2004 (11) TMI 17 - HC - Income Tax

Notice u/s 148 - The assessees filed returns of income and the same were processed under section 143(1)(a) - The assessees derived income from property and share income from firms. Subsequently, the Assessing Officer issued notices under section 148 finding that the assessees claimed excessive deductions under section 24(1)(vi) of the Act while computing the income from property. The Assessing Officer disallowed the excess claim made by the assessees. In the instant case, admittedly, no notices under section 143(2) of the Act were served on the assessees within the stipulated period of twelve months and, therefore, the proceedings under section 143 of the Act come to an end and the matter becomes final. Hence, applying the ratio laid down by the Punjab and Haryana High Court in Vipan Khanna v. CIT, we are of the view that no substantial question of law arises for our consideration in these appeals. Accordingly, these appeals are dismissed

Summary

Issues:
1. Validity of reopening assessment under section 147 of the Income-tax Act.
2. Completion of assessment without issuing notice under section 143(2) within 12 months.

Analysis:

The High Court of Madras dealt with the appeal filed by the Revenue against the order of the Income-tax Appellate Tribunal, Madras "B" Bench, related to the reopening of assessments under section 147 of the Income-tax Act. The assessees had initially claimed excessive deductions under section 24(1)(vi) of the Act while computing income from property, leading to notices being issued by the Assessing Officer under section 148. The Assessing Officer disallowed the excess claims, prompting the assessees to appeal before the Commissioner of Income-tax (Appeals), who upheld the Assessing Officer's decision.

Subsequently, the assessees further appealed to the Income-tax Appellate Tribunal, which found that notices under section 143(2) were issued beyond the prescribed period, thereby invalidating the assessment orders. The Tribunal set aside the orders based on this ground. The Revenue challenged this decision on the substantial question of law regarding the validity of reopening assessments without issuing notices under section 143(2) within 12 months.

The High Court referred to a precedent from the Punjab and Haryana High Court in Vipan Khanna v. CIT [2002] 255 ITR 220, which established that if no notice under section 143(2) is served within the stipulated period, the assessment process concludes, and the matter becomes final. Applying this precedent to the current case where no notices under section 143(2) were served within 12 months, the High Court held that no substantial question of law arose. Consequently, the appeals were dismissed, and no costs were awarded. Additionally, the connected T.C.M.P. Nos. 445 to 447 of 2004 were also dismissed in line with the main judgment.