2016 (9) TMI 340 - HC - Income Tax

Notice deemed to be valid in certain circumstances - application of provisions of Section 292-BB of the Act in the case of the assessee when the notice though not proved to be issued by the Assessing Officer was also not served on the assessee - company - Whether the Hon'ble Tribunal acted illegally and perversely by misdirecting itself in law as well as on facts by reversing the order of the CIT (A) and restoring that of the Assessing Officer when neither notice under Section 143(2) of the Act was issued nor served, during the course of assessment proceedings ? Held that - The notice dated 20.08.2013 was declared by the Tribunal to be a valid notice by recording findings essentially based on facts produced before it, which included Speed Post entries, copies of the Dispatch Register of the Department and the actual notice dated 20.08.2013 issued under Section 143 (2) of the Act. The assessee, having not raised any objection with regard to issuance and service of a valid notice during the assessment proceedings and rather, without any objection, having voluntarily taken part in such proceedings, were facts, which were also considered and held against the assessee. It was further observed that even the Commissioner had recorded that the notice dated 20.08.2013 duly existed in the assessment records and qua this finding of the Commissioner, the assessee had not filed any appeal or crossobjection The objection so raised by the assessee before the Assessing Officer was that the notice issued under Section 143(2) of the Act before 30.03.2013 was invalid. Thus, such objection was taken only with regard to the earlier refused notice dated 28.09.2012 and cannot be taken to be an objection to any notice issued after the filing of the return by the assessee including the notice dated 20.08.2013. From the above, it is abundantly clear that the Tribunal has essentially determined questions of fact. The conclusion being a possible view cannot be termed as perverse. Therefore, we are disinclined to interfere in the present appeal and resultantly, order dismissal of the same.

Summary

Issues involved:
1. Validity of notice under Section 143(2) of the Income Tax Act, 1961.
2. Application of Section 292-BB of the Act regarding the notice served on the assessee.
3. Assessment based on voluntarily surrendered income and its impact on the business.

Detailed Analysis:

1. Validity of Notice under Section 143(2):
The appeal challenged the order passed by the Income Tax Appellate Tribunal, Chandigarh, regarding the Assessment Year 2011-12, questioning the validity of the assessment proceedings due to the absence of a valid notice under Section 143(2) of the Act. The Commissioner of Income Tax (Appeals) had annulled the assessment, citing invalid notices issued to the assessee. However, the Tribunal reversed this decision, deeming a notice dated 20.08.2013 as valid based on evidence provided by the Revenue, including Speed Post entries and the Dispatch Register. The Tribunal concluded that the assessee had not objected to the notice during the assessment proceedings, and thus, the assessment was upheld.

2. Application of Section 292-BB:
Section 292-BB of the Act was invoked to determine the validity of the notice served on the assessee. The section states that if an assessee has cooperated in any inquiry related to assessment, it shall be deemed that the notice required to be served has been duly served. The Tribunal relied on this provision to reject the assessee's claim of non-service of the notice dated 20.08.2013, as the assessee had participated in the assessment proceedings without raising any objection regarding the notice. This led to the Tribunal remanding the matter to the Commissioner for further adjudication on the appeal's merits.

3. Assessment based on Voluntarily Surrendered Income:
The assessee, a private limited company in the real estate business, voluntarily surrendered an amount during a survey operation under Section 133-A of the Act. The surrendered amount was added to the income for the relevant assessment year by the Assessing Officer, alleging an attempt to set off undisclosed income. The Commissioner annulled the assessment due to invalid notices, but the Tribunal upheld the assessment based on the deemed validity of the notice under Section 292-BB. The Tribunal's decision was based on factual findings, including evidence of the notice's existence and service, as well as the assessee's lack of objection during the assessment proceedings.

In conclusion, the High Court dismissed the appeal, stating that the Tribunal's decision was based on factual determinations and not legal errors. The Court found no grounds for interference, thereby upholding the assessment based on the deemed validity of the notice under Section 292-BB and the assessee's participation in the assessment proceedings without raising objections.