2003 (3) TMI 257 - AT - Income Tax

Summary

Issues Involved:
1. Validity of the assessment order passed u/s 147 due to the belated issuance of notice u/s 143(2).
2. Whether the DCIT (A) erred in annulling the assessment order by not considering the arguments of the Assessing Officer.

Summary:

Issue 1: Validity of the assessment order passed u/s 147 due to the belated issuance of notice u/s 143(2)

The Assessing Officer issued a notice u/s 148 on 27-3-1992, and the return of income was filed on 27th May 1992. Subsequently, notices u/s 142(1) and 143(2) were issued on 11th March 1994, which was beyond the 12-month statutory limit from the end of the month in which the return was furnished. The DCIT (A) annulled the assessment order on the grounds that the notice u/s 143(2) was issued beyond the statutory time limit, rendering the assessment order invalid. The revenue appealed against this decision.

The Ld. DR argued that the order u/s 147 is distinct from the order u/s 143(2) and that the provisions of section 147 encompass the requirements of section 143(2). The DR contended that the issuance of notice u/s 143(2) is redundant if the Assessing Officer has already recorded reasons for income escaping assessment u/s 147. The DR cited various case laws to support the argument that the time limit for issuing notice u/s 143(2) does not apply to returns filed in response to notice u/s 148.

On the other hand, the Ld. Counsel for the assessee argued that any return filed in compliance with notice u/s 148 should be treated as a return filed u/s 139, thereby necessitating the issuance of notice u/s 143(2) within the statutory time limit. The Counsel cited several judgments, including the Hon'ble Supreme Court's decision in R. Dalmia v. CIT, which emphasized that the procedure laid down in sections subsequent to section 139 must be followed in assessments and reassessments u/s 147.

Issue 2: Whether the DCIT (A) erred in annulling the assessment order by not considering the arguments of the Assessing Officer

The DCIT (A) annulled the assessment order on the grounds that the notice u/s 143(2) was issued beyond the statutory time limit, without properly considering the arguments of the Assessing Officer. The Ld. DR argued that the DCIT (A) ignored the material facts and the legal provisions that distinguish the order u/s 147 from the order u/s 143(2).

Conclusion:

After careful consideration of the rival submissions and the decisions cited, the Tribunal held that the return of income filed in compliance with notice u/s 148 should be considered as if it were a return filed u/s 139. Therefore, the provisions of section 143(2) are mandatory, and the non-issuance of notice within the statutory time limit renders the assessment order invalid. Consequently, the Tribunal upheld the DCIT (A)'s decision to annul the assessment order and dismissed the revenue's appeal.