2014 (3) TMI 931 - AT - Income Tax

Regular Assessment - Matter remitted back from High Court Bar of limitation - Failure to serve Notice u/s 143(2) of the Act within time Held that - The observations made by Hon ble High Court are very much relevant that, during the course of argument, the appellant contended that the very issuance of notice u/s 143(2) and the time provided u/s 143(2)(ii) was over the High Court has made its mind very clear that the proceedings cannot be taken against the assessee, if the notice issued u/s 143(2)(ii) is beyond the time specified under the provisions assessee pointed out that the return of income is filed on 06.05.2005 - the notice u/s 143(2) was served on 03.11.2006 - The time gap between the date of filing of return and the date of service of notice is more than 12 months - the notice is barred by limitation in terms of the time limit prescribed u/s 143(2) of the Act thus, the order of the Ao set aside Decided in favour of Assessee.

Summary

Issues:

1. Validity of notice served under section 143(2) of the Act.
2. Whether the notice served was within the time limit prescribed under the law.

Issue 1: Validity of notice served under section 143(2) of the Act

The appeal was filed against the order of the ld CIT(A)-IV, Kochi relating to the AY 2001-02. The Hon'ble High Court of Kerala directed the Tribunal to consider the question of limitation regarding the assessment, specifically focusing on the service of notice under section 143(2) of the Act. The appellant contended that failure to serve the notice as per the provisions of sec. 143(2) would vitiate the assessment. The Hon'ble High Court emphasized that if the notice under section 143(2) is beyond the specified time, the proceedings would be vitiated.

Issue 2: Whether the notice served was within the time limit prescribed under the law

The appellant argued that the notice under section 143(2) was issued after the expiry of 12 months from the date of filing the return, rendering it barred by limitation. The ld DR, on the contrary, asserted that the notice was served within the extended time limit provided under the proviso to section 148(1) of the Act. The ld CIT(A) noted that the reason for reopening was communicated to the appellant, and the AR participated in the proceedings, precluding objections against the reopening. The Hon'ble High Court highlighted that the notice served under section 143(2) was beyond the time specified, making further proceedings impermissible.

The Tribunal analyzed the observations of the Hon'ble High Court and concluded that the notice served under section 143(2) was indeed barred by limitation. Despite the ld DR's argument regarding the extension of time under the proviso to section 148(1), the Tribunal held that the time limit prescribed under section 143(2) must be adhered to as per the High Court's order. Consequently, the impugned assessment order was annulled, and the appeal filed by the assessee was allowed.