2010 (2) TMI 77 - HC - Income Tax

Period of limitation for issuance of notice u/s 148 ITAT held that notice was issued beyond period of 4 years held that - The case of the Revenue is that there is a factual mistake in the impugned order passed by the Tribunal in as much as approval from the Commissioner was obtained and in that regard reliance has been placed on document Annexure A-1 to show that the approval was obtained from the Commissioner of Income Tax, Faridabad on 2.5.2003. The aforesaid error has been pointed out by the counsel for the Revenue for which proper course would be by getting it rectified rather than approaching this Court for determination of a substantial question of law. Accordingly, we relegate the Revenue to seek remedy in accordance with law.

Summary

Issues:
1. Validity of notice under Section 148 of the Income Tax Act issued after the expiry of four years from the end of the relevant assessment year.
2. Requirement of prior approval from the Chief Commissioner of Income Tax or Commissioner of Income Tax under Section 151(1) of the Act for issuing such notice.

Analysis:

Issue 1:
The High Court addressed the appeal filed by the Revenue challenging the order of the Income Tax Appellate Tribunal, which held that the notice under Section 148 of the Income Tax Act was issued after the four-year period from the end of the relevant assessment year. The original assessment under Section 143(3) was completed on 31.3.2003, and the notice under Section 148 was issued on 6.5.2003 for the assessment year 1997-98. The Tribunal's decision was based on the fact that the notice was issued after the expiration of the four-year period. The Revenue contended that there was a factual mistake in the Tribunal's order as the approval from the Commissioner was obtained, citing document Annexure A-1 showing approval from the Commissioner of Income Tax on 2.5.2003. The Court noted this error and advised the Revenue to rectify it through the appropriate legal channels rather than seeking a determination of a substantial question of law from the Court.

Issue 2:
The key contention in this issue was whether the notice under Section 148 of the Act could be issued after the four-year period if prior approval from the Chief Commissioner of Income Tax or Commissioner of Income Tax was obtained under Section 151(1) of the Act. The Revenue claimed that the approval was indeed obtained from the Commissioner, which the Tribunal had overlooked. The Court acknowledged the factual error and directed the Revenue to address the matter through the correct legal procedures. The judgment emphasized the importance of following the proper course of action in rectifying errors rather than approaching the Court for resolution of substantial legal questions. Consequently, the Court disposed of the appeal, indicating that the Revenue should seek the necessary remedy in accordance with the law.

In conclusion, the High Court's judgment highlighted the significance of obtaining prior approval for issuing notices under Section 148 of the Income Tax Act and the need to address factual errors through appropriate legal channels rather than seeking a determination of substantial legal questions from the Court. The Court's decision underscored the importance of following the correct legal procedures in resolving such matters.