2022 (6) TMI 1283 - HC - Income Tax

Reopening of assessment u/s 147 - Time limit for notice - maximum time limit for issuance of notice under section 148 - HELD THAT - As the issuance of notice under section 149 is complete only when the same is issued in the manner as prescribed under section 282 r/w rule 127 of the Income Tax Rules prescribing the mode of service of notice under the Act. The signing of notice would not amount to issuance of notice as contemplated under section 149 - the requirement of issuance of notice under section 149 is not mere signing of the notice under section 148 but is sent to the proper person within the end of the relevant assessment year. Concededly the notice dated 31.03.2018 issued by the respondent was served on the appellant through mail only on 18.04.2018. Though the learned senior panel counsel appearing for the respondent produced the relevant pages of notice server book maintained by the department to show that the notice of the respondent dated 31.03.2018 under section 148 is within the limitation period but the same only disclosed that the notice dated 31.03.2018 was returned on 06.04.2018. The decision in Aban Offshore Limited case ( 2016 (11) TMI 542 - MADRAS HIGH COURT relied on the side of the respondent is of no assistance wherein the postal cover showed that the franking was made on 01.04.2015 but the business post arrangement between the Income Tax Department and the Department of Posts disclosed that the cover was despatched on 31.03.2015 i.e. within the period of limitation. Whereas in this case there is no document made available to prove that the notice under section 148 dated 31.03.2018 was sent for despatch to the appellant within the end of the relevant assessment year i.e. 31.03.2018. Thus it is crystal clear that the notice under section 148 for reopening the assessment was not sent to the appellant within the time stipulated under section 149 of the Act and hence the same vitiates the reassessment proceedings initiated under section 147

Issues Involved:
1. Validity of the reassessment notice under Section 148 of the Income Tax Act, 1961.
2. Compliance with the limitation period prescribed under Section 149 of the Income Tax Act, 1961.
3. Applicability of the doctrine of substantial compliance.
4. Interpretation of the term "issued" in the context of Section 149 of the Income Tax Act, 1961.

Detailed Analysis:

1. Validity of the reassessment notice under Section 148 of the Income Tax Act, 1961:
The appellant challenged the reassessment notice dated 31.03.2018 issued by the respondent under Section 148 of the Income Tax Act, 1961, for the assessment year 2011-2012, claiming it was time-barred as per Section 149 of the Act. The appellant contended that the notice was received via email only on 18.04.2018, beyond the limitation period. The respondent argued that the notice was signed and dispatched on 31.03.2018, within the limitation period, but was returned unserved and subsequently sent via email.

2. Compliance with the limitation period prescribed under Section 149 of the Income Tax Act, 1961:
The court examined Section 149, which stipulates a maximum time limit of six years for issuing a notice under Section 148. The relevant assessment year was 2011-2012, making the limitation period expire on 31.03.2018. The appellant received the notice on 18.04.2018, while the respondent claimed it was signed and dispatched on 31.03.2018. The court needed to determine if the notice was issued within the prescribed period.

3. Applicability of the doctrine of substantial compliance:
The court applied the doctrine of substantial compliance, referencing the Supreme Court's decision in Commissioner of Central Excise, New Delhi v. Hari Chand Shri Gopal and others. The doctrine is designed to avoid hardship where a party has done all that can reasonably be expected but failed in minor aspects. The court determined whether the statutory requirements were sufficiently followed to carry out the intent of the statute.

4. Interpretation of the term "issued" in the context of Section 149 of the Income Tax Act, 1961:
The court referred to the Gujarat High Court's decision in Kanubhai M. Patel v. Hiren Bhatt and others, which held that the date of issuance of a notice under Section 148 is when it is actually delivered to the assessee, not merely when it is signed. The court concluded that the notice must be sent to the proper person within the prescribed period to be considered issued.

Conclusion:
The court found that the notice dated 31.03.2018 was served via email only on 18.04.2018, beyond the limitation period. The respondent failed to provide evidence that the notice was dispatched within the period ending on 31.03.2018. Consequently, the reassessment proceedings were deemed invalid due to non-compliance with Section 149. The court set aside the learned Judge's order dated 26.04.2021 and the notice dated 31.03.2018, allowing the writ appeal.

Judgment:
The writ appeal was allowed, and the reassessment notice dated 31.03.2018 was quashed. The court emphasized the importance of adhering to statutory time limits and proper issuance procedures under the Income Tax Act.

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