2015 (10) TMI 1480 - AT - Income Tax

Reopening of assessment - proceedings initiated without a valid notice - Held that - We are conscious that the apex court in Pooran Mal v. Director of Inspection (Investigation) 1973 (12) TMI 2 - SUPREME Court clarified that the test of admissibility of evidence under the Indian jurisprudence lies in its relevance, so that even materials or information found during or as a result of an illegal search could also be put to use or relied on in framing an assessment. Why, even independent of the said decision, an assessment could only be on the strength of the materials and, further, upon duly confronting the same to the assessee, and the validity of the reliance would not be impacted on the process or the manner in which the information/material has come in the possession of the Revenue. So, however, it is the validity of the assessment proceedings itself that is at stake in the present case. The proceedings initiated without a valid notice under section 148(1) cannot be recognised in the eye of the law. - Decided in favour of assessee

Summary

Issues:
1. Maintainability of assessment proceedings based on notice under section 148 dated March 30, 2010.

Detailed Analysis:
The appeal was filed by the Revenue against the order of the Commissioner of Income-tax (Appeals)-I, Mumbai, allowing the assessee's appeal regarding the assessment under section 143(3)/147 of the Income-tax Act, 1961 for the assessment year 2005-06. The main issue was the validity of the assessment proceedings initiated through a notice under section 148 dated March 30, 2010. The assessee contended that the notice was invalid as the reasons for issuing it were recorded on March 31, 2010, and not on the date of the notice. On the other hand, the Revenue argued that the reasons were dictated on March 30, 2010, and signed on March 31, 2010, making the notice valid within the prescribed time limit.

The Tribunal observed that the notice under section 148 was dated March 30, 2010, and was signed by the Assessing Officer on the same date, indicating that it was processed and issued on that day. The Tribunal emphasized the importance of recording reasons before issuing such a notice, as mandated by section 148(2) of the Act. The Tribunal rejected the argument that the notice could be considered valid if signed a day later, stating that adherence to procedural requirements is crucial for the validity of such notices.

The Tribunal referred to legal precedents to highlight the significance of following procedural requirements for jurisdictional notices. It emphasized that even if information obtained illegally could be used for assessment, the validity of the assessment proceedings themselves is essential. In this case, the Tribunal concluded that the notice under section 148 and the subsequent assessment proceedings were invalid due to the procedural irregularity in issuing the notice.

As a result, the Tribunal declared the notice under section 148 and the assessment proceedings initiated based on it as legally flawed. The decision to quash the assessment was upheld, and the Revenue's appeal was dismissed. The judgment was pronounced in open court on March 18, 2015.