2023 (6) TMI 774 - HC - Income Tax

Scrutiny assessment - Validity of Notice u/s 143(2) - condition precedent for framing of an income tax assessment - HELD THAT - The notice u/s 143(2) issued in this case does not suffer from any legal infirmity as it satisfies all ingredients under that provision. The order of assessment dated 20.12.2019 is confirmed qua this count. Upon conclusion of dictation of this order, learned counsel for the petitioner would request leave to file a statutory appeal before the Appellate Commission. The writ petition has been instituted on 09.03.2020, a few months beyond the statutory limitation provided. However, learned Standing Counsel does not very seriously object to this Court condoning the intervening delay. Hence, petitioner is permitted to approach the appellate authority by way of statutory appeal and such appeal, if filed, within a period of two (2) weeks from date of receipt of this order, shall be taken on file by the Commissioner of Income Tax (Appeals) without reference to limitation, but ensuring compliance with all other statutory conditions.

Summary

Issues involved:
The challenge to an order of assessment under the Income Tax Act, 1961 based on the adequacy of notice under Section 143(2).

Summary:
The petitioner contested the order of assessment primarily focusing on the veracity of the notice under Section 143(2) of the Income Tax Act. The petitioner argued that the notice dated 09.08.2018 was inadequate as it did not sufficiently specify the issues for scrutiny. Citing a Delhi High Court decision, the petitioner emphasized that the notice must not be mechanical and should reflect the assessing authority's satisfaction regarding the selected issue. In response, the respondent contended that the notice complied with statutory requirements and correctly identified the issue for further examination.

Upon hearing both parties, the court found no merit in the petitioner's argument. It affirmed that a notice under Section 143(2) is essential for income tax assessment, and in this case, the notice was duly issued. The court explained that the selection of the petitioner's return for limited scrutiny, specifically focusing on share capital/capital, was in line with routine procedure. The notice under Section 143(2) adequately conveyed the purpose of scrutiny and provided the petitioner with an opportunity to present supporting evidence.

Regarding the Delhi High Court decision cited by the petitioner, the court clarified that it pertained to a different context involving advance rulings. The court highlighted that the notice under Section 143(2) in this case met the legal requirements and did not suffer from any infirmity. Consequently, the order of assessment dated 20.12.2019 was upheld. The petitioner was granted permission to file a statutory appeal within a specified timeframe. The writ petition was dismissed with liberty, and no costs were imposed.

Additionally, the court noted that an interim stay had been granted subject to certain conditions, but only partial payment had been made by the petitioner. Therefore, the revenue was authorized to recover the disputed demand in accordance with the law.