LETTER IN RESPONSE TO FORMAL FIRST NOTICE U S 143(2)

[C.A. DEV KUMAR KOTHARI]

For better tax administration and tax payer relations:

In the first formal notice u/s 143(2) the date of hearing should preferably be fixed after December/ January. Seek adjournment if date is fixed after just few days.

Relevant provisions S. 143.

Notice u/s 143 (2)

As per substituted proviso to clause (ii) of  S. 143 (2)  notice is to be served on assessee within six month from the end of the F.Y. in which return was files. For example, for assessment year 2007-08 if return was filed within due date say 31.10.07  or even belatedly  say  at any time before 31.03.08, then the notice must be served on assessee before 30.09.08 because the return was filed in the FY 2007-08.

Service of notice is essential:

The requirement is to serve the notice and not simply to issue and keep in file by the A.O. Therefore, it should be ensured that notice is served properly.

The Substituted proviso:

The proviso was substituted by the FA 2008 w.e.f. 01.04.2008. This is a provision governing procedure, therefore it can be considered as applicable to any earlier year also for which a notice is to be issued and served on assessee on or after 01.04.08 and it is not that it apply to assessment year 2008-09 on wards. In fact the revenue officials have also considered the proviso in this manner and notices were served in many cases before 30.09.08.  It is expected that notices will not be issued after such period.

However, it is likely that the A.O. will try to say that the substituted proviso apply from A.Y. 2008-09 and not to any earlier year. The litigation is likely on this aspect.

Unjust period of revised limitation:

Prior to amendment of the proviso limitation to serve the notice was twelve months from the end of the month in which the return was filed. This was more logical as all tax filer had almost similar period of limitation in which the A.O. could issue notice. The difference was only on the basis of the day of any month in which one filed return. For example, limitation for issuance of notice was same whether return was filed on 01.10.06 or 31.010.06.

However, fixing limitation as six month from end of the FY is not justified. A very sincere assessee who files return in the month of April, has longer contingency  period of eighteen months and a late filer who file return belatedly in March has only a contingency period of six months. This in a way penalize sincerity and timely compliance and reward late compliers.   

Date of hearing:

Many assessing Officers have adopted practice of fixing date of hearing just after few days of service of notice. Thus in some cases date is fixed in second/ third week of October vide notice served in last week of September.

Many officers have adopted good and healthy practice of fixing the date after December. This is more logical because during period up to 31.12.08 as per usual practice time barring assessments are taken up and assessment for A.Y. 2007-08 are generally not taken up for hearing.

In view of fact that hearing and assessment for earlier year (e.g. AY 2006-07) will have an impact on process to be adopted in ( e.g. A.Y. 2007-08) and fact that usually preference is given to completion of assessment of earlier year, therefore, the A.O. can adopt practice of fixing the case of new year ( e.g A.Y. 2007-08) after December or preferably after January as by that time barring assessments are completed, the process of recover is started and the assesses also complete the process of filing of petitions and appeals etc. if required.   

Adjournment:

As per normal practice, when case for a new year ( say A.Y. 2007-08) is fixed before completion of assessment for earlier year (say AY. 2006-07) during pendency of time barring old assessments, hearing for new year is not taken up and case is adjourned.

Some time case is adjourned verbally in good faith and without recording in order sheet. Instances have come when we find that the A.O. is changed, and the new A.O. issued Show Cause Notice (SCN)  for explaining  non compliance and why penalty should not be levied.

Therefore, it is always better course to file an adjournment petition and obtain acknowledgment from the receiving department.

As in case of formal first notice u/s 143(2) usually the A.O. also want to adjourn the hearing, it is advisable to file an adjournment petition just when a notice is received, so that an administrative burden is reduced from the head.

A draft letter is appended, which can be modified as per facts and circumstances in particular case and also some other reasons for adjournment can be given.

 

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Draft

From Assessee   

( use specially designed  and saved letter head for correspondence with

I.T.Department giving correct address as per PAN records, PAN and, TAN).

 

To,

The A.O.

(DCIT Cir.   )

              PAN AY 2007-08 - petition for adjournment. 

Reg:  Assessment proceedings for A.Y. 2007-08 - fixed for hearing on (22.10.08) vide your notice u/s 143 (2) dt. 18.09.08 - Request for adjournment.

We have received the above notice. The notice is not accompanies by any requisition.

 We have been advised that this is  first formal  notice just for  initiation of assessment proceedings, and as per usual   practice prevalent in the department at present time barring assessments are usually heard in priority to hearing for  A.Y. 2007-08.

Furthermore, our assessment proceeding for earlier year that is  A.Y. 2006-07  is in progress before your self  / The I.T.O. Ward …. The completion of assessment for earlier year is likely to have a bearing on A.Y. 2007-08 and as per practice usually assessment of a later year is taken after completion of earlier assessment.

We are also contemplating to file a revised return for A.Y. 2007-08.

Our accountant is also presently busy in compliance with A.O. for earlier year./ Our tax consultant has requested us to seek adjournment as he is preoccupied in tame barring matters/  any other reasons in given facts and circumstances.

In view of the above facts and circumstances, we request you to kindly adjourn the hearing which is fixed for first time on (22.10.08) and oblige and kindly  re-fix the  same after January 2009  as we hope that by that time we will be served with the assessment order for A.Y, 2006-07 and process of filing of requisite petitions, appeal, etc. if required, is expected to be completed.

Thanking you,

Yours faithfully,

 

Assessee