TMI Blog2010 (4) TMI 856X X X X Extracts X X X X X X X X Extracts X X X X ..... of by this common order. 2. While admitting these appeals under section 260A of the Income-tax Act, 1961 (the Act), on August 7, 2000, the following substantial question of law had been formulated in both the appeals : "Was the unsigned notice under section 143(2) of the Act deemed to have been served on the assessee because it was posted within the prescribed period, though received by the assessee thereafter ?" 3. The assessment year is 1995-96. The respondent had filed a return of income declaring nil income on November 29, 1995, which was processed under section 143(1)(a) of the Act on November 27, 1996, by making prima facie adjustments of Rs. 40,79,353 in relation to the relief under section 80HHC of the Act. Subsequently, notice under section 143(2) of the Act came to be issued on November 29, 1996. It appears that the said notice did not bear the signature of the Assessing Officer having jurisdiction over the case of the assessee, although it bore his rubber stamp. The said notice was served upon the assessee on December 2, 1996. 4. Pursuant to the said notice, the assessee appeared before the Assessing Officer and, vide order dated February 26, 1998, assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... resent case is no longer res inte- gra inasmuch as the same stands decided in favour of the assessee by a decision of this court in Deputy CIT v. Mahi Valley Hotels and Resorts [2006] 287 ITR 360 (Guj) as well as a decision of the Supreme Court in Asst. CIT v. Hotel Blue Moon [2010] 321 ITR 362 (SC). It is submitted that in the circumstances, the question is required to be answered in favour of the assessee. 9. The facts are not in dispute. Admittedly, the return of income was filed by the assessee on November 29, 1995, and was processed under section 143(1)(a) of the Act on November 27, 1996. The notice under section 143(2) was issued on November 29, 1996, and served upon the assessee on December 2, 1996, that is, after a period of twelve months from the end of the month in which the return was furnished. 10. In the impugned order, the Tribunal has recorded a finding of fact that the notice under section 143(2) of the Act was served on the assessee on December 2, 1996. According to the Tribunal, as per the proviso to section 143(2), no notice under section 143(2) can be served on the assessee after the expiry of 12 months from the end of the month in which the return is fu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 9. The issuance of notice under section 143(2) of the Act is in the course of assessment in the third mode, namely, scrutiny assessment. Section 143(2) of the Act requires that where a return has been made by an assessee, if the Assessing Officer considers it necessary or expedient to ensure that the assessee has not understated the income, or has not computed excessive loss, or has not under-paid tax in any manner, he shall serve on the assessee a notice requiring him either to attend his office, or to produce, or cause to be produced there, any evidence on which the assessee may rely in support of the return. Therefore, the language of the main provision requires the Assessing Officer to prima facie arrive at satisfaction of existence of any one of the three conditions. The proviso under the said sub-section states : provided that no notice under this sub-section shall be served on the assessee after the expiry of twelve months from the end of the month in which the return is furnished. On a plain reading of the language in which the proviso is couched it is apparent that the limitation prescribed therein is mandatory, the format of provision being in negative terms. The posi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t the notice can be served within twelve months from the end of the month in which the return is furnished. (Ref : Central Board of Direct Taxes Circular No. 621, dated December 19, 1991, Chaturvedi and Pithisaria's Income Tax Law, Fifth Edition, Volume 3, page 4747 at page 4748). It goes without saying that the Departmental authorities are bound by the circulars issued by the Central Board of Direct Taxes. In the cir- cumstances, it is not open to the Revenue to contend otherwise. These Circulars are explanatory. They give contemporaneous exposi- tion of legal position. Even otherwise, on a plain reading of the sec- tion and the proviso it is more than abundantly clear that the proviso prescribes a mandatory period of limitation in the light of the scheme of assessment wherein majority of returns are required to be accepted without scrutiny and only certain returns are taken up for scrutiny." 12. Thus, the controversy in issue in the present case stands concluded by the abovecited decision and all the contentions raised by the appellant- Revenue stand answered against the Revenue and in favour of the asses- see. The said view also finds support in the decision of the Supre ..... X X X X Extracts X X X X X X X X Extracts X X X X
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