2012 (9) TMI 829 - HC - Income Tax

Appeal against order of Tribunal setting aside the order passed by CIT on the ground that CIT has nowhere recorded his satisfaction, but it was the satisfaction of Income-tax Officer (Technical), who is not competent to revise order u/s 263 - Held that - Provisions of Section 299-BB deals with the procedure for service of notice and in case, there is a defective service of notice, it provides that if the assessee has cooperated, it will not be open for him to raise the plea, whereas in the instant case, it is not the case of the service of notice, but the initial issuance of notice, which has not been signed by the competent authority as a finding has been recorded by the Tribunal that the notice has been issued under the signature of Income-tax officer (Technical), whereas in view of the provisions of powers u/s 263 (1), it is only the CIT to issue notice. Order of Tribunal upheld. It is also relevant that pleas can be raised only out of the judgment passed by the Tribunal or other authorities, but the plea, which was not raised at any stage, cannot be raised for the first time before this Court. No other arguments have been advanced in respect of other questions framed in the memo of appeal.

Summary

Issues:
1. Jurisdiction of Commissioner of Income-tax under Section 263 of the Income-tax Act.
2. Validity of notice issued by the competent authority.
3. Applicability of Section 299BB regarding objection to notice served.

Issue 1: Jurisdiction of Commissioner of Income-tax under Section 263 of the Income-tax Act:
The High Court examined the appeal challenging the Tribunal's decision to set aside an assessment order under Section 263 of the Income-tax Act. The Tribunal found that the Commissioner of Income-tax (CIT) did not record his satisfaction before revising the order, as required by law. It was noted that the Income-tax Officer (Technical) lacked the authority to revise orders under Section 263. The Court emphasized that the CIT must apply his mind and be satisfied that an order is erroneous and prejudicial to the revenue before taking action under Section 263.

Issue 2: Validity of notice issued by the competent authority:
The appellant contended that the notice issued under Section 263 was improper due to the absence of the CIT's signature, as mandated by the Act. The Court analyzed the provisions of Section 299BB, which deal with the service of notice. It clarified that while the section precludes an assessee from objecting to a notice if they have cooperated in the proceedings, it does not apply if the objection is raised before the completion of assessment. In this case, the appellant raised the issue of improper notice during the appeal stage, which was not permissible under the law.

Issue 3: Applicability of Section 299BB regarding objection to notice served:
The Court delved into the provisions of Section 299BB, emphasizing that if an assessee cooperates in the proceedings, they cannot later object to the notice served. However, the section allows objections to be raised before the completion of assessment or reassessment. In this case, the appellant's objection to the notice's validity was raised during the appellate stage, which was deemed impermissible under the law. The Court dismissed the appeal based on these findings and upheld the Tribunal's decision to set aside the assessment order.

This detailed analysis of the judgment highlights the key legal issues surrounding the jurisdiction of the Commissioner of Income-tax, the validity of notices issued, and the applicability of relevant provisions under the Income-tax Act.