2015 (12) TMI 1767 - AT - Income Tax

Scrutiny / regular assessment u/s 143(3) - validity of issue of notice - effect of revision of belated return - section 139(4) r.w.s. 139(5) - period of limitation - additions towards capital gains - long term or short term capital gain - Held that - A perusal of sub-section (5) of section 139 would show that the provisions relating to filing of revised return are applicable only to the return filed u/s. 139(1) or return of income filed in pursuance to notice u/s. 142(1) of the Act. A bare reading of the provisions of sub-section (5) of section 139 makes it unambiguously clear that belated return filed under the provisions of section 139(4) cannot be revised. Since the revised return filed by the assessee is invalid and non-est in eye of law the period of limitation for issuing notice u/s. 143(2) has to be calculated from the date of filing of original return. The original return was filed on 12-12-2008 i.e. in the financial year 2008-09 the period of limitation for issuing notice u/s. 143(2) with reference to original return comes to an end on 30-09-2009. Therefore the notice was clearly issued beyond the statutory period of limitation. Since the notice issued u/s. 143(2) is barred by limitation no valid assessment could have been made on the assessee by Assessing Officer in the absence of valid notice u/s. 143(2) of the Act. Decided in favor of assessee.

Summary

Issues Involved:
1. Validity of notice issued under section 143(2) of the Income Tax Act.
2. Addition of Rs. 17,50,000/- as short term capital gain.
3. Addition of Rs. 24,39,063/- as long term capital gain.

Detailed Analysis:

1. Validity of Notice Issued under Section 143(2):

The assessee contested the validity of the notice issued under section 143(2), arguing it was issued beyond the statutory time limit. The original return was filed on 12-12-2008 under section 139(4), and a revised return was filed on 11-05-2009. The notice under section 143(2) was issued on 18-08-2010, which the assessee claimed was beyond the permissible period. According to section 143(2), no notice should be served after six months from the end of the financial year in which the return is furnished. The Tribunal noted that the revised return filed under section 139(4) is invalid as per section 139(5), which only allows revision of returns filed under section 139(1) or in response to a notice under section 142(1). The limitation period for issuing the notice should be counted from the original return date, making the notice issued on 18-08-2010 time-barred. The Tribunal referenced the Supreme Court's decision in ACIT Vs. Hotel Blue Moon, emphasizing that the issuance of a notice within the statutory time limit is mandatory and not curable under section 292BB. Consequently, the assessment proceedings were deemed invalid, and the assessment order was annulled.

2. Addition of Rs. 17,50,000/- as Short Term Capital Gain:

Since the Tribunal annulled the assessment order based on the invalidity of the notice under section 143(2), the merits of the addition of Rs. 17,50,000/- as short term capital gain were not adjudicated. The Tribunal did not provide further analysis on this issue as it became academic.

3. Addition of Rs. 24,39,063/- as Long Term Capital Gain:

Similarly, the addition of Rs. 24,39,063/- as long term capital gain was not examined on merits due to the annulment of the assessment order. The Tribunal's decision on the invalidity of the notice under section 143(2) rendered the discussion on this issue unnecessary.

Conclusion:

The Tribunal allowed the appeal of the assessee, primarily on the grounds that the notice issued under section 143(2) was time-barred and thus invalid. As a result, the assessment order was annulled, and the issues regarding the additions of short term and long term capital gains were not further adjudicated. The Tribunal's decision emphasized the mandatory nature of the statutory time limits for issuing notices under section 143(2) and the non-curable nature of defects in such notices.