2012 (12) TMI 1148 - HC - Income Tax

Validity of notice u/s 143(2) - availability of Assessee to receive the notice - Held that - We find that admittedly the notice for the assessment year 2005-2006 was issued on 16.10.2006 u/s 143(2) and was served upon the petitioner on 2.11.2006. The proviso to Section 143(2)(ii) of the Act specifically provides that no notice shall be served on the assessee after the expiry of 12 months from the end of the month in which return has been furnished. The Parliament by en-acting the aforesaid proviso specifically, intended that the notice had to be served within a specified period and mere issue of a notice would not be sufficient. The notice had to be served upon the assessee within the period of 12 months from the end of the month on the day return has been filed. In the present case service on the authorized representative on 19.10.2006 cannot be treated to be a valid service in the eyes of law. The service has to be upon the assessee which in the present case was served on 2.11.2006. The principle laid down by Hon ble Supreme Court in case of Assistant Commissioner of Income Tax and another Vs. Hotel Blue Moon(2010 (2) TMI 1 - SUPREME COURT OF INDIA) would be fully applicable to the facts of the present case. Therefore, the notice dated 16.10.2006 filed as Annexure-2 to the writ petition which has been served on the petitioner on 2.11.2006 was clearly barred by limitation.

Summary

Issues:
1. Validity of the notice issued under section 143(2) of the Income Tax Act.
2. Barred by limitation as per the Proviso to Section 143(2)(ii) of the Act.
3. Service of notice on the authorized representative.

Analysis:
1. The petitioner sought a writ order to quash the notice dated 16.10.2006 issued under section 143(2) of the Income Tax Act and to restrain the respondent from further proceedings. The petitioner, a Proprietor of M/s Narain Filling Station, filed his return of income for the assessment year 2005-2006 on 17.10.2005, accompanied by duly audited accounts under section 44AB of the Act. The notice u/s 143(2) was issued on 16.10.2006 and served on the petitioner on 2.11.2006. The petitioner contended that the notice was barred by limitation as per the Proviso to Section 143(2)(ii) of the Act.

2. The respondent argued that the notice was issued within the 12-month period from the end of the month in which the return was filed, and even if the petitioner could not be served, it should not affect the proceedings. However, the petitioner disputed the service on the authorized representative as a valid notice service. The court considered the provisions of the Act, specifically the proviso to Section 143(2)(ii), which mandates serving the notice within 12 months from the end of the month in which the return was furnished.

3. The court held that service on the authorized representative on 19.10.2006 did not constitute valid service as the notice must be served upon the assessee, which occurred on 2.11.2006 in this case. Referring to a precedent set by the Hon'ble Supreme Court, the court concluded that the notice dated 16.10.2006 served on the petitioner on 2.11.2006 was indeed barred by limitation. Consequently, the court quashed the entire proceedings, ruling in favor of the petitioner's contention regarding the limitation issue.

In conclusion, the High Court of Allahabad ruled in favor of the petitioner, holding that the notice issued under section 143(2) of the Income Tax Act was indeed barred by limitation as per the Proviso to Section 143(2)(ii) of the Act. The court emphasized the importance of serving the notice within the prescribed period and invalidated the service on the authorized representative, deeming it necessary for the notice to be served directly on the assessee.