TMI Blog2007 (1) TMI 72X X X X Extracts X X X X X X X X Extracts X X X X ..... , 1961, as bad in law on the ground that no notice under section 143(2) which was to be issued within one year of filing of the return of income was issued. 3 The facts appearing in all cases are identical. We therefore referring the facts in the case of Sukhini P. Moth as a representative case. Brief facts of the case are that the assessee has filed her return of income on March 5, 1997, for the assessment year 1996-97 showing income at Rs. 1,65,951, which was processed by the Assessing Officer under section 143(1) of the Act. No return was filed for the assessment year 1997-98. During the course of investigation, it was found that the shares of Rupmanglam Investment P. Ltd. (RIPL) and Flovin Plastics P. Ltd. (FPPL) were transferred to Dhanushya Financial P. Ltd. and the shareholders of FPPL and RIPL had already received sale price of the shares. On scrutiny of the case records, it was found that the assessee had not shown sale of shares and no capital gain had been offered for taxation. The Assessing Officer therefore, issued notice under section 148 of the Act. In response to which the assessee had filed her return of income on October 27, 2000, for the assessment year 1997- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a period of one year and only a notice under section 142(1) was issued on March 7, 2002. The Commissioner of Income-tax (Appeals), therefore, observed as under "I have carefully considered the issue and the submissions filed by the authorised representative and I am of the view that the judicial decisions are in favour of the appellant. The fact that notice under section 143(2) has not been issued and only a notice under section 142(1) was issued is very clear from the records. The hon'ble Supreme Court in the case of R. Dalmia [1999] 236 ITR 480 has very clearly stated that after the notice under section 148 has been issued, the procedures as required under sections 142(1) and 143 (in that specific case under section 144B), for completing of the assessment has to be carried out. It was stated that while assessment under section 143 and reassessment under section 147 are different but in making the assessments and reassessments under section 147, the procedure as laid down subsequent to section 139, including that laid down under section 144B has to be followed. The Ahmedabad Bench has also applied the ratio of this decision in the case of Rakesh S. Mardia v. Deputy CIT [ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it is a return under section 139, either the Assessing Officer is required to issue a notice under section 143(2) for making the assessment under section 143(3) or accept it under section 143(1)(a). Therefore, in case an assessment is required to be made, the provisions of section 143(2) shall be applicable including the proviso. The decision of the Income-tax Appellate Tribunal, Mumbai, in the case of Uma Polymers P. Ltd. [2002] 123 Taxman 226 (Mag) is also on the similar lines. From the above, it is quite clear that the judicial position at the moment is in support of the fact that even in the case of a return filed in response to notice under section 148, the requirement of issuing a notice under section 143(2) within a year of filing of the return cannot be ignored. Following the same, in the appellant's case also, it is held that the assessment framed cannot be sustained as the notice under section 143(2) which was required to be issued within a year of filing of the return was not issued. Hence the assessment framed in this case is hereby annulled being bad in law. The other grounds of appeal against the quantum addition are not being taken up, as they become acade ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n is furnished or the expiry of six months from the end of the month in which the return is furnished, whichever is later." 10 The proviso was amended again by the Finance (No. 2) Act, 1991, with effect from October 1, 1991, to the following : "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." 11 Section 148, as it stood in the relevant year, is reproduced hereunder: "(1) Before making the assessment, reassessment or recomputation under section 147, the Assessing Officer shall serve on the assessee a notice requiring him to furnish within such period, not being less than thirty days as may be specified in the notice, a return of his income or the income of any other person in respect of which he is assessable under this Act during the previous year corresponding to the relevant assessment year, in the prescribed form and verified in the prescribed manner and setting forth such other particulars as may be prescribed and the provisions of this Act shall, so far as may be, apply accordingly as if such return were a return required to be furnished unde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cedural or jurisdictional and whether assessment made without issuing notice under section 143(2) is a nullity, or would it only be an irregularity, which can be cured ? (iii) What is the effect of retrospective amendment brought by the Finance Act, 2006, by inserting the proviso to section 148 of the Income-tax Act, 1961 ? and (iv) whether there was compliance with the provisions of section 143(2) ? 14 As regards the first part of the question the learned Departmental representative Dr. Banwarilal, submitted that the proceedings in the present cases are under section 148 and not under section 143 and, therefore, there is no requirement to issue a notice under section 143(2) at all. Under the whole scheme of the Income tax Act, 1961, there are two categories of returns ; (a) filed voluntarily under section 139(1) or 139(4), and (b) involuntarily, i.e., in compliance with notice under section 142(1), notice under section 148 and under section 158BC(a). For the purposes of issue of notice under section 143(2) within 12 months, the Legislature has consciously picked up returns filed in response to section 142(1) only from the second category. Thus, there is no legal requirement fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... He then referred to the Central Board of Direct Taxes Circular No. 549 dated October 31, 1989 (182 ITR (St.) 1, 24). 16 On hearing the parties we find that this first issue stands covered by Special Bench in the case of Raj Kumar Chawla [2005] 277 ITR (AT) 225 (Delhi), in favour of the assessee. This is a case for the assessment year 1995-96 wherein the admitted fact was that the notice under section 143(2) in respect of the three appellants have been served after the expiry of period of 12 months as provided under the proviso to section 143(2). The Bench held that since the assessing authority has failed to serve the notices within the statutory period provided under section 143(2), he lost the jurisdiction to make the assessment under section 143(3) read with section 147. A contrary construction would render the adoption of procedure as prescribed in sections 139 to 143 and other provisions as meaningless. The phrase has been used so as to provide that the provision would be generally applicable but to the extent it is not inconsistent with the express provisions of the adopting legislation. The proviso nowhere comes in conflict with the provisions of section 147. Had th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Code of Criminal Procedure has been incorporated by pen and ink in section 37(2)— Expression "so far as may be" to be construed to mean that the provisions in section 165 may be generally followed as far as possible or such procedure would be broadly followed. Legality in the method, manner or initiation of search does not necessarily mean that anything seized during search has to be returned. This decision has been taken into consideration by the Special Bench in arriving at its decision and, therefore, no further discussion is necessary. To similar effect is the order in Mrs. C. Malathy wherein the Income-tax Appellate Tribunal, Chennai Bench [2004] 88 111)37 (Chennai) held that in order that an assessment could be framed on the assessee within the time permitted under section 153, the Assessing Officer has to necessarily and compulsorily follow the procedure prescribed under section 143(2) if he has to frame the assessment by calling upon the assessee, that is to frame an assessment order under section 143(3) or under section 144 or notice under section 143(2) is a. compulsory and mandatory prerogative to be complied by ensuring that the notice is issued within twelve month ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ss/reassess any escaped income by issuing notice under section 148 and not by issuing notice under section 143(2) of the Income-tax Act, 1961. It is a procedural irregularity not involving the question of jurisdiction and can be cured by the appellate authority, as held in Kimtee v. CIT [1985] 151 ITR 73 (MP), H. H. Maharaja Raja Pawer Dewas v. CIT [1982] 138 ITR 518 (MP) and Prabhudayal Amichand v. CIT [1989] 180 ITR 84 (MP). Referring to the case of Ghanshyamdas v. Regional Asst. CST [1964] 51 ITR 557 (Sc), he submitted thatit is a settled legal position that the assessment proceedings are validlyinitiated either by filing of return or by issuance of notice for filing ofreturn. In the instant cases of the assessees, there is no provision for filing of voluntary return for escapement of income and the only provision under which return can be filed is on issue of a notice under section 148. .He submitted that escaped income assessment proceedings were validly initiated by issuance of notice under section 148 after recording proper reasons and therefore the Assessing Officer would have seisin over the case resulting in vesting of overall jurisdiction in the Asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e's submission reveal that the notice under section 143(2) was issued beyond a period of 12 months. Notice under section 142(1) issued along with detailed questionnaire 7-3-2002 Assessee/AR filed PA and replies in response to this notice on 15-3-2002 Assessment made 28-3-2002 Under section 143(3)/147. 19 Learned counsel for the assessee contended that issue of notice is a jurisdictional issue as held by the Gujarat High Court in the case of Mahi Valley Hotels and Resorts [2006] 287 ITR 360 (Guj) and Raj Kumar Chawla [2005] 277 ITR (AT) 225 (Delhi) [SB] particularly paragraphs 41-42 thereof. He also relied upon the decisions Smt. Kamala Devi Todi [1988] 174 ITR 414 (Gauhati); Vipan Khanna [2002] 255 ITR 220 (P H); Uma Polymers P. Ltd. v. Asst. CIT [2002] 123 Taxman 226 (Mag) (Mum); Baikunth Nath Singhal [2004] 89 ITD 109 (Agra) and Mrs. C. Malathy [2004] 88 ITD 37 (Chennai). He then referred to the Central Board of Direct Taxes Circular No. 549 dated October 31, 1989, [1990] 182 ITR (St.) 1 at 24. He also relied upon the arguments raised in the case of Suratwala in I.T.A. Nos. 3218-19 3203- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ction of the Assessing Officer and would make the assessment/reassessment "null and void" because the notice under this section is not a mere procedural requirement but a condition precedent to assume jurisdiction and to make a valid assessment/ reassessment. Absence of such a notice would make the assessment invalid and without jurisdiction in view of the decisions of Y. Narayana Chetty v. ITO [1959] 35 ITR 388 (SC) ; CIT v. Thayaballi Mulla Jeevaji Kapasi [1967] 66 ITR 147 (SC); CIT v. Kurban Hussain Ibrahimji Mithiborwala [1971] 82 ITR 821 (SC) ; Nyalchand Malukchand Dagli v. CIT [1966] 62 ITR 102 (Guj) ; Madan Lal Agarwal v. CIT [1983] 144 ITR 745 (All) ; P. N. Sasikumar v. CIT [1988] 170 ITR 80 (Ker) and Electro Steel Castings Ltd. [2003] 264 ITR 410 (Cal)——SLP dismissed [2004] 266 ITR (St.) 104. The existence of a valid 148 notice being a condition precedent for the exercise of the jurisdiction by the Assessing Officer to assess or reassess under section 147, it does not confer any right to the assessee, which he could abandon. Want of a notice affects the jurisdiction of the Assessing Officer to proceed with the assessment and failure to give ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... time and had children from the second wife, Aruna Devi. Rangalal executed a will totally disinheriting Shankar Lal and appointing Aruna Devi and another as executors of his will. The Income-tax Officer, probably unaware of the will, gave notice to Shankar Lal, who objected that he is not the legal representative of the deceased and that the second wife (Aruna Devi) and the other executor are the proper persons to be notified. The Income-tax Officer called for a copy of the will but it was not produced. The Income-tax Officer thereupon completed the assessment describing the assessee as "the estate of late Sri Rangalal Jajodia by legal heirs and representatives Sri Shankar Lal Jajodia, son of Rangalal Jajodia, Smt. Aruna Devi, wife of Rangalal Jajodia and her children". Appeals were preferred by the second wife, Aruna Devi contending, inter alia, that the assessments having been made without notice to her and the other executor were illegal and invalid. This plea was rejected by the Appellate Assistant Commissioner and the Tribunal, who however remitted the matters to the Income-tax Officer to complete the assessments after notice to Aruna Devi. The High Court too rejected the said ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ade irregular—depending upon the nature of the provision not complied with—but certainly not void or illegal. Reliance is placed on Chatturam v. CIT [1947] 15 ITR 302, wherein it has been held by the Federal Court : "The income-tax assessment proceedings commence with the issue of a notice. The issue or receipt of a notice is not, however, the foundation of the jurisdiction of the Income-tax Officer to make the assessment or of the liability of the assessee to pay the tax. It may be to urged that the issue and service of a notice under section 22(1) or (2) may affect the liability under the penal clauses which provide for failure to act as required by the notice. The jurisdiction to assess and the liability to pay the tax, however, are not conditional on the validity of the notice. Suppose a person, even before a notice is published in the papers under section 22(1), or before he receives a notice under section 22(2) of the Income-tax Act, gets a form of return from the Income-tax Office and submits his return, it will be futile to contend that the Income-tax Officer is not entitled to assess the party or that the party is not liable to pay any tax because a notice had not be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The jurisdiction of the Income-tax Officer, which is assumed as soon as return is filed, is not lost. Ass is not to be annulled, but can be set aside. The court explained the position in detail as: "To issue a notice under section 143(2) is mandatory and, therefore, if the assessment is made without complying with section 143(2), then the assessment is, ordinarily, invalid. But the contention of the Revenue is that in such a situation, the correct order to be passed by the Appellate Assistant Commissioner is to set aside the assessment, whereas according to the assessee it should have been annulled. The assessment order passed without notice under section 143(2) is invalid and it is vitiated, but the invalidity is not, however, of such a nature which goes to the root of the proceedings and, that being so, the Appellate Assistant Commissioner having found it to be invalid, that invalidity did not go to the root of the matter. It could be set aside for being redone de novo. He should not have annulled it. Failure to serve notice on the assessee under section 143(2) is merely an irregularity and the Income-tax Officer, until and unless he gets the notices served, cannot complete the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , however, of such a nature which goes to the root of the it proceedings and that being so, the Appellate Assistant Commissioner having found it to be invalid, that invalidity did not go to the root of the matter. It could be set aside for being redone de novo. He should to not have annulled it. Failure to serve notice on the assessee under section 143(2) of the Act is merely an irregularity and the Income-tax Officer, until and unless he gets the notices served, cannot complete on the assessment. We find it difficult to hold that the Income-tax Officer has no jurisdiction in respect of the proceedings. As soon as the return is filed, he gets seisin over the case. He has jurisdiction over it, 'be but on failure to comply with section 143(2) of the Act, the only limited restriction is that he cannot complete the assessment. In these circumstances, the assessment orders completed without service of notice under section 143(2) cannot be said to be ab initio void and when it is not so, the assessment order cannot be annulled." (d) Sant Baba Mohan Singh v. CIT [1973] 90 ITR 197 (All) A case for the assessment year 1960-61, wherein it is held that section 31(3)(a) speaks of the p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... plenary powers to make any order he liked on the facts and circumstances of the case. The second part of section 250(4) empowers the Appellate Assistant Commissioner to give directions to the Income-tax Officer to make further inquiry. The power of setting aside the order of assessment, where it is illegal, is inherent in any appellate court and the Appellate Assistant Commissioner has passed a perfectly legal order in directing the Income-tax Officer to issue notice to the assessee before making an assessment because he was not satisfied regarding the correctness of the assessees return. The Appellate Assistant Commissioner had ample jurisdiction either to call for a report or to give directions to the Income-tax Officer to comply with the requirements of law. The Appellate Assistant Commissioner, it is held, has inherent power to set aside the illegal order of assessment and direct the Income-tax Officer to comply with mandatory requirements while making the de novo assessment. It is further held that section 143 of the Act is not a substantive but purely a procedural section laying down the procedure for making assessment in various contingencies. The court then examined the eff ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessment Order de novo. The finding by the Tribunal was that the assessment order was passed de novo by the Assessing Officer without giving any notice to the assessee. It set aside the assessment. Referring to the decisions in Estate of Late Rangalal Jajodia v. CIT [1971] 79 ITR 505 (SC) and Guduthur Bros. v. ITO [1960] 40 ITR 298 (SC) the court held that the Tribunal to be right in setting aside the assessment not annulling it. It held that want of notice would not make the assessment bad in law. An assessment proceeding does not cease to be a proceeding under the Act merely by reason of want of notice. (g) In Guduthur Bros. v. ITO [1960] 40 ITR 298 the Supreme Court, almost in the same factual background, held that the Income-tax Officer had jurisdiction to continue the proceedings from the stage at which the illegality had occurred. (h) In Prabhudayal Amichand v. CIT [1989] 180 ITR 84 (MP), a case for the assessment year 1973-74 the Income-tax Officer levied a penalty under section 271(1)(c) of the Act. Aggrieved, the assessee preferred an appeal and contended that the order passed by the Income-tax Officer deserved to be quashed as no approval of the Insp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sion Bench of this court in H. H. Maharaja Raja Pawer Dewas v. CIT [1982] 138 ITR 518 observing (page 523) "Besides, the argument that the assessment order was totally invalid or non est on account of non-compliance with the procedure laid down under section 144B of the Act, is not correct. There was no jurisdictional error even though the procedure under section 144B of the Act was not complied with. The scheme of section 144B clearly envisages that the jurisdiction to pass an order even when there is a variance of rupees one lakh and more between the income returned and the income assessed, is with the Income-tax Officer, though section 144B provides for a machinery for the service of a draft order on the assessee and a consultation with a superior officer. This is only a procedural matter not involving the jurisdiction and, therefore, if there is a procedural irregularity which can be cured by directing the. Income-tax Officer to frame an assessment after following the correct procedure. The Madhya Pradesh High Court in Banarsidas Bhanot and Sons v. CIT [1981] 129 ITR 488, has considered this question and held that non-compliance with the provisions of section 144B of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al plea that the proceeding has not been continued against him, although, in substance and reality, it has been so continued. It, therefore, held that it was obvious that if the assessment was not a nullity, the Appellate Assistant Commissioner would be competent to give a direction as to fresh assessment even after the time limit therefor had expired, subject, of course, to any other just exception that could be taken under the law. The court noted that in Dhirendra Nath Gorai v. Sudhir Chandra Ghosh, AIR 1964 SC 1300, the following passage from the decision in Ashutosh Sikdar v. Behari Lal Kirtania [1908] ILR 35 Cal 61 [FB] was cited with approval to bring about the distinction between a nullity and an irregularity (page 1304 of AIR 1964 SC) "... no hard and fast line can be drawn between nullity and an irregularity; but this much is clear, that an irregularity is a deviation from a rule of law which does not take away the foundation or authority for the proceeding, or apply to its whole operation, whereas a nullity is a proceeding that is taken without any foundation for it or is so essentially defective as to be of no avail or effect whatever, or is void and incapable ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ithout affecting the jurisdiction of the authority seized of the proceeding. If the assessing authority, in the exercise of his jurisdiction, omits to take one or more of steps commits an error or even deviates from the statutory mandate, the various procedural Steps therein laid down or in taking any of such assessment would be null and void, only if the omission, error or breach, as the case may be, is so fundamental as could not be waived because it affects inherent jurisdiction. The legal representative has a right to waive the advantage of any of the statutory provisions made solely for his protection or benefit and not conceived in public interest. The court referred to Maharaja of Patiala v. CIT [1943] 11 ITR 202 (Bom) ; Chooharmal Wadhuram v. CIT [1971] 80 ITR 360 (Guj) and Estate of Late Rangalal Jajodia v. CIT [1971] 79 ITR 505 (SC), in which the question whether if one or more of the essential steps envisaged in such a machinery section are not taken and the assessing authority acts in breach of the said section or any part thereof, the assessment proceeding is rendered invalid, has come to be considered in the context of section 24B of the Indian Income-tax ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... understated the income or had not computed excessive loss or had not underpaid the tax in any manner. Such a notice could be issued only within twelve months from the end of the month in which the respective returns had been filed originally. Admittedly, no such notice had been served on the petitioner within the stipulated period and, therefore, it has to be held that the Assessing Officer had not found it necessary to require the petitioner to produce any evidence in support of the returns. Thus, the returns filed by the petitioner had become final. This finality could not be disturbed even in proceedings under section 147 in respect of issues on which there is no material on record suggesting any escapement of income. Except for excessive claim of depreciation there is no material to suggest any underassessment or escapement of income under any other item. There is no gainsaying the fact that in proceedings under section 147 it is only the escaped income which has to be assessed or reassessed. When proceedings under section 147 are initiated, the proceedings are open only qua items of underassessment. The finality of assessment proceedings on other issues remains undisturbed. It ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nnulled. 29 As observed earlier it is important to note that an assessment proceeding do not cease to be a proceeding under the Act merely by reason of want of notice and that it would be a proceeding liable to be challenged and corrected. One of the powers of the Commissioner of Income-tax (Appeals) is to annul an assessment. That is a power to be exercised where the assessment proceeding is a nullity in the sense that the Income-tax Officer had no jurisdiction ab initio to take the proceeding. A proceeding is a nullity when the authority taking it has no jurisdiction either because of want of pecuniary jurisdiction or of territorial jurisdiction or of jurisdiction over the subject-matter of the proceeding or when the authority taking it has no power to have seisin over the case. The omission of the Assessing Officer to issue a notice under section 143(2) does not affect the ab initio jurisdiction enjoyed by the Assessing Officer in respect of the proceeding. The Assessing Officer had seisin over the case, he had overall jurisdiction over the case and in that sense had power to initiate the proceeding. The omission to issue a notice under section 143(2) merely prevents the Inc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... proceedings on the merits it for more than one year, clearly showed that the so-called illegality/irregularity did not cause any prejudice to the assessee. In other words, the assessee was afforded the fullest opportunity to participate in the proceedings. 31 Even in cases of non-compliance with the provisions of section 144B it is held to be only a procedural irregularity and no question of jurisdiction is involved in such cases. The scheme of section 144B clearly envisages that the jurisdiction to pass an order even when there is a variance of rupees one lakh and more between the income returned and the income assessed, is with the Income-tax Officer, though section 144B provides for a machinery for the service of a draft order on the assessee and a consultation with a superior officer. This is only a procedural matter not involving the jurisdiction and, therefore, if there is a procedural irregularity which can be cured by directing the Income-tax Officer to frame an assessment after following the correct procedure. 32 As explained by the High Court of Gujarat in Sumantbhai C. Munshaw (Decd.) [1981] 128 ITR 142, a nullity results from an error which is incurable and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e legal position; that even otherwise, on a plain reading of the section 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 and therefore the orders of the Commissioner of Income-tax (Appeals) and the Tribunal reflect correct reading of the statutory scheme of the Act which is plain, unambiguous and clear, as well as in consonance with the circulars of the Board. 34 The learned Departmental representative submitted that by the amendment by insertion of the proviso to section 148 with retrospective effect the time limit of 12 months for issue of notice under section 143(2) has been done away with in cases of reopened assessments. Thus, the status of law before April 1, 1988, has been restore Thus, after removal of the time limit for issuance of notice under section 143(2), the requirement for issuing notice under section 143(2), if any, becomes procedural only and, therefore, the ratio laid down in the case of Raj Kumar Chawla [2005] 277ITR (AT) 225 (Delh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er section 148, on the assessee, requiring him to furnish his return of income and the provisions of the Act shall apply as if the return furnished in response to such notice were a return required to be furnished under section 139. It is proposed to insert a proviso to sub-section (1) so as to provide that where a return has been furnished during the period from October 1, 1991, to September 30, 2005, in response to a notice served under section 148 and, subsequently a notice has been served under sub-section (2) of section 143 after the expiry of twelve months specified in the proviso to sub-section (2) of section 143 as it stood immediately before the amendment of the said sub-section by the Finance Act, 2002, but before the expiry of the time limit for making the assessment, reassessment or recomputation as specified in sub-section (2) of section 153, such notice shall be deemed to be valid notice. It is further proposed to insert a proviso in the said sub-section so as to provide that where a return has been furnished during the period from October 1, 1991, to September 30, 2005, in response to a notice served under section 148 and, subsequently a notice has been served u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sment or recomputation shall be made under section 147 after the expiry of one year from the end of the financial year in which the notice under section 148 was served : Provided that where the notice under section 148 was served on or after the 1st day of April, 1999, but before the 1st day of April, 2000, such assessment, reassessment or recomputation may be made at any time up to the 31st day of March, 2002 : Provided further that where the notice under section 148 was served on or after the 1st day of April, 2005, the provisions of this sub-section shall have effect as if for the words 'one year', the words nine months' had been substituted. (2A) Notwithstanding anything contained in sub-section (1), (1A), (1B) and (2), in relation to the assessment year commencing on the 1st day of April, 1971, and any subsequent assessment year, an order of fresh assessment in pursuance of an order under section 250 or section 254 or section 263 or section 264, setting aside or cancelling an assessment, may be made at any time before the expiry of one year from the end of the financial year hi which the order under section 250 or section 254 is received by the Chief Commissioner or Com ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ee participated in the proceedings and assumed to have waived the service of notice under section 143(2) of the Act. If the assessee is present before the taxing authority either on issue of a notice or voluntarily appears in the proceeding without service of notice and does not object to the continuance of the proceeding and is heard by the Income-tax Officer, in regard to the tax liability and invites an assessment on the merits, such an assessee must be taken to have exercised the option of abandoning the technical plea that the proceeding has not been validly continued against him, although in substance and reality, it has been so continued. In such circumstances, the assessment is not a nullity. It is, therefore, clear that this provision though must be construed to have a mandatory force, because the object of the Legislature is that if the Assessing Officer is not satisfied with the correctness of the return filed by an assessee or the documents or materials furnished by him, he must give an opportunity to the assessee before making the assessment to explain. In these present cases, when asked for the details though, vide notice dated March 7, 2003, which could be only in or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ompany. Due to dispute regarding payment the shares were not transferred and the sale did not take place. I, therefore, request you to show us any evidence which you may have so that we can give our explanation. I also request you to kindly issue summons to the following person so that the truth regarding transfer of shares will be known. 1. Shri Hemant Kashiparekh of M/s. Kashiparekh Associates Akshay Apartment, Nr. Old High Court Lane Navrangpura, Ahmedabad. 2. Shri Jatin Jhanunwalla Director of Dhanushya Financial P. Ltd. Core-tower, Opp. Dr. House Parimal Crossing, Ahmedabad. 3. Shah Shah (C.A.) Auditors for Dhanushya P. Ltd. 501, Aniket 5th Floor, Navrangpura, Ahmedabad. I have also to request you to direct Shri Hanunwalla, Shn Kashiparekh, directors of company namely Dhanushya and Rup Mangal P. Ltd. by issue of summons to produce following documents connected with the transfer of shares belonging to me. 1. Share transfer from Rup Mangal P. Ltd. C/o. Kashiparekh Associates who are their auditors. 2. Shares certificate (Rup Mangal P. Ltd.) 3. Shares register (Rup Mangal P. Ltd.) 4. Minute books recording transfer of shares of Rup Mangal P ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rify the correct ness and completeness of the return by requiring the presence of the assessee or the production of evidence in this behalf, the Assessing Officer shall serve on the assessee a notice requiring him, on a date to be therein specified, either to attend at the Assessing Officer's office or to produce, or to cause to be there produced, any evidence on which the assessee may rely in support of the return. It is true that the assessee was required, vide notice issued under section 142(1) to the assessee dated March 7, 2002, to appear and produce or cause to be produced the accounts and/or documents specified overleaf on March 15, 2002, and the requirement is contained in letter dated March 7, 2002. But the fact remains that it was not a notice meant for the purposes of section 143(2) but to comply with the directions for requirements under section 142(1) of the Act. As observed by the jurisdictional High Court in the case Mahi Valley Hotels [2006] 287 ITR 360, 362 "4. The second contention regarding there being acquiescence and/ or waiver on part of the assessee by participating in the proceedings also does not merit acceptance. It is an admitted position that the r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... When the provision was first introduced in the statute, the Central Board of Direct Taxes issued Departmental Circular No. 549, dated October 31, 1989, (see [1990] 182 ITR (St.) 1) and the necessity of the proviso as well as the consequences flowing on failure to issue notice within the limitation have been explained in the following be words (page 24) : '5.13 A proviso to sub-section (2) provides that a notice under the sub-section can be served on the assessee only during the financial of year in which the return is furnished or within six months from the end of the month in which the return is furnished, whichever is later. This means that the Department must serve the said notice on the assessee within this period, if a case is picked up for scrutiny. It follows that if an assessee, after furnishing the return of income does not receive a notice under section 143(2) from the Department within the aforesaid period, .he can take it that the return filed by him has become final and no scrutiny proceedings are to be started in respect of that return'." 43 We, therefore, reject the contention of the Revenue that in substance the notice was issued under section 143(2) by callin ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
