2004 (1) TMI 53 - HC - Income Tax

Validity of notice issued under section 143 (2) Notice does not mention clause of the said sub-section i.e. clause (i) or clause (ii) - The text of the notice without any mistake makes the intention clear for general purpose, not for specific purpose as required under clause (i) - Particularly, when the text thereof substantially makes the intention clear as to why and for what purpose the notice was served, notice cannot be held as bad in law for the specific clause having not been mentioned

Summary

Issues Involved:
1. Validity of the notice issued under section 143(2) of the Income-tax Act, 1961.
2. Jurisdiction of the Assessing Officer to issue a clarificatory notice after the expiry of the statutory period.
3. Suppression of material facts by the petitioner.
4. Waiver of objection by the petitioner through subsequent conduct.

Detailed Analysis:

1. Validity of the Notice Issued Under Section 143(2):
The writ petition challenges the notice dated October 21, 2002, issued under section 143(2) of the Income-tax Act, 1961, on the grounds that it did not specify whether it was issued under clause (i) or clause (ii) of the said section. The petitioner argued that the notice was invalid as it did not comply with the statutory requirements, and the subsequent clarificatory notice issued on November 17, 2002, was beyond the twelve-month time limit stipulated by the proviso to section 143(2). The court examined the notice's text and found it was issued in general terms, not for any specific purpose, and thus, it should be presumed to have been issued under clause (ii). The court held that the omission of the specific clause was a mere irregularity and did not render the notice null and void, especially since section 292B of the Act provides immunity for such mistakes or omissions if the notice is in substance and effect in conformity with the Act's intent and purpose.

2. Jurisdiction of the Assessing Officer to Issue a Clarificatory Notice:
The petitioner contended that the clarificatory notice issued after the expiry of the twelve-month period was invalid. The court disagreed, stating that the original notice was issued within the statutory period, and the clarificatory notice was merely an addendum with retrospective effect. The court emphasized that the clarificatory notice did not have an independent existence and was intended to correct a minor error, which is permissible under section 292B.

3. Suppression of Material Facts by the Petitioner:
The court addressed the issue of suppression of material facts, noting that the petitioner did not disclose his subsequent participation in the proceedings before the Assessing Officer after receiving the clarificatory notice. The court highlighted the importance of full and fair disclosure of all relevant facts in public law cases. It held that the petitioner's act and conduct, including seeking adjournments and participating in the proceedings, constituted a waiver of the objection to the notice's validity. The court found that the petitioner's failure to disclose these facts amounted to gross suppression of material facts, which is sufficient to dismiss the writ petition.

4. Waiver of Objection by the Petitioner Through Subsequent Conduct:
The court observed that the petitioner's subsequent actions, such as appearing before the Assessing Officer and requesting adjournments, indicated a waiver of the technical objection regarding the notice. The court emphasized that the objection was of a waivable nature, and the petitioner's conduct demonstrated an acceptance of the notice's validity. The court concluded that the petitioner was estopped from challenging the notice's legality due to his subsequent participation in the assessment proceedings.

Conclusion:
The court dismissed the writ petition, holding that the notice issued under section 143(2) was valid despite the omission of the specific clause. The clarificatory notice was deemed to have retrospective effect and was permissible under section 292B. The court also found that the petitioner's suppression of material facts and subsequent conduct amounted to a waiver of the objection to the notice's validity. Consequently, the writ petition was dismissed without costs.