2016 (10) TMI 1310 - AT - Income Tax

Draft assessment order u/s 143(3) r.w.s. 144C - maintainability of th objection filed by the assessee under Form No. 35A - curable defect u/s 292B - DRP dismissing the application filed by the appellant in Form 35A in limine by holding that the application is invalid and non-est - Form No. 35A filed by the assessee is only a scanned copy containing the signature of the concerned person - HELD THAT - Revenue's only objection is regarding furnishing of the application in scanned copy. Otherwise, the said scanned copy is meant for the assessee and for the purposes of the Act in all respects. Further, we find it is undisputed fact that, in response to the show cause notice, the assessee attempts to file the Form No 35A in original and however, the same was not successfully allowed by the DRP. Rather, the DRP preferred to act on the said scanned copy of Form No 35A unfairly and considered the said the scanned application as non-est. Further, it is relevant to mention that the DRP failed to provide the written reasons for rejecting the Original Application attempted to be filed by the assessee in response to the show cause notice. Thus, in our opinion, the expression 'other proceedings' is wider enough to cover the present defect or omission of replacing the scanned copy with the original in time. We order AO accordingly. As per assessee original Form No.35A could not be furnished to replace the scanned copy which is already with DRP, within the prescribed time of 30 days for the reasons as the assessee geographically located in Singapore; the signed original application could not be received in India in time; to meet the dead lines, assessee filed the application with colour scanned copy of Form No.35 with the intention to replace the same with the original one at the time of hearing before the DRP; and there was a change in the tax consultant / AR of the assessee and the responsibility of replacing the scanned copy with the original application has missed inadvertently. As discussed above, we find, the same is not without reason and the same being the change in the Representative. As such, the furnishing of the scanned papers and replacing them with hard copies or soft copies, if any, is now not new to the Department. Further, now, the Revenue started accepting the e-filing of application / appeals these days. Why not this also should not be deemed as such but for the procedural defects, if any. Both decisions of the first appellate authority in treating the application non-est and dismissing the same as in limine are unsustainable in law. We order accordingly. Thus, grounds no.1 to 4 raised by the assessee are allowed.

Summary

Issues Involved:
1. Dismissal of the application filed by the appellant in Form 35A as invalid and non-est.
2. DRP's failure to adjudicate the appellant's case on merits.
3. Consideration of the defect in Form 35A as curable.
4. Whether treating the application as non-est rendered the assessment time-barred.

Issue-wise Detailed Analysis:

1. Dismissal of the application filed by the appellant in Form 35A as invalid and non-est:
The primary issue was whether the DRP was justified in dismissing the application filed by the appellant in Form 35A as invalid and non-est because it was a scanned copy and not the original. The appellant argued that the defect was curable under Section 292B of the Income Tax Act, which states that no return, assessment, notice, summons, or other proceeding shall be invalid merely due to any mistake, defect, or omission if it is in substance and effect in conformity with the intent and purpose of the Act. The Tribunal found that the expression "other proceedings" in Section 292B is broad enough to include the filing of the application to the DRP. It was noted that the scanned copy was duly signed and filed within the prescribed time. The Tribunal held that the DRP's decision to treat the scanned copy as non-est and dismiss the application in limine was unsustainable in law. The Tribunal allowed the grounds raised by the appellant on this issue.

2. DRP's failure to adjudicate the appellant's case on merits:
The appellant raised grounds stating that the DRP failed to adjudicate the case on merits. The Tribunal noted that the DRP did not address the other grounds raised by the appellant and only focused on the preliminary issue of the validity of the scanned application. The Tribunal directed that the remaining grounds raised in the appeal be remanded to the file of the DRP/AO for a decision on merits, ensuring a speaking order on each of the issues raised.

3. Consideration of the defect in Form 35A as curable:
The appellant argued that the defect in filing a scanned copy of Form 35A was curable and relied on various decisions supporting this view. The Tribunal agreed with the appellant's contention, emphasizing that the intent of the assessee was clear and that the defect was indeed curable under Section 292B. The Tribunal highlighted that the DRP failed to issue a defect notice in a timely manner and only raised the issue during the hearing proceedings, which was not appropriate.

4. Whether treating the application as non-est rendered the assessment time-barred:
The appellant contended that treating the application as non-est would render the assessment time-barred. The Tribunal examined the timeline and found that the appellant had filed the scanned copy within the prescribed 30 days and was prepared to replace it with the original. The Tribunal concluded that the assessment order made by the AO should not be considered time-barred if the application was treated as non-est. The Tribunal held that the DRP's decision to dismiss the application as non-est and the subsequent assessment order were not justified.

Conclusion:
The Tribunal allowed the appeal filed by the assessee, holding that the scanned copy of Form 35A was a curable defect under Section 292B and that the DRP's decision to dismiss the application in limine was unsustainable. The Tribunal remanded the remaining grounds to the DRP/AO for a decision on merits, ensuring a reasonable opportunity of being heard to the assessee. The order was pronounced on 19th October 2016.