2020 (9) TMI 35 - HC - Income Tax

Assessment u/s 153A - Validity of notice issued under section 153C - Whether the notice issued to the assessee on June 1, 2010 under section 153A of the Act would not invalidate the assessment by relying upon section 292B ? - no search warrant was issued in the name of the appellant-assessee - HELD THAT - When the notice is perused it would establish though heading is under section 153A of the Act, the Deputy Commissioner of Income-tax has categorically stated in the said notice that he proposes to assess the appellant's income under section 153C of the Act. Juxtaposing the contents of the notice dated June 1, 2010 with the satisfaction note, it is clear that notice is not one under section 153A of the Act, but one under section 153C of the Act. The copy of the said notice has been received by the appellant and the appellant having full knowledge of the fact that the Deputy Commissioner of Income-tax has proposed to assess/reassess the appellant's income under section 153C. Appellant cannot now be allowed to contend by taking hyper-technical defence to state that the notice received is one under nomenclature of section 153A of the Act to invalidate the entire assessment proceedings and the said contention also cannot be entertained as the provisions of section 153C is specifically mentioned in the notice. Hence, we are of the view that the notice issued under section 153C is proper and valid. The mere fact that the heading indicates that it is one issued under section 153A of the Act cannot vitiate the assessment proceedings. Section 292B of the Act in terms whereof any minor defect or omission in the notice does not cause any prejudice to the parties and it cannot be invalidated on the basis of such minor defect or omission. See Sardar Harvinder Singh Sehgal v. Asst. CIT 1997 (5) TMI 45 - GAUHATI HIGH COURT Proceedings which have been initiated against the assessee by the Assessing Officer in the instant case by issuance of notice dated June 1, 2010 indicate that suitable and necessary particulars have been provided by the Assessing Officer to the appellant to answer all the queries and the appellant having replied to the said notice has been unable to establish the existence of oral contract for the payments received from M/s. Corporate Liesure and Property Development (P.) Ltd. Hence, the matter is required to be re-examined with regard to the merits of the addition made by the Assessing Officer and the order of remand made by the Appellate Tribunal is just and proper.

Summary

Issues:
Challenge to orders by Income-tax Appellate Tribunal - Validity of notice under section 153A of the Income-tax Act, 1961 - Assessment proceedings based on search action - Dispute regarding search warrant - Interpretation of section 292B of the Act - Applicability of section 153C of the Act - Assessment order validity - Dispute on notice details - Prayers for substantial questions of law - Appeal dismissal.

Analysis:
The judgment concerns the challenge to orders passed by the Income-tax Appellate Tribunal regarding the validity of a notice issued under section 153A of the Income-tax Act, 1961. The case arose from a search action conducted on M/s. Corporate Leisure and Property Development (P.) Ltd., leading to a notice under section 153A issued to the assessee. The appellant filed returns for assessment years 2005-06, 2006-07, and 2007-08, which were processed by the Assessing Officer. The Commissioner of Income-tax (Appeals) allowed the appeals, deeming the assessment orders invalid due to the absence of a search warrant in the appellant's name.

The Revenue challenged this decision, leading to the Tribunal's ruling in their favor. The Tribunal held that the notice under section 153A did not invalidate the assessment, citing section 292B of the Act. It was emphasized that the appellant participated in the proceedings and did not contest falling under section 153C of the Act. The Tribunal remitted the matter back to the Commissioner of Income-tax (Appeals) for further adjudication, prompting the current appeal.

The appellant argued for quashing the assessment proceedings due to the absence of a search warrant, citing relevant case law. In contrast, the Revenue contended that the proceedings were valid, given the appellant's response to the notice and participation in the assessment process. The High Court analyzed the notice issued under section 153A, noting discrepancies in the notice's heading and content. Despite the heading, the notice explicitly referred to section 153C, indicating the appellant's awareness of the assessment nature.

The Court highlighted the applicability of section 292B, which deems minor defects in notices inconsequential. Emphasizing the appellant's knowledge of the assessment nature, the Court deemed the notice under section 153C proper and valid. The Court rejected the appellant's hyper-technical defense and upheld the Tribunal's decision. The Court concluded that the notice's heading did not invalidate the assessment proceedings, dismissing the appeal due to the absence of substantial legal questions.

In summary, the judgment clarifies the importance of search warrants for section 153A notices, interprets the application of section 292B, and underscores the significance of notice details in assessment proceedings. The Court's analysis reaffirms the validity of the notice under section 153C and the Tribunal's decision, ultimately dismissing the appeal.