2016 (5) TMI 1151 - HC - Income Tax

Validity of assessment - whether time period specified under Section 144(C) (4) read with Section 144(C)(3) adhered or not - penalty u/s 271(1)() - Petitioner s specific case is that the final assessment order was not passed on the date mentioned therein, i.e., 22nd April, 2014 and was probably antedated in order to avoid the expiry of the period of limitation as stipulated under Section 144(C)(4) of the Act read with Section 144(C)(3) of the Act - Held that - In the instant case, when the Assessee sought to inspect the file to see whether there was any entry in the despatch register, he was not allowed such inspection. It now transpires that there was no such despatch register available which would have shown the date of despatch of the final assessment order and proof of service of such assessment order. Therefore, going by the ratio of the decision of the Supreme Court in Collector of Central Excise, Madras v M.M. Rubber and Co. (1991 (9) TMI 71 - SUPREME COURT OF INDIA), in the instant case it was incumbent on the Department to demonstrate that the AO who passed the assessment order ceased to have any control over such order and that it left his hand soon after it was passed. The Department having failed to do so, a presumption has to be drawn that the final assessment order was not passed within the time period specified under Section 144(C) (4) read with Section 144(C)(3) of the Act. In that view of the matter, the impugned assessment order dated 22nd April, 2013 under Section 143(3) of the Act and the consequent penalty order dated 26th June, 2013 under Section 271(1)(c) of the Act and the notice dated 22nd April, 2014 under Section 221 of the Act are hereby quashed. - Decided in favour of assessee

Summary

Issues Involved:
1. Validity of the assessment order dated 22nd April, 2013 under Section 143(3) of the Income Tax Act, 1961.
2. Validity of the penalty order dated 26th June, 2013 under Section 271(1)(c) of the Act.
3. Validity of the notice dated 22nd April, 2014 under Section 221(1) of the Act for AY 2009-10.

Detailed Analysis:

1. Validity of the Assessment Order:
The petitioner, ST Microelectronics Pvt. Ltd., challenged the assessment order dated 22nd April, 2013, passed by the Additional Commissioner of Income Tax (ACIT) under Section 143(3) of the Income Tax Act, 1961. It was argued that the final assessment order was not passed within the stipulated time under Section 144(C)(4) read with Section 144(C)(3) of the Act. The petitioner alleged that the final assessment order was antedated to avoid the expiry of the limitation period and was sent to the old address despite the department being aware of the updated address. The court noted that the department failed to provide proof of despatch of the assessment order soon after it was passed. The absence of a counter affidavit from the respondents to rebut the petitioner's claims further strengthened the petitioner's case. The court concluded that the department did not prove on a preponderance of probabilities that the final assessment order was passed on the date mentioned, i.e., 22nd April, 2013.

2. Validity of the Penalty Order:
The petitioner also challenged the penalty order dated 26th June, 2013, passed under Section 271(1)(c) of the Act. The penalty order was allegedly issued at the old address of the petitioner, similar to the assessment order. The court observed that the respondents failed to provide proof of despatch and service of the penalty order. The court found that the penalty order was likely antedated and issued at the old address to cover up the expiry of the limitation period. Consequently, the penalty order was deemed invalid.

3. Validity of the Notice under Section 221(1):
The petitioner challenged the notice dated 22nd April, 2014, issued under Section 221(1) of the Act for AY 2009-10. The notice sought to impose a penalty for non-payment of demand. The petitioner contended that the notice was issued at the old address despite the department being aware of the updated address. The court noted that the respondents did not provide proof of despatch and service of the notice. The court concluded that the notice was invalid due to the lack of evidence supporting its timely issuance and proper service.

Conclusion:
The court quashed the assessment order dated 22nd April, 2013, the penalty order dated 26th June, 2013, and the notice dated 22nd April, 2014, under Section 221 of the Act. The writ petition was allowed with no orders as to costs.