2012 (8) TMI 479 - AT - Income Tax

Addition on account of unexplained investment - assessee contested against notice u/s. 142 (1) as issued beyond the prescribed time - Held that - As per Proviso to S.142 (1)(i) it is clear that any notice served on the assessee after the end of the relevant assessment year shall be deemed to have been served in accordance with the provisions of S.142 (1) - Provisions u/s. 142(1) contain the operative expression, i.e. any notice has been served , such notice issued to him only qualify the conditions issue and service of any notice. The expression any in our opinion should cover the impugned notice issued with the delay of 15 months of the end of the relevant assessment year 2005-06 - when there is no express provision limiting issuance of notice u/s 142 (1) within the period of one year from the end of the relevant assessment year, no such limitation can be read into the provision - no substantial force in the argument of assessee that notices u/s 142 (1) cannot be issued when no return of income was filed Notice u/s. 148 - arguments of assessee about applicability of the provisions of S.148 are of no use as it is a separate proceedings and is not the case here that proceedings under S.144 read with S.142 (1) (i) are simultaneously initiated, while the other proceedings under S.148 are in force or vice versa - set aside the matter to the file of the CIT (A) to dispose of the appeal on merits in accordance with law - Revenue s appeal is allowed for statistical purposes.

Issues:
1. Validity of notice issued under S.142(1) of the Act beyond the prescribed time limit.
2. Interpretation of the proviso to S.142(1)(i) of the Act.
3. Applicability of the provisions of S.148 of the Act.
4. Legal grounds for allowing the appeal of the assessee by CIT(A).
5. Consideration of subsequent legislative developments.

Analysis:

Issue 1: Validity of notice issued under S.142(1) of the Act beyond the prescribed time limit
The appeal by the Revenue challenged the order of the Commissioner of Income-tax(Appeals) IV, Hyderabad regarding the assessment year 2005-06. The assessing officer issued a notice under S.142(1) of the Act after the relevant assessment year had ended, leading to the completion of assessment under S.144 of the Act. The CIT(A) declared the assessment null and void, citing the notice was issued beyond the stipulated time. The argument focused on the validity of the notice issued after the statutory time limit, with the Revenue contending that the notice was valid due to the deeming provisions of the proviso to S.142(1) of the Act.

Issue 2: Interpretation of the proviso to S.142(1)(i) of the Act
The Tribunal analyzed the proviso to S.142(1)(i) of the Act, which states that a notice served after the end of the relevant assessment year shall be deemed valid. The Revenue argued that the notice issued after a delay of 15 months was still valid under this proviso, emphasizing the operative expression "any notice has been served." The Tribunal agreed with the Revenue's interpretation, stating that the proviso did not specify additional time limits, thereby deeming the notice valid despite the delay.

Issue 3: Applicability of the provisions of S.148 of the Act
The Tribunal clarified that the proceedings under S.144 read with S.142(1)(i) of the Act were separate from those under S.148. It was highlighted that the case did not involve simultaneous initiation of proceedings under both sections. The Tribunal deemed the citation relied upon by the assessee as inapplicable to the case at hand.

Issue 4: Legal grounds for allowing the appeal of the assessee by CIT(A)
The CIT(A) allowed the appeal of the assessee based on the argument that the notice under S.142(1) was issued beyond the stipulated time, rendering the assessment null and void. However, the Tribunal found that the CIT(A) did not consider the proviso to S.142(1)(i) of the Act and subsequent legislative developments, leading to the decision to set aside the CIT(A)'s order for fresh consideration.

Issue 5: Consideration of subsequent legislative developments
The Tribunal highlighted the importance of considering subsequent legislative developments, specifically the decision in the case of Smt. Kausari Begum, which was not available to the CIT(A) during the initial proceedings. The Tribunal set aside the CIT(A)'s order and directed a fresh consideration of the appeal in accordance with the law and after affording a reasonable opportunity of hearing to the assessee.

In conclusion, the Revenue's appeal was allowed for statistical purposes, and the matter was restored to the file of the CIT(A) for fresh consideration and disposal in light of the legal aspects discussed during the proceedings.

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