2010 (12) TMI 910 - HC - Income Tax

Re-assessment notice - Whether notice issued u/s148 of the Act was not invalid specially when the assessee had consciously and intentionally waived his right to object to the defect in the notice - Notice under Section 148 of the Act were issued in the name of Kesho Dass and the learned counsel for the assessee had admitted and made a statement that the returns already filed by the assessee be treated to have been filed in response to notices issued u/s 148 of the Act in the status of Hindu Undivided Family (HUF). According, once the assessee had filed returns in response to re-assessment notice under Section 148 in the status of HUF, he could not take a plea that the notice issued by the assessing officer did not disclose the status of the assessee and was, thus, invalid - Thus,answered in favour of the Revenue and against the assessee.

Summary

Issues:
Validity of notice under Section 148 of the Income Tax Act, 1961; Interpretation of Section 292B of the Act; Jurisdictional defect in the notice.

Validity of Notice under Section 148:
The judgment addressed the validity of a notice under Section 148 of the Income Tax Act, 1961. The case involved the initiation of reassessment proceedings due to the non-filing of income tax returns by the assessee for certain assessment years. The Tribunal had canceled the assessments, stating that the notices under Section 148 were vague and did not specify the status in which the returns were to be filed. The appellate authority, however, held that the assessments in the status of Hindu Undivided Family (HUF) were correct. The Revenue argued that the assessee had consciously filed returns in response to the notice in the status of HUF, and therefore, any defect in the notice did not render it invalid. The assessee contended that the defect was jurisdictional and could not be cured under Section 292B of the Act.

Interpretation of Section 292B of the Act:
The judgment extensively analyzed Section 292B of the Income Tax Act, which states that no return of income, assessment, notice, summons, or other proceeding shall be deemed invalid merely due to any mistake, defect, or omission if it aligns with the intent and purpose of the Act. The provision aims to prevent technical objections from invalidating proceedings as long as they conform to the Act's essence. The judgment emphasized that minor defects or irregularities should not impede the validity of assessment proceedings, and the assessee cannot raise trivial objections based on technicalities.

Jurisdictional Defect in the Notice:
The judgment concluded that the notice issued under Section 148 of the Act was not invalid despite the lack of specific mention of the assessee's status. It noted that the assessee had acknowledged and filed returns in response to the notice as an HUF, thus complying with the essence of the Act. The Court found no prejudice to the assessee and held that the notice, in substance and effect, aligned with the Act's intent and purpose under Section 292B. Consequently, the judgments cited by the assessee were deemed inapplicable, and the question of law was answered in favor of the Revenue, leading to the disposal of the References.

In summary, the judgment clarified the application of Section 292B in validating assessment proceedings, upheld the notice under Section 148 as valid, and resolved the dispute in favor of the Revenue based on the compliance of the assessee with the notice requirements.