TMI Blog2018 (5) TMI 639X X X X Extracts X X X X X X X X Extracts X X X X ..... ervice of notice to the petitioner which is a jurisdictional fact and condition precedent for initiation of assessment proceeding under Section 148(1) of the IT Act. No hesitation to hold that no notice was served to the petitioner under Section 148(1) of the IT Act and service of notice to the Chartered Accountant of the petitioner Company is not service at all and participation of the petitioner Company by filing return and filing objection to the notice to the reasons to believe cannot be held to be a valid service of notice as held by the Delhi High Court in Chetan Gupta's case (2015 (9) TMI 756 - DELHI HIGH COURT) and, therefore, it cannot be held that the petitioner was served with notice under Section 148(1) of the IT Act - decided in favour of assessee - Writ Petition (T) No.168 of 2016 - - - Dated:- 4-5-2018 - Hon'ble Shri Justice Sanjay K. Agrawal For the Petitioner: Mr. Ajay Wadhwa and Mr. Ankit Singhal, Advocates. For the Respondents: Mrs. Naushina Ali, Advocate. ORDER 1. The jurisdiction of this Court under Article 226 of the Constitution of India has been invoked by the petitioner herein calling in question the notices dated 15-3-2016 and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 8-2016 deserve to be quashed. 4. Return has been filed by the respondents stating inter alia that only objections have been rejected and the assessing officer has not arrived at a final decision to be communicated and the petitioner has alternative remedy with it if it is not satisfied with the outcome of the assessment proceeding and the writ petition as framed and filed is not maintainable. The petitioner has been served with notice dated 15-3-2016 through speed post and has filed its return of income in response to notice under Section 148 of the IT Act and also participated in the assessment proceedings and thereafter, by his conduct, abandoned the right to claim non-service of notice under Section 148. Thus, the irregularities, if any, got cured by the subsequent conduct of the assessee, as the petitioner himself on 2- 5-2016 filed its return mentioning the reference of notice under Section 148 of the IT Act dated 15-3-2016, which clearly indicates the service of notice. Therefore, the writ petition as framed and filed is premature and deserves to be dismissed. 5. Mr. Ajay Wadhwa, learned counsel appearing on behalf of the petitioner, would submit that no notice within t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed with costs. 7. I have heard learned counsel for the parties, considered the rival submissions made herein-above and gone through the record with utmost circumspection. 8. The first issue for consideration would be whether the writ petition challenging the show cause notice issued under Section 147 read with Section 148 of the Act, 1961 is maintainable in law. 9. It was vehemently submitted on behalf of the respondents relying upon the decision of the Supreme Court in the matter of Commissioner of Income Tax and others v. Chhabil Dass Agarwal (2014) 1 SCC 603 that such a writ petition would not be maintainable, whereas the petitioner has relied upon the decision of the Supreme Court in the matter of Calcutta Discount Co. Ltd. v. Income-Tax Officer, Companies District I, Calcutta AIR 1961 SC 372. 10. In Calcutta Discount (supra), Their Lordships of the Supreme Court have clearly and unmistakably held that the High Court in appropriate cases has power and jurisdiction to issue an order prohibiting the Income Tax Officer from proceeding to reassess the income when the conditions precedent do not exist. K.C. Das Gupta, J, speaking for the Supreme Court and delivering the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r Article 226 of the Constitution, to set aside or vacate the notice for reassessment on a re-appraisal of the evidence. 12. The above-stated enunciation of law laid down in Calcutta Discount (supra) reiterated in M/s. A. Raman and Co.'s case (supra) by Their Lordships of the Supreme Court has further been followed very recently by the Supreme Court in the matter of Jeans Knit Private Ltd. Bangalore v. Deputy Commissioner of Income Tax Bangalore 2016 SCC OnLine SC 1536 and it has been clearly held that writ petition filed by the assessee challenging the issuance of notice under Section 148 of the Act, 1961 and the reasons which were recorded by the Assessing Officer for reopening the assessment is maintainable, after noticing the earlier decision of the Supreme Court in Chhabil Dass Agarwal's case (supra) and observed as under: - 2. We find that the High Courts in all these cases have dismissed the writ petitions preferred by the appellant/assessee herein challenging the issuance of notice under Section 148 of the Income Tax Act, 1961 and the reasons which were recorded by the Assessing Officer for reopening the assessment. These writ petitions are dismissed by th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent for any assessment year, he may, subject to the provisions of sections 148 to 153, assess or reassess such income and also any other income chargeable to tax which has escaped assessment and which comes to his notice subsequently in the course of the proceedings under this section, or recompute the loss or the depreciation allowance or any other allowance, as the case may be, for the assessment year concerned (hereafter in this section and in sections 148 to 153 referred to as the relevant assessment year) : Provided that where an assessment under sub- section (3) of section 143 or this section has been made for the relevant assessment year, no action shall be taken under this section after the expiry of four years from the end of the relevant assessment year, unless any income chargeable to tax has escaped assessment for such assessment year by reason of the failure on the part of the assessee to make a return under section 139 or in response to a notice issued under sub-section (1) of section 142 or section 148 or to disclose fully and truly all material facts necessary for his assessment, for that assessment year: xxx xxx xxx 16. Thus, Section 147 of the IT Ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h proceedings. These conditions have, therefore, to be treated as being mandatory... 19. Section 148(1) of the IT Act provides for issuance of notice when income has escaped assessment and service of notice. Section 149 provides time limit for notice. Notice must be issued within the limitation period prescribed in Section 149(1), however, service of notice within the limitation period is not a prerequisite for conferment of jurisdiction on the assessing officer. A clear distinction has been made out between 'issue of notice' and 'service of notice' under the IT Act. Section 149 prescribes the period of limitation. It categorically prescribes that no notice under Section 148 shall be issued after the prescribed limitation has lapsed. Section 148(1) provides for service of notice as a condition precedent to making the order of reassessment. Once a notice is issued within the period of limitation, jurisdiction becomes vested in the Assessing Officer to proceed to reassess. The mandate of Section 148(1) is that reassessment shall not be made until there has been service. The Delhi High Court in the matter of Commissioner of Income-tax (Central)-I v. Chetan Gupta ( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the period of limitations, jurisdiction becomes vested in the Income Tax Officer to proceed to reassess. The mandate of Section 148(1) is that reassessment shall not be made until there has been service. The requirement of issue of notice is satisfied when a notice is actually issued. ... 22. The principle of law laid down in R.K. Upadhyaya (supra) has been followed by a three-Judge Bench of the Supreme Court in the matter of Commissioner of Income Tax and another v. Major Tikka Khushwant Singh (1995) 212 ITR 650 (SC). Similarly, the High Court of Gauhati in the matter of Commissioner of Income Tax v. Mintu Kalita (2002) 253 ITR 334 (Gauhati), placing reliance upon R.K. Upadhyaya (supra) has held in no uncertain terms that service of notice under Section 148 of the IT Act for the purpose of initiating proceedings for reassessment is not a mere procedural requirement but it is a condition precedent for initiation of proceedings for reassessment under Section 147. However, service of notice under Section 148 of the IT Act is an integral part of the cause of action arising out of initiation of a proceeding under Section 147 (see CESC Ltd. v. DCIT (2003) 263 ITR 402 (Cal.)). 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ;To issue' means to send out, to send out officially; to send forth; to put forth; to deliver, for use, or unauthoritatively; to put into circulation; to emit; to go out (Burrill); to go forth as a authoritative or binding, to proceed or arise from; to proceed as from a source (Century Dict.) Issue of Process. Going out of the hands of the clerk, expressed or implied, to be delivered to the Sheriff for service. A writ or notice is issued when it is put in proper form and placed in an officer's hands for service, at the time it becomes a perfected process. Any process may be considered 'issued' if made out and placed in the hands of a person authorised to serve it, and with a bona fide intent to have it served. 28. Thus, the expression to issue in the context of issuance of notice, writs and process, has been attributed the meaning, to send out; to place in the hands of the proper officer for service. The expression shall be issued as used in Section 149 of the IT Act would therefore have to be read in the aforesaid context. Thus, the expression shall be issued would mean to send out to the place in the hands of the proper official for service. A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e deemed to have been served at the time when the letter would be delivered in the ordinary course of post to the assessee. 32. In this connection, the decision of a Division Bench of the Delhi High Court in the matter of ST Microelectronics (P.) Ltd v. Deputy Commissioner of Income-tax (2016) 384 ITR 550 (Delhi) may be noticed herein in which the assessee filed return of income, it changed its address thereafter, new address was updated in PAN database which was duly recorded and all communications were thereafter received by petitioner from respondents at new address. The Delhi High Court relied upon para 12 of the judgment of the Supreme Court in the matter of Collector of Central Excise v. M.M. Rubber Co. AIR 1991 SC 2141 which states as under: - It may be seen therefore, that, if an authority is authorised to exercise a power or do an act affecting the rights of parties, he shall exercise that power within the period of limitation prescribed therefore. The order or decision of such authority comes into force or, becomes operative or becomes an effective order or decision on and from the date when it is signed by him. The date of such order or decision is the date on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Ardent Steel Limited, A 401 Lotus Corporat Park, Jay Coach Signal, Off Western Express, Highway Goregoen E, Mumbai, Maharashtra 400063 Tel. No.: 91 9437076481 35. The petitioner has filed number of documents along with his application clearly demonstrating that the petitioner has been issued with show cause notice under Section 271(1)(c) of the IT Act for the assessment year 2008-09 by the same assessing officer namely Shri Birendra Kumar, Assistant Commissioner of Income- tax (Central) 2, Raipur, on 17-6-2016 in the address A-401, Lotus Corporation Park, Goregaon (East), Mumbai (M.H.) ; notice under Section 274 read with Section 271 {notice under Section 271(1)(c)} of the IT Act on 31-3-2016; notice under Section 142(1) of the IT Act on 18-3-2016; notice under Section 143(2) of the IT Act on 23-2- 2016; and notice under Section 142(1) of the IT Act on 12-2-2016. All notices have been issued and served to the petitioner on the new address A-401, Lotus Corporation Park, Goregaon (East), Mumbai (M.H.) . The respondents have neither filed the said notice dated 15-3-2016 with envelope having the postal endorsement left with a copy to the other side n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t which provides as under: - Notice deemed to be valid in certain circumstances. 292BB. Where an assessee has appeared in any proceeding or co-operated in any inquiry relating to an assessment or reassessment, it shall be deemed that any notice under any provision of this Act, which is required to be served upon him, has been duly served upon him in time in accordance with the provisions of this Act and such assessee shall be precluded from taking any objection in any proceeding or inquiry under this Act that the notice was- (a) not served upon him; or (b) not served upon him in time; or (c) served upon him in an improper manner: Provided that nothing contained in this section shall apply where the assessee has raised such objection before the completion of such assessment or reassessment. 39. A careful perusal of the aforesaid provision would show that a proviso is appended to the main provision which provides that the aforesaid provision would not apply where the assessee has raised such objection before the completion of such assessment or reassessment. In the instant case, the petitioner has raised objections while submitting its reply to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f Hira Group in his statement given on oath has accepted the findings of the search team. In his reply to the Question No. 24 in which the name of your company M/s Ardent Steel Ltd. is categorically mentioned alongwith the names other concerns of the Hira Group of Companies, Shri B.L. Agrawal has clearly stated that various companies of Hira Group which includes M/s Ardent Steel Ltd. had introduced undisclosed share application/capital money through Kolkata based paper concerns. ... 41. The aforesaid narration of facts would show that no notice was served to the petitioner. The plea of Section 292BB of the IT Act would not be available to the petitioner as the petitioner has submitted its objection on 18-7-2016 to the assessing officer prior to the completion of assessment proceeding. Law in this regard is well settled which may be noticed herein profitably. 42. A Full Bench of the Allahabad High Court in the matter of Laxmi Narain Anand Prakash v. Commissioner of Sales Tax AIR 1980 All 198 has held that the notice of initiation proceeding under Section 21 of the U.P. Sales Tax Act, 1947 was a condition precedent and not only a procedural requirement. The mere fact that the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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