2008 (1) TMI 378 - HC - Income Tax

On a plain reading of section 163(2) of the Act, it appears to us that when an order adverse to the assessee/agent is passed by the Assessing Officer, then a written order is required to be made. However, if there is no objection to the agent continuing the proceedings on behalf of the assessee, no specific order needs to be passed by the Assessing Officer - notice was issued to the assessee under section 148 on January 14, 2000, and it was served on the assessee on January 31, 2000 - the notice was time barred in view of the provisions of section 149(3)

Summary

Issues:
1. Timeliness of notice under section 148 of the Income-tax Act, 1961.
2. Requirement of a specific order treating a person as an agent of the assessee under section 163(2) of the Act.

Analysis:
1. The High Court addressed the issue of the timeliness of a notice issued under section 148 of the Income-tax Act, 1961. The case involved a return filed by M/s. Marubeni Corporation as the agent of the assessee for the assessment year 1996-97. The notice under section 148 was issued on January 14, 2000, and served on January 31, 2000. The assessee contended that the notice was time-barred as it should have been served before March 31, 1999, as per section 149(3) of the Act. This contention was raised before the Tribunal as an additional ground, which was accepted, leading to the conclusion that the notice was indeed issued beyond the prescribed period.

2. Another issue addressed in the judgment was the requirement of a specific order treating a person as the agent of the assessee under section 163(2) of the Act. The Revenue argued that no such order was passed in this case, citing section 163(2) which states that a person cannot be treated as the agent of a non-resident unless given an opportunity to be heard by the Assessing Officer. The Court interpreted section 163(2) and held that while an adverse order necessitates a written order, if there is no objection to the agent representing the assessee, no specific order is required. Referring to precedent, the Court clarified that only an adverse order, which is appealable, needs to be made in writing to protect the rights of the assessee or the agent. In this case, since the proceedings continued without objection, no specific order was needed.

In conclusion, the High Court found no error in the Tribunal's decision that the notice was issued beyond the prescribed period and dismissed the appeal, stating that no substantial question of law arose from the case.