2020 (2) TMI 725 - HC - Income Tax

Notice u/s 143(2) - period of limitation - defective return filed u/s 139(1) - petitioner having filed the correct return in response to the notice under section 139(9) - HELD THAT - Notice u/s 143(2) is a statutory notice, upon issuance of which, the Assessing Officer assumes jurisdiction to frame the scrutiny assessment under sub-section (3) of section 143. Consequently, if such notice is not issued within the period specified in sub-section (2) of section 143 viz. before the expiry of six months from the end of the financial year in which the return is furnished, it is not permissible for the Assessing Officer to proceed further with the assessment. In the facts of the present case, as discussed earlier, the petitioner filed its return of income under sub-section (1) of section 139 of the Act on 10.09.2016. Since the return was defective, the petitioner was called upon to remove such defects, which came to be removed on 07.07.2017, that is, within the time allowed by the Assessing Officer. Therefore, upon such defects being removed, the return would relate back to the date of filing of the original return, that is, 10.09.2016 and consequently, the limitation for issuance of notice under sub-section (2) of section 143 of the Act would be 30.09.2017, viz. six months from the end of the financial year in which the return under sub-section (1) of section 139 came to be filed. In the present case, it is an admitted position that the impugned notice under sub-section (2) of section 143 of the Act has been issued on 09.08.2017, which is much beyond the period of limitation for issuance of such notice as envisaged under that sub-section. The impugned notice, therefore, is clearly barred by limitation and cannot be sustained. - Decided in favour of assessee.

Summary

Issues Involved:
1. Validity of the notice issued under section 143(2) of the Income-tax Act, 1961.
2. Determination of the date for computing the period of limitation under section 143(2) of the Act.
3. Interpretation of section 139(9) of the Act in relation to defective returns.

Issue-wise Detailed Analysis:

1. Validity of the Notice Issued Under Section 143(2) of the Income-tax Act, 1961:

The petitioner challenged the notice dated 09.08.2018 issued under section 143(2) of the Income-tax Act, 1961, arguing that it was barred by limitation. The petitioner contended that the original return was filed on 10.09.2016, and any notice under section 143(2) should have been issued on or before 30.09.2017. The respondent argued that the corrected return filed on 07.07.2017 should be considered for computing the limitation period, making the notice issued on 09.08.2018 valid.

2. Determination of the Date for Computing the Period of Limitation Under Section 143(2) of the Act:

The court examined whether the date of the original return (10.09.2016) or the date when defects were removed (07.07.2017) should be considered for computing the limitation period under section 143(2). The petitioner argued that the original return date should be considered, relying on precedents from the Bombay High Court and Delhi High Court, which held that the removal of defects relates back to the original filing date. The respondent contended that the corrected return date should be considered, as the original return was defective and not valid for assessment purposes.

3. Interpretation of Section 139(9) of the Act in Relation to Defective Returns:

Section 139(9) deals with defective returns and provides an opportunity for the assessee to rectify defects within a specified period. The court noted that sub-section (9) does not require the filing of a new return but only the rectification of defects in the original return. If defects are rectified within the allowed time, the original return is considered valid. The court emphasized that the corrected return is not a fresh return but a rectification of the original return.

Judgment:

The court concluded that the original return filed on 10.09.2016 should be considered for computing the limitation period under section 143(2). The removal of defects on 07.07.2017 relates back to the original filing date. Therefore, the notice issued on 09.08.2018 was beyond the permissible time limit and barred by limitation.

The petition was allowed, and the impugned notice dated 09.08.2018 issued under section 143(2) and all proceedings pursuant thereto were quashed and set aside. The court made the rule absolute with no order as to costs.