2008 (1) TMI 9 - HC - Income Tax

Time barred notice - Assessee contented that they received the notice u/s 143(2) of the ITA, 1961 after the due date but revenue contented that they had issued a notice prior to the due date, hence burden on revenue to prove the same - Revenue unable to proved and notice held to be time barred

Summary

Issues:
- Service of notice under Section 143(2) of the Income Tax Act, 1961 within the statutory period of limitation of 12 months from the date of filing the return.

Analysis:

The judgment involves a dispute regarding the service of a notice under Section 143(2) of the Income Tax Act, 1961 within the prescribed statutory period. The assessee filed its return of income on 30th November, 1997, along with an audited balance sheet. Subsequently, a notice was issued on 28th November, 1998, stating a hearing on 8th December, 1998. However, no proceedings took place on the scheduled date as no one appeared on behalf of the assessee.

The crux of the issue lies in the fact that the assessee claimed to have received the first notice under Section 143(2) on 21st October, 1999, which was beyond the statutory 12-month period. The assessing officer proceeded to pass an assessment order under Section 144 of the Act, raising a tax demand. The tribunal, however, noted that there was no evidence to suggest that the initial notice dated 28th November, 1998 was served on the assessee within the prescribed time limit.

The tribunal rightly emphasized the importance of the revenue providing evidence to establish the timely service of the notice. Despite the affidavit filed by the assessee asserting non-receipt of the initial notice, no steps were taken by the revenue to verify the service status of the notice dated 28th November, 1998. The tribunal's decision was supported by the lack of material produced by the revenue to counter the assessee's claim.

In comparison to a previous case cited by the revenue, where the court emphasized the onus on the assessee to prove delayed receipt of the notice, the present case differs significantly. Here, the assessee consistently maintained that the notice dated 28th November, 1998 was never received, and the only notice acknowledged was the one dated 21st October, 1999. Consequently, the court held that the revenue failed to discharge its onus of proving timely service of the initial notice, leading to the dismissal of the appeal.

Furthermore, the judgment highlighted the recurring issue of the revenue filing frivolous appeals, leading to unnecessary burdens on the court and inconveniences for individuals. As a deterrent, the court imposed costs on the revenue and directed the payment of Rs.10,000 to be deposited for juvenile justice, emphasizing the need to discourage the filing of frivolous appeals and prioritize serious matters.

In conclusion, the judgment underscores the significance of establishing the timely service of statutory notices and discourages the filing of frivolous appeals by imposing costs on the revenue to promote a more responsible and efficient legal system.