2013 (2) TMI 621 - HC - Income Tax

Income escaping assessment - notice u/s 147/148 - non mentioning of AY in the notice - assessee participated in the reassessment proceeding. - appeal was allowed in part by the CIT(A) against the order u/s 147 - validity of assessment u/s 292B and 292BB - held that - No party can claim to have vested right in injustice being done because of some slip of pen, or omission causing no prejudice to anyone. The section is intended to ensure that an inconsequential technicality does not defeat justice. Nature of mistake will determine whether a return, order or proceeding is vitiated or not. The only defect which could be pointed out is that the assessment year was not mentioned in the reasons recorded by the Assessing Officer. Unless it is shown that assessee was misled by not mentioning the assessment year in the reasons recorded, we are of the view that if the reasons recorded relate to a particular year, the reassessment proceeding initiated relate to that particular year and the assessee participated in the reassessment proceeding without raising any objection, such an objection cannot be raised by the assessee at a subsequent stage of the proceeding. Order of the Tribunal cannot be sustained - Decided in favor of Revenue.

Summary

Issues:
Appeal against reassessment proceeding under Section 147 of the Income-tax Act, 1962 for the Assessment Year 2002-03 based on non-mention of assessment year in the reasons recorded by the Assessing Officer.

Analysis:
The appeal in question pertains to a reassessment proceeding under Section 147 of the Income-tax Act, 1962 for the Assessment Year 2002-03. The Assessing Officer initiated reassessment proceedings after recording reasons, following which the assessee participated in the process. Subsequently, additions were made during the reassessment, leading to an appeal by the assessee. The Commissioner of Income Tax (Appeals) partially allowed the appeal, prompting the matter to be taken to the Tribunal. The primary contention raised by the assessee during the Tribunal appeal was the absence of the assessment year in the reasons recorded by the Assessing Officer. The Tribunal, in its order, quashed the reassessment proceedings citing this technical ground.

Four substantial questions of law were framed, including whether the Tribunal erred in quashing the reassessment solely based on the non-mention of the assessment year, despite the assessee's cooperation during the proceedings. The Department argued that the non-mention of the assessment year was inconsequential under Section 292B of the Act, as the assessee was not misled and participated in the reassessment treating it as for the Assessment Year 2002-03. On the other hand, the respondent contended that the initiation of reassessment was invalid due to the absence of the assessment year in the reasons recorded.

The Court considered the arguments presented and highlighted the importance of Section 292B, which addresses curable defects in proceedings to ensure substantial justice prevails over technicalities. It emphasized that an inconsequential technicality should not hinder justice delivery. The Court ruled that the participation of the assessee in the reassessment proceedings without raising objections regarding the assessment year indicated no prejudice due to the omission. The existence of a valid notice under Section 148 was noted as a crucial condition, which was met in this case.

Ultimately, the Court held that the reasons recorded by the Assessing Officer were not invalidated by the absence of the assessment year and directed the matter back to the Tribunal for a merit-based examination. The appeal was allowed in favor of the Department, emphasizing that objections regarding the assessment year could not be raised at a later stage if the reassessment proceeding was initiated and participated in without issue.