2011 (5) TMI 911 - HC - Income Tax

Validity of service of notice u/s 148 - curable u/s 292B - In present case Notice u/s 148 of the Act was issued to the assessee. In response thereto the assessee filed its return declaring nil income and the assessment was completed by making additions. Feeling aggrieved the assessee filed an appeal before the CIT (A). the CIT(A) deleted the addition made on account of undisclosed income in servicing of vehicles. Being not satisfied the assessee as well as the revenue filed appeals before the Tribunal. The Tribunal dismissed the appeal filed by the revenue and allowed the appeal filed by the assessee. The Tribunal recorded that the service of notice u/s 148 was not valid and consequently the assessment order was annulled. Hence the present appeal by the revenue. HELD THAT - It is not disputed that in the return which was filed by the assessee it was mentioned that the same was filed in response to notice u/s 148. No objection regarding valid service of notice was raised before the AO. Once that is so the argument of the assessee that there was no valid service of notice u/s 148 fails. The Tribunal was thus in error in concluding otherwise and holding the proceedings to be invalid. Suffice it to notice that the plethora of judgments on which learned counsel for the assessee had placed reliance does not advance the case of the assessee as either in those cases Section 292BB or Section 292B was not under consideration or it was on individual fact situation involved therein that the cases had been decided. In view of the above the substantial questions of law are answered in favour of the revenue and against the assessee.

Summary

Issues:
Validity of notice under Section 148 of the Income Tax Act, 1961 and its impact on assessment proceedings.

Analysis:

Issue 1: Validity of Notice under Section 148
The appeal before the High Court concerned the validity of the notice issued under Section 148 of the Income Tax Act, 1961. The Revenue contended that the notice was validly issued and served in accordance with the provisions of the Act. The Revenue relied on Section 292BB inserted by the Finance Act, 2008, which deemed the notice served if the assessee cooperated in the proceedings. The assessee argued that the defect in the notice was a jurisdictional defect and not curable under Section 292B. The Court examined the provisions of Section 292BB and noted that it applied to all pending proceedings from 1.4.2008. The Court emphasized that the assessee's return mentioned it was filed in response to the notice under Section 148, and no objection was raised before the assessing officer regarding the notice's validity. Therefore, the Court held that the notice was validly served, rejecting the Tribunal's conclusion that the proceedings were invalid.

Issue 2: Applicability of Section 292B and 292BB
The Court discussed the applicability of Section 292B and 292BB in the context of the case. Section 292B protected assessment proceedings from being invalidated due to minor mistakes, defects, or omissions if the proceedings were in conformity with the Act's intent and purpose. On the other hand, Section 292BB deemed the notice served if the assessee participated in the proceedings, with an exception if objections were raised before completion of assessment. The Court highlighted that Section 292BB was prospective from 1.4.2008 and applied to pending proceedings. It referenced a Division Bench judgment emphasizing that technical defects would not invalidate assessment orders if the proceedings were in line with the Act's intent.

Conclusion:
The High Court ruled in favor of the Revenue, holding that the notice under Section 148 was validly served, and the proceedings were not invalidated by minor defects. The Court directed the matter to be remanded to the Tribunal for a fresh decision on merits. The parties were instructed to appear before the Tribunal on a specified date for further proceedings.