2014 (6) TMI 294 - HC - Income Tax

Reassessment u/s 147 - Notice issued u/s 143(2) of the Act not served Validity of assessment - Held that - The assessee submitted the return which he had already submitted on 31.10.2000 with the intention of opting for having the assessment completed based on the return that he had already filed - return was accepted and acted upon by the Department - revenue cannot now be allowed to contend that the assessee did not file a return in response to Section 148 and there was no necessity to issue a notice u/s 143(2) of the Act. Validity of belated return filed in response to notice u/s 148 - Held that - The notice under Section 148 was issued to the assessee on 4.12.2006. By this notice, the assessee was called upon to file the return within 30 days of service of the notice. This notice was served on the assessee on 7.12.2006. The assessee did not request for extension of time, nor was any extension granted for complying with the notice. The assessee did not file any return within the 30 days specified in the notice also and instead, filed the return submitted on 30.10.2000, only on 15.10.2007. Such a return belatedly filed by the assessee, is an invalid one in view of the provisions contained in Section 139 of the Act. The assessee had already filed a return u/s 139 as early as on 31.10.2000 and therefore calling upon the assessee to file a return u/s 142(1) does not arise - notice u/s 142(1) issued to the assessee on 5.10.2007 could have been only to call upon the assessee to produce accounts or documents and not for filing a return - in a proceedings initiated u/s 148, the provision does not come into operation whatsoever thus, the return filed by the assessee on 15.10.2007 was not a valid return, which could have been acted upon by the AO entitling the assessee for a notice u/s 143(2) of the Act thus, the order of the Tribunal that in the absence of a notice u/s 143(2) the assessment is illegal cannot be sustained thus, the matter is remitted back to the Tribunal Decided in favour of revenue.

Summary

Issues:
1. Validity of notice under Section 143(2) of the Income-tax Act in relation to an assessment year.
2. Compliance with the requirements of filing a return in response to a notice under Section 148.
3. Interpretation of provisions under Sections 142(1) and 139 regarding filing of returns and production of accounts.

Analysis:

Issue 1: Validity of notice under Section 143(2)
The case involved a challenge to the assessment order for the assessment year 2000-01 due to the absence of a notice under Section 143(2) of the Income-tax Act. The Appellate Tribunal allowed the appeal, setting aside the assessment order, based on the absence of the said notice. However, the High Court held that the return filed by the assessee was valid, as it was a copy of the original return submitted earlier, and was accepted by the Assessing Officer. Therefore, the High Court concluded that the absence of a notice under Section 143(2) did not render the assessment illegal, overturning the Tribunal's decision.

Issue 2: Compliance with filing requirements in response to notice under Section 148
The appellant contended that the return filed by the assessee was not within the specified time period of the notice under Section 148, thus not obliging the issuance of a notice under Section 143(2). The High Court examined the timeline of events and found that the return was indeed filed after the specified period, making it invalid under Section 139 of the Act. Therefore, the High Court rejected this argument, emphasizing the importance of timely compliance with notice requirements under the Act.

Issue 3: Interpretation of Sections 142(1) and 139 for filing returns and production of documents
The High Court analyzed the provisions of Sections 142(1) and 139 concerning the filing of returns and production of documents. It clarified that Section 142(1) pertains to cases where a return has not been filed, while Section 139 deals with the filing of returns. In this case, as the assessee had already filed a return under Section 139, the notice under Section 142(1) was not for filing a return but for producing accounts or documents. The High Court concluded that the return filed by the assessee was not valid for the Assessing Officer to act upon, thus upholding the legality of the assessment order.

In conclusion, the High Court allowed the appeal, setting aside the Tribunal's decision based on the legal questions discussed. The matter was remitted back to the Tribunal for consideration of other contentions raised by the assessee.