2013 (11) TMI 978 - HC - Income Tax

Applicability of section 292BB Held that - Notice was served after 1.4.2008 i.e., after the date of incorporation of Section 292BB of Income Tax Act - CBDT Circular No.549 of 1989 concedes that if the assessee after furnishing the return of income does not receive a notice under section 143 (2) of the Act within the stipulated period, he can take it that the return filed by him has become final and no scrutiny proceedings are to be started in respect of that return - The provision of Section 292BB of the Act has been inserted by the Finance Act, 2008 w.e.f. 01.04.2008 - The new provision is applicable for the assessment year 2008-09 and certainly not applicable for the assessment year under consideration i.e. 2007-08 Decided against Revenue.

Summary

Issues:
Appeal under Section 260-A of the Income Tax Act, 1961 against ITAT judgment for AY 2007-08; Applicability of Section 292BB of the Act; Assessment proceedings; Interpretation of CBDT Circular No.549 of 1989; Stipulated period for notice under section 143(2); Finality of return without notice; Applicability of Section 292BB for AY 2007-08.

Analysis:
The High Court heard an appeal filed by the department under Section 260-A of the Income Tax Act, 1961 against the judgment and order passed by the Income Tax Appellate Tribunal (ITAT) for the assessment year 2007-08. The case involved the applicability of Section 292BB of the Act, which was inserted w.e.f. 01.04.2008. The department contended that the notice issued on 29.09.2008 was sent after the incorporation of Section 292BB, thus seeking its benefit. However, the Court noted that the assessment year in question was 2007-08, not covered by the said provision.

The Court considered the CBDT Circular No.549 of 1989, which stated that if an assessee does not receive a notice under section 143(2) within the stipulated period, the return filed by them becomes final, and no scrutiny proceedings should be initiated. The stipulated period initially was six months but was increased to twelve months from 01.10.1991. In this case, as no notice under section 143(2) was served within the stipulated period, the Court concluded that the return of the assessee had become final for the AY 2007-08.

The Court emphasized that Section 292BB of the Act, introduced in 2008, was not applicable to the assessment year 2007-08. It held that the new provision applied to AY 2008-09 and not to the case at hand. Consequently, the Court upheld the ITAT's order, stating that no substantial question of law arose from it. The appeal filed by the department was dismissed at the admission stage, affirming the Tribunal's decision.

In conclusion, the Court's analysis focused on the specific provisions of the Income Tax Act, the CBDT Circular, and the timeline of events related to the assessment proceedings. The judgment clarified the inapplicability of Section 292BB to the AY 2007-08 and upheld the finality of the assessee's return due to the absence of a notice within the stipulated period, leading to the dismissal of the department's appeal.