dates commencing from April 30, 1996 to May 6, 1996.   The assessee is a partnership firm.  During the search the department recovered several records and materials relating to undisclosed income of the assessee.   The notice for assessment under Section 158BC of the Act was issued.   The Assessing Officer, after giving reasonable opportunity to the assessee prepared the draft assessment and presented it to the Commissioner of Income Tax for approval under Section 158BG of the Act.  The Commissioner approved the draft and final assessment was completed by the Assessing Officer in terms of the draft approved by the Commissioner on May 27, 1997, the last date for completion of assessment under Section 158 BE of the Act falling on May 31, 1997.  

                        The Department dispatched the assessment order along with notice of demand under Section 156 of the Act to the assessee on 30.05.1997, i.e., one day prior to the last date for completion of the assessment as provided under Section 158 BE of the Act.    The same was received by the assessee on 02.06.1997.  The Assessing Officer noticed that the assessment dispatched to the assessee did not contain the statement that the assessment was completed after obtaining approval from the Commissioner of Income Tax under Section 158 BG and therefore he sent another assessment order signed by him on 02.06.1997 informing that the said assessment completed was with the prior approval of the Commissioner of Income Tax in terms of Section 158BG of the Act.  

                        The assessee noticed that the assessment order sent to him on 30.05.1997 did not contain signature of the Assessing Officer.  While filing appeal against the assessment he contended that the first copy received was not signed and the second copy of the assessment order which contained the signature of the Assessing officer dispatched to the assessee on 02.06.1997.  He contended that the assessment is time barred.  In the hearing of the appeal the Judicial Member took the view that the first copy of the assessment order had not been signed by the Assessing Officer within the period of limitation and therefore the assessment is invalid.   The Accountant Member took the stand that the assessment was completed on 27.05.1997 and the same was done after obtaining prior approval of the Commissioner of Income Tax under Section 158BG.   He further held that even though the first copy sent to the assessee along with the signed copy of notice of demand did not contain the signature of the Assessing officer, it does not invalidate the assessment that was completed on 27.05.1997, ie., within the period of limitation.  Because of the different views taken by the members the case was referred to the President of the Tribunal who agreed with the view of the judicial member.   The appeal was decided by majority against the Revenue and therefore the Revenue filed the appeal before the High Court. 

                        The assessee contended before the High Court that the assessment in this case should be treated as completed beyond the period of limitation.   The High Court felt that the requirement of section158BE is satisfied if the Department establishes that the block assessment is completed before the last date provided for completion of assessment under Section 158BE which in this case is 31.05.97. 

                        In this case the assessment was approved by the Commissioner of Income Tax by proceedings dated 23.05.1997 as required under Section158BG of the Act.  The Assessing officer also dispatched copy of assessment order along with signed copy of notice of demand.  Even though the copy of the assessment order was not signed by the Officer, a modified copy of the order was sent by the Assessing Officer on 02.06.1997 wherein the approval of the draft assessment by the Commissioner of Income Tax which is the requirement of Section 158BG of the Act was also stated by the Assessing Officer in the Assessment Order.  The High Court considered the following questions to be answered- 

• Whether the dispatch of an unsigned copy of the assessment order along with signed copy of the notice of demand invalidates the assessment;
• Whether the evidence on record proves beyond doubt the claim of the Department that the assessment in this case was completed within the period of limitation i.e., on 27.05.1997 as claimed by the Department, which is within the period of limitation provided under Section158BE of the Act. 

Records were produced before the Tribunal and there is no dispute that the signed copy of notice of demand was dispatched to the assessee by the Department before the last date for completion of assessment and it contains tax demand which is the same amount contained in the signed assessment order later dispatched by the Assessing officer on 02.06.1997.  The High Court held that going by the nature of assessment, which is a voluminous document with full facts and figures containing sixty pages, nobody can have a doubt that it cannot be prepared within a period of one or two days after sending the notice of demand.  The High Court is of the view that mere the fact that the first copy of the assessment order sent to the assessee did not contain the signature of the Assessing Officer does not give rise to a presumption that the original assessment order was not signed by the Assessing officer.   Admittedly the assessment is made in several copies and one of the copies is sent to the assessee along with copy of demand notice.  It may so happen that the dispatch section without noticing the omission would have sent an extra copy of assessment order which was not signed by the Assessing officer with reference to which only he prepares  the notice of demand which was admittedly signed and dispatched to the assessee within the period of limitation.   Further the draft assessment prepared and finalized by the Assessing Officer was approved by the Commissioner of Income tax on 23.05.1997 and so much so the assessee cannot even contend that a draft assessment was not finalized within the period of limitation.  The High Court held that there is no finding that the assessment order signed on 27.05.1997 was not available on file.  It cannot also be assumed that the Assessing officer pre dated the assessment order in this case because the draft assessment was approved by the Commissioner on 23.05.1997.  There is no case of any deviation made from the approved draft while issuing the final order.  

                        The High Court further held that the whole purpose of Section 292B of the Act is not to defeat on technicalities the object of the statute that is to assess and collect the tax legitimately due under the Act.  This is a case where elaborate evidence is collected in the course of search and the proceedings of the document took several months before the completion of the block assessment.  The High Court agreed with the view of the Accountant Member rightly held on hyper technicality a proper assessment completed strictly observing the provisions of the Act should not be held invalid.  The High Court dismissed the appeal filed by the Revenue.   The High Court restored the appeal of the Income Tax Appellate Tribunal for decision on merits after hearing both sides.