9911796707
TMI Blog2012 (2) TMI 121X X X X Extracts X X X X X X X X Extracts X X X X ..... ding that the notice issued to the assessee under Section 148 of the Income Tax Act as also the reassessment framed in pursuance thereto was invalid? (2) In case answer to question No. 1 above is in the affirmative, whether the income originally returned by the assessee could not be brought to tax?" 4. For the sake of convenience, ITA No. 7/2006, which relates to the assessment year 1992-93, is treated as the lead case. However, the relevant facts relating to each assessment year are noticed below. 5. For the assessment year 1989-90, the respondent filed their return of income on 29th December, 1989 declaring income of Rs. 2,29,706/-. For the assessment years 1992-93 to 1995-96, no return of income under Section 139(1) was filed by the respondent. For the Assessment Years 1992-93 to 1995- 96, returns of income were filed on 10th December, 1999 declaring the following incomes: Assessment Year Disclosed Income 1992- 93 Rs. 3,42,322/- 1993- 94 Rs. 7,75,282/- 1994- 95 Rs. 11,88,712/- 1995- 96 Rs. 4,69,949/- 6. These returns were filed beyond the due date of filing as stipulated in the Act. The respondent had and did not pay taxes due and payable on the income declar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1992- 93 Income declared in the original return Rs. 342322/- Add: Income declared under VDIS, 1997 Rs. 342322/- Taxable Income Rs. 672369/- R/of Rs. 672370/- Assessment Year 1993- 94 Income declared in the original return Rs. 775282/- Add: Income declared under VDIS, 1997 Rs. 764586/- Taxable Income Rs. 1539868/- R/of Rs. 1539870/- Assessment Year 1994- 95 Income declared in the original return Rs. 1188712/- Add: Income declared under VDIS, 1997 Rs. 1117131/- Taxable Income Rs. 2305843/- R/of Rs. 2305840/- Assessment Year 1995- 96 Income declared in the original return Rs. 469949/- Add: Income declared under VDIS, 1997 Rs. 428719/- Taxable Income Rs. 898668/- R/of Rs. 898670/- 13. The respondent filed appeals. Appeal filed for the assessment year 1992-93 was treated as a lead case by the CIT(Appeals) as the said appeal was disposed of, earlier in point of time. Two principal contentions were raised by the respondent. Firstly, no notice under Section 148 of the Act was served on the respondent and, therefore, the entire proceedings under Section 147/148 of the Act were void. Secondly, the notice under Section 147/1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... alid notice and in such a case the vagueness cannot be removed by reference to other documents on the record or by issuing a copy of the same notice to the Director as pointed out by the AO. In view of the foregoing, I find no justification to sustain the additions made by the AO subsequent to issuing of invalid notice. 6. The appeal is allowed." 15. It is noticeable from the reasoning given by the CIT(Appeals) that she has not specifically dealt with contention Nos. (b) and (c) and had only examined contention No. (a) mentioned in the aforesaid order and held that the notice was vague and, therefore, void or invalid. 16. The aforesaid appellate order was followed in other assessment years. 17. After the orders passed by the CIT(Appeals), consequential orders were passed by the Assessing Officer in the income tax computation form. In the computation form, he gave appeal effect and computed the income of the respondent for the years in question as under:- Assessment Year Income declared in the Original Return Additions made by the AO Total taxable income, as per the AO Deletions made by the AO [as per the orders of CIT(A)] 1989- 90 Rs. 2,29,706/- Rs. 3,11,839/- Rs. 5,41 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... had admitted and adjudicated the appeals, it could be assumed that she had exercised her discretionary power and had come to the conclusion that there were good and sufficient reasons for the respondent assessee not to pay the advance tax. 22. Section 249(4) of the Act reads as under:- "249. Form of appeal and limitation.- ** ** ** (4) No appeal under this Chapter shall be admitted unless at the time of filing of the appeal,- (a) where a return has been filed by the assessee, the assessee has paid the tax due on the income returned by him; or (b) where no return has been filed by the assessee, the assessee has paid an amount equal to the amount of advance tax which was payable by him: Provided that in a case falling under clause (b) and on an application made by the appellant in this behalf, [* * *] Commissioner (Appeals) may, for any good and sufficient reason to be recorded in writing, exempt him from the operation of the provisions of that clause. 23. We have quoted the order passed by the CIT(A) mentioned above. It is palpable that the CIT(A) has not examined whether or not to grant exemption from payment of the advance tax under Secti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce of any of the provisions of this Act shall be invalid or shall be deemed to be invalid merely by reason of any mistake, defect or omission in such return of income, assessment, notice, summons or other proceeding if such return of income, assessment, notice, summons or other proceeding is in substance and effect in conformity with or according to the intent and purpose of this Act." 28. The aforesaid provision has been enacted to curtail and negate technical pleas due to any defect, mistake or omission in a notice/summons/return. The provision was enacted by Tax Laws (Amendment) Act, 1975 with effect from 1st October, 1975. It has a salutary purpose and ensures that technical objections, without substance and when there is effective compliance or compliance with intent and purpose, do not come in the way or affect the validity of the assessment proceedings. In the present case, as noticed above, the respondent took the plea before the Assessing Officer that they were never served with the notices under Section 148 of the Act. However, it is prudent to note that according to the Assessment Order dated 22nd March 2002, a letter dated 1st March 2002 was submitted by the company wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tance or in effect it is in conformity and in accordance with the intent and purpose of the Act. This is the purport of Section 292B. Notice/summons are issued for compliance and informing the person concerned, i.e. the assessee. Defective notice/summon if it serves the intent and purpose of the Act, i.e. to inform the assessee and when there is no confusion in his mind about initiation of proceedings under Section 147/148 of the Act, the defective notice is protected under Section 292B. In such circumstances, the defective notice/summon is in substance and in accordance with the intent and purpose of the Act. The primary requirement is to go into and examine the question of whether any prejudice or confusion was caused to the assessee. If no prejudice/confusion was caused, then the assessment proceedings and their consequent orders cannot and should not be vitiated on the said ground of mistake, defect or omission in the summons/notice. 30. In Venad Properties Private Ltd. v. Commissioner of Income Tax, ITA No. 1525 of 2010 decided on 11th November 2011, we had the occasion to deal with Section 282 of the Act. In the said case, we have held that procedural rules of service are re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ar. The tribunal decided the matter in favour of the Revenue holding that the second notice in the name of the Hindu Undivided Family was legally valid and held that the period of eight years had to be counted from the end of the assessment year and not from the end of the previous year. The High Court, on reference by the ITAT at the instance of the assessee, reversed the finding holding, inter alia, that the first notice, issued in the name of the individual, was not invalid in law and consequently the second notice was illegal and the assessment made in pursuance thereto was also illegal. The appeal was allowed by the Supreme Court and it was held that the Assessing Officer could not have validly acted on a return filed by the assessee in the status as an individual. The notice under Section 34 should have been issued to the Hindu Undivided Family and, therefore, the second notice was valid. The decision in the said case hardly supports the contention of the respondent. Under the scheme of the Income Tax Act, 1922 (as under the present Act), an individual and Hindu Undivided Family were treated as separate units of assessment and consequently a notice issued in a status of an in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... but there was no reply or clarification by the Assessing Officer. 34. In P.V. Doshi v. Commissioner of Income Tax, Gujarat, [1978] 113 ITR 22 (Guj.) it was held that the pre-conditions for initiation of reassessment are jurisdictional requirements and these are conditions precedent which must be satisfied before the Assessing Officer invokes and exercises the jurisdiction under Section 147/148 of the Act. These jurisdictional pre-conditions cannot be conferred by consent as jurisdiction is not conferred by waiver, acquiescence or estoppel. The three jurisdictional pre-conditions mentioned by the High Court are (i) the Assessing Officer should have reason to believe, (ii) should record the reasons in writing and (iii) should obtain sanction when required. In the present case, the tribunal has not held that the three pre-conditions are missing or not satisfied. The question is whether or not the notice under Section 148 was invalid because the words "Pvt. Ltd." were not mentioned but the alphabets PL were mentioned in four out of the five cases. 35. In Rama Devi Agarwalla and Others v. Commissioner of Income Tax, West Bengal-III, [1979] 117 ITR 256 (Cal.), notice was issued to an i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ispute and debatable. The said dispute/debate caused prejudice and the High Court was of the opinion that the failure to mention the status in the notice for reassessment was not a mere procedural or a technical defect but a substantive defect. 38. In Bhagwan Devi Saraogi and Others v. Income Tax Officer, 'E' Ward and Others, [1979] 118 ITR 906 (Cal.) the notice for reopening did not mention that the income was being assessed in the status of association of persons and, therefore, was treated as null and void. 39. In Jayanthi Talkies Distributors v. Commissioner of Income Tax, [1979] 120 ITR 576 (Mad.), notice was served on a person who was not specifically empowered or authorized to receive notice and personal service was not affected. In the said case, best judgment assessment order was passed under Section 144 of the Act. The aforesaid decision does not help the respondent. 40. Referring to Sections 147 to 149 of the Act and drawing on dissimilarities with similar provisions in the Income Tax Act, 1922, the Supreme Court in R. K. Upadhyaya v. Shanabhai P. Patel [1987] 166 ITR 163 (SC), has noticed the modifications/changes made in the 1961 Act. Difference between "issue of no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt had also filed some details before the Assessing Officer who passed the assessment order. 42. In Commissioner of Income Tax v. Anand and Company [1994] 207 ITR 418 (Cal.), it has been observed as under:- "In our view, the Tribunal has taken an unduly technical view of the whole matter. The judiciary in this country has never gone on technical triviality. Even in the litigation of private parties, the courts have shown a wide measure of forgiveness in similar acts of omission or failure as pointed out by learned counsel for the Revenue. (See Gouri Kumari Devi's case [1959] 37 ITR 220). At page 223 of the Reports, the Patna High Court has observed as follows: "With regard to the analogous provisions of Order 6, rule 14, there is authority for the view that the omission or failure on the part of the plaintiff to sign the plaint is a mere irregularity which can subsequently be rectified and the omission is not a vital defect. That is the view expressed by the Judicial Committee in Mohini Mohun Das v. Bungsi Buddan Saha Das [1889] ILR 17 (Cal) 580 and by the Madras High Court in Lodd Govindoss Krishnadas Varu v. P.M.A. R.M. Muthiah Chetty, AIR 1925 Mad 660. " Learned counsel for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... notice itself clearly informed the assessee that he had to file a return of income for the relevant year. 46. In Chief Forest Conservator, Government of Andhra Pradesh v. Collector [2003] 3 SCC 472, the Supreme Court examined the question of misdescription or misnomers of parties and the effect thereof and it was held as under:- "12. It needs to be noted here that a legal entity - a natural person or an artificial person - can sue or be sued in his/its own name in a court of law or a tribunal. It is not merely a procedural formality but is essentially a matter of substance and considerable significance. That is why there are special provisions in the Constitution and the Code of Civil Procedure as to how the Central Government or the Government of a State may sue or be sued. So also there are special provisions in regard to other juristic persons specifying as to how they can sue or be sued. In giving description of a party it will be useful to remember the distinction between misdescription or misnomer of a party and misjoinder or non-joinder of a party suing or being sued. In the case of misdescription of a party, the court may at any stage of the suit/proceedings permit correc ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
