2019 (1) TMI 1484 - HC - Income Tax

Validity of notice u/s 143(2) - Invalid return - Removal of the defects in the return initially filed defectively - notice barred by the limitation - Held that - The petitioner filed the return of income on 16th October, 2016. This return was found to be defective. Department called upon petitioner to remove such defects which was done on 12th September, 2017. Though at one stage the department had some doubt about the curing of defects, on a representation of the petitioner it did not raise this issue further and thus impliedly accepted the petitioner's representation that there were no further defects after the petitioner removed the defects on 12th September, 2017. The issue arising in the present petition is no longer resintegra. A division bench of this Court in case of Prime Securities Limited Vs. Varinder Mehta, Assistant Commissioner of Income-Tax 2009 (4) TMI 108 - BOMBAY HIGH COURT had held that once the defects are removed within the time permitted by the department, the same would relate back to the original date of filing of the return. In the result, impugned notice is set aside - Decided in favour of assessee.

Summary

Issues:
Challenge to notice under Section 143(2) of the Income Tax Act as time-barred.

Analysis:
The petitioner, a registered company, filed its income tax return for the assessment year 2016-17 on 17th October 2016, declaring a total income of ?22.15 crores. The Assessing Officer issued a notice under Section 139(9) on 28th August 2017 to rectify defects in the return, which were rectified by the petitioner on 12th September 2017. The petitioner contended that the original return was defective but not invalid due to technical issues. Subsequently, another notice was issued on 19th September 2017 stating that the rectified return was also defective. The petitioner represented that there were no defects in the return, which the department seemingly accepted. The Assessing Officer processed the return under Section 143(1) on 10th February 2018. A notice under Section 143(2) was issued on 10th August 2018, which the petitioner challenged as time-barred, arguing that it should have been issued by 30th September 2017, six months after the original return filing. The department contended that the notice was valid based on the date of rectification of defects on 12th September 2017.

The key question was whether the date of filing the return should be considered as 17th October 2016 (original filing) or 12th September 2017 (rectification of defects). The court referred to a previous case where it was held that rectifying defects within the permitted time relates back to the original filing date. The court emphasized that the critical date is when the return was initially presented, not when defects were rectified. A similar decision by the Punjab and Haryana High Court supported this interpretation. Consequently, the court set aside the notice dated 15th November 2018 as time-barred, ruling in favor of the petitioner.