2009 (12) TMI 53 - HC - Income Tax

Assessment u/s 144 Assessee claims that notice u/s 143(2) not received - The assessee filed his return for the assessment year 2005-06 on 30.06.2006 admitting a total income of Rs.2,05,280/-. It is the case of the revenue that the revenue issued notice under section 143(3) of the Act, but there was no response. The assessment was completed under section 144 on 24.12.2007 on a total turnover of Rs.37,32,880/- and a demand of Rs.17,22,990/- was made. The assessee is a flute artist. He claimed to be a non resident for the previous year 2004-05 and claimed to have been in India only for a total period of 181 days, but that was not accepted by the department by saying that the assessee has not proved by producing his stay outside India held that since department failed to produce the evidence of service of notice u/s 143(2) the order passed under section 144 of the Act was invalid and ab initio void decided in favor of assessee

Summary

Issues: Appeal under section 260A of the Income Tax Act against the order of the Income tax Appellate Tribunal regarding the assessment year 2005-06.

The judgment delivered by the High Court of Madras pertains to an appeal filed under section 260A of the Income Tax Act challenging the order of the Income tax Appellate Tribunal for the assessment year 2005-06. The primary question raised was whether the assessment under section 144 of the Income Tax Act, based on the details of stay provided by the assessee and the alleged non-receipt of notice under section 143(2) by the assessee, was valid. The assessee, a flute artist, claimed non-resident status for the previous year 2004-05, but the department held him to be a resident based on insufficient proof of stay outside India. Consequently, foreign income was added to the admitted Indian income. The Commissioner of Income Tax (Appeals) later declared the assessment under section 144 void ab initio due to the alleged non-receipt of notice, a decision upheld by the Tribunal. The High Court noted the absence of proof of notice service and upheld the Tribunal's decision, citing a similar ruling by the Delhi High Court. The appeal was dismissed as the revenue failed to establish any case for determining a question of law.

The High Court's analysis focused on the lack of evidence regarding the service of notice under section 143(2)/142(1) to the assessee before the assessment order under section 144 was finalized. Despite the department's contentions, the Tribunal found no proof of notice issuance or service to the assessee. The Tribunal's scrutiny of records revealed no evidence of sending the notice to the assessee on the alleged dates. Citing the Delhi High Court's decision in a similar case, the Tribunal affirmed the Commissioner of Income Tax (Appeals) order declaring the assessment void ab initio. The High Court concurred with the Tribunal's findings, emphasizing the revenue's failure to substantiate any legal question, resulting in the dismissal of the appeal without costs.