2021 (7) TMI 840 - HC - Income Tax

Reopening of assessment u/s 147 - Notice issued beyond the period of limitation - HELD THAT - In the present case, the initial notice under Section 148 of the Income Tax Act was issued on 31.03.2018, which was despatched on the same day and the cover was franked by the Postal Department on 02.04.2018, in view of the fact that 01.04.2018 was a Sunday, thus, for all purposes, notice was issued for reopening of assessment within the period of limitation for the assessment year 2011-12, and therefore, the respondent is to proceed further in accordance with law by following the procedures contemplated under the Act as well as the directives issued by the Hon'ble Supreme Court of India in the case of GKN Driveshaft (India) Ltd.. 2002 (11) TMI 7 - SUPREME COURT and such an exercise is directed to be done as expeditiously as possible.

Summary

Issues:
Challenge to notice issued under Section 148 of the Income Tax Act, 1961 and corrigendum to notice dated 31.03.2018 on grounds of being beyond the period of limitation.

Analysis:
The petitioner submitted his return of income, which was assessed, but the respondent issued a notice under Section 148 for reopening the assessment on 31.03.2018. The petitioner contended that the notice and corrigendum were issued beyond the limitation period, rendering them invalid. The corrigendum changed the assessment year from 2010-11 to 2011-12, further complicating the issue. The petitioner relied on a Gujarat High Court judgment and argued that any notice issued beyond the limitation period lacks statutory sanction.

The respondent argued that the delay in franking the cover was due to a holiday, not a violation of statutory provisions. They contended that the corrigendum was to rectify a typing error and should not affect the limitation period. The court noted the difference between issuing and serving a notice under Section 148, emphasizing that the issuance of notice is crucial, not the actual delivery to the assessee. The court referred to Section 149 of the Act, which specifies the time limit for issuing notices, highlighting that the focus is on the issuance, not the service.

The court clarified that the issue of notice by the competent authority is essential, and the service to the assessee is a subsequent step. The court emphasized that for determining the limitation period, the issuance of notice is sufficient, and delays in serving the notice do not affect the validity of the notice. The court concluded that the notice in this case was issued within the limitation period, despite the delay in franking the cover due to a holiday. The respondent was directed to proceed with the assessment following the procedures under the Act and Supreme Court directives.

In conclusion, the writ petitions challenging the notice and corrigendum were dismissed, with directions for the respondent to continue with the assessment process promptly.