2018 (12) TMI 335 - HC - Income Tax

Non-service of notice under Section 148 - entitled to raise the plea of limitation - Held that - From the reading of the impugned order, it appears that the authority found that there was undue delay caused by the petitioner in the proceedings and that is why the authority thought it not feasible to pass separate orders on the objections raised. The petitioner has seriously disputed that the petitioner caused any delay. We are unable to agree with the reason given by the authority since the objections ought to have been decided, as fairly stated by the counsel for the revenue. The next submission made by the learned counsel for the revenue that the revenue should be allowed to decide the objections now and the impugned orders should not be quashed, is having no force because as a sequel the impugned orders become illegal and will have to be quashed. The next submission made by the learned counsel for the revenue is that the revenue should be permitted to pass speaking order so also fresh assessment orders simultaneously. This submission has been objected to by the learned counsel for the petitioner on the ground that the right of the petitioner to challenge adverse orders after adjudication on the objections of the petitioner, if any, cannot be taken away. We find merit in her submission. The petitioner may have his legal remedy. The Court cannot prevent him. Petitioner then submitted that the petitioner should be given an opportunity to raise objections regarding limitation in respect of the proceedings in question. In our opinion, there can be no prohibition for the petitioner in raising the question of law, namely the issue of limitation before the authority and therefore, the petitioner is always at liberty to do so. All the question of law and the objections raised by the petitioner will have to be decided by the authority according to law. The averments made in the petition about furnishing of documents as contemplated by Section 78(6) of the Evidence Act is a matter of legal objection which may be decided by the authority.

Summary

Issues:
Challenge to assumption of jurisdiction under Section 148 of the Income Tax Act for assessment years 2006-2007 and 2007-2008, challenge to assessment orders, notices under Section 156 and Section 271(1)(c) read with Section 274, non-receipt of notices, objections filed by the petitioner, non-adjudication of objections, legality of assessment orders, consideration of legal objections including limitation, compliance with legal demands, necessity of speaking order.

Analysis:

Challenge to Assumption of Jurisdiction:
The petitioner sought quashing of assumption of jurisdiction under Section 148 of the Income Tax Act for the assessment years 2006-2007 and 2007-2008. The petitioner alleged non-receipt of notices, including the notice under Section 148 dated 23.03.2016. The petitioner emphasized the lack of compliance with legal demands for relevant legal documents necessary for filing objections.

Non-Adjudication of Objections:
The petitioner filed objections on 13.02.2018, which were not considered before the assessment orders were passed on 14.02.2018. The court noted that adjudication of objections is mandatory as held by the Apex Court. The failure to decide the objections rendered the subsequent actions and orders illegal, irrespective of the reasons cited for non-decision.

Legal Objections and Limitation:
The petitioner's counsel argued for the consideration of legal objections, including the right to challenge a speaking order and raise issues of limitation. The court affirmed the petitioner's right to raise legal objections and highlighted that all legal objections raised must be decided by the authority according to law.

Remittal for Fresh Hearing:
The court ordered the proceedings to be remitted to the respondents for fresh hearing and disposal of objections on facts and legal issues, including limitation, within six months. The impugned orders and related notices were quashed and set aside, emphasizing the necessity for compliance with legal procedures and the requirement for a speaking order in such matters.

Conclusion:
The judgment highlighted the importance of due process in tax assessment proceedings, emphasizing the mandatory nature of adjudicating objections raised by the assessee. It underscored the need for authorities to consider legal objections, provide necessary documents, and pass speaking orders in compliance with legal requirements. The decision to remit the proceedings for fresh hearing reflects the court's commitment to upholding procedural fairness and ensuring proper adjudication of objections in accordance with the law.