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TMI Blog2012 (2) TMI 121X X X X Extracts X X X X X X X X Extracts X X X X ..... itors Private Limited. 2. In ITA Nos. 4/2006, 7/2006, 11/2006, 17/2006 and 22/2006, the following substantial question of law was formulated at the time of admission:- "Whether the ITAT was, in the facts and circumstances of the case, correct in holding 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?" 3. In ITA Nos. 2/2006, 3/2006, 5/2006, 8/2006 and 10/2006, the following two substantial questions of law were formulated at the time of admission:- "(1) Whether the ITAT was, in the facts and circumstances of the case, correct in holding 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, th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stionnaire, was issued on 7th March, 2002. The respondent vide letter dated 22nd March, 2002 reiterated his stand that the notices under Section 148 of the Act were not served and stated that the returns filed on 10th December, 1999 and the original return for the assessment year 1989-90 filed on 29th December, 1989 should be treated as returns filed pursuant to the notice under Section 148. 12. It appears that the respondent did not furnish all details as required by the questionnaire. The Assessing Officer passed assessment orders dated 22nd March 2002, assessing the income of the respondent as under:- Assessment Year 1989- 90 Income declared in the original return Rs. 229706/- Add: Income declared under VDIS, 1997 Rs. 311839/- Taxable Income Rs. 541545/- R/of Rs. 541550/- Assessment Year 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ord 'Private Ltd.' has not been mentioned in the notice u/s 148. ( b ) There was no 'additional income' as explained as per the detailed submissions and the reconciliation of the two figures adopted by the AO enclosed as computation to the written submissions. ( c ) There was no case of rejection of appeal in view of the provisions of S.249 (4) (a) of the Income Tax, 1961 as there was no tax due as no assessment had been made in time. Moreover, the question involved is of validity of notice u/s 148 and not the case on merits or based on return. On a consideration of the facts of the case I find that in this case no valid notice u/s 148 of the Act has been issued to the appellant. It is well settled that the issue of a valid notice to the assessee u/s 148 of the Income Tax Act, 1961 within the period specified u/s 149 of the Act, is a condition precedent for the validity of any re-assessment to be made against any reassessment to be made against an assessee u/s 147. Where the notice issued to an assessee is vague. It would not be possible to rely upon it to sustain an assessment made u/s 147. A vague notice is an invalid notice and in such a case the vagueness cannot be re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent under Section 147 of the Act, heard the appeals and dismissed the same. She held that the earlier order passed by her, was properly implemented by the Assessing Officer and the required addition had been deleted, in consonance with the directions issued. 20. Accordingly, there were two sets of appeals filed before the tribunal. The first set of appeals were filed by the Revenue against the order of the CIT(Appeals) declaring that the notices under the Sections 147/148 were void as the words "Pvt. Ltd." were missing. The second set of appeals were filed by the respondent against the order of the Assessing Officer under Section 154/250 of the Act, which were affirmed by the CIT(Appeals). 21. These ten appeals were disposed of by a common order of the tribunal dated 15th April, 2005. In the impugned order, while dealing with the appeals of the Revenue, the tribunal has rejected the contention that the appeals before the CIT(A) were not maintainable and were liable to be dismissed for non payment of taxes under Section 249(4), on the ground that the respondent had not filed valid returns of the income and, therefore, clause (a) of Section 249(4) was not applicable. With reg ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the CIT (A) which were not contravorted before us it is clear that the notice u/s 148 was not valid. The question whether there was valid service of notice u/s 148 has not been decided by the CIT (A), though the assessee reiterated even before us that there was no service of notice u/s 148. Admittedly the word "Pvt. Ltd." was not mentioned in the notice u/s 148. The ld. DR however, produced before us a copy of notice issued u/s 148 for AY 1989-90 and submitted that the said notice contained the word "Pvt.Ltd.". The ground of appeal of the Revenue however, proceeds under the assumption that in all notices the word "Pvt. Ltd.". was omitted. Be that as it may. We are of the view that the basis on which the CIT (A) held the assessments to be invalid are just and proper." 26. The tribunal has rejected that Section 292-B would not come to the aid of the Revenue as the requirement to serve the notice was a jurisdictional pre-condition and reference was made to P.N. Sasikumar v . CIT , [1988] 170 ITR 80 (Kerala) and P.V. Doshi v . CIT , [1978] 113 ITR 22 (Gujarat). 27. Section 292-B of the Act reads as under:- " 292-B. Return of income, etc., not to be invalid on certain grou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... clearly stated. The address mentioned on all notices is 1489, Chandni Chowk, Delhi. This is the correct address of the respondent. The tribunal has not accepted the plea of the respondent assessee that the notice under Section 148 of the Act was not duly served as the said notices were sent under registered post at the aforesaid address. It is not the case of the respondent that there was any other firm/concern at the same address by the name of Jagat Novel Exhibitors. In the present case, we do not think that failure to mention the words 'Principal Officer' and the specific words 'Pvt. Ltd.' or the use of the abbreviation 'P.L.' has caused or could have caused any confusion or has resulted in vagueness which justifies the quashing of the entire assessment proceedings and the consequent assessment orders. 29. Object and purpose behind Section 292-B is to ensure that technical pleas on the ground of mistake, defect or omission should not invalidate the assessment proceedings, when no confusion or prejudice is caused due to non-observance of technical formalities. The object and purpose of this Section is to ensure that procedural irregularity(ies) do not vitiate assessments. No ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... but a perceptible and distinct acceptance that in matters of due service of notice/summon, a practical and pragmatic approach, rather than mere compliance and non-compliance of a formality(ies) is determinative and relevant. Amendment to Order XIII, Rule 9 of the code of Civil Procedure, 1908 pursuant to the 27 th report of Law Commission in 1976 is a clear pointer and reflects an acceptable approach. Prejudice caused is relevant and apposite, but contrivance and stratagem once established should not be accepted." 31. We may now deal with the judgments relied upon by the respondent. Commissioner of Income Tax, Andhra Pradesh v. K. Adinarayana Murty , [1967] 65 ITR 607 (SC) was pronounced before the introduction of Section 292-B of the Act. In the said case, notice for assessment under notice Section 34 of the Act was issued to the assessee in status of an individual, as in a previous order it was held by the Assessing Officer that the assessee was not a Hindu Undivided Family but an individual. However, the said finding was upset by the first appellate authority which had held that the status of the assessee was of a Hindu Undivided Family and not that of an individual. Af ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing was for assessment year was 1948-49 and not for the assessment year 1949-50 and, therefore, the assessment order for assessment year 1949-50 was invalid. The facts of the present case are entirely different. There is no dispute that the assessment years are correctly mentioned and there was no confusion or doubt about the assessment years. There is no finding that there was confusion in the mind of the respondent as the word 'Pvt. Ltd.' were missing. 33. The decision of the Gujarat High Court, which was made subject matter of challenge before the Supreme Court is reported in [1968] 68 ITR 407 (Guj.). It was held that there was a defect or mistake in the notice, and the same cannot be waived by the assessee. Even if the assessee had submitted the return for the assessment year 1949-50, this would not help the Revenue. Service of notice was a jurisdictional pre-condition, which cannot be waived. As noticed above, the Income Tax Act, 1961 has been amended to incorporate a new provision i.e. Section 292-B, with effect from 1st October 1975, and this provision must be given due credence. All issues arising after the insertion of Section 292B, must be adjudicated by applying th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he High Court to G. Murugesan and Brothers v. CIT , [1973] 88 ITR 432 (SC) wherein it was held that for constituting/assessing an association of persons, the members must join together and the mere fact that there were joint shares or dividends were received by one or more persons would not create an association of persons. 36. Similarly, in the case of P.N. Sasikumar and Others v. Commissioner of Income Tax ( supra ), the notice was issued in the name of an individual without indicating whether he was being served in his capacity as a principal officer or as a member of an association or a body of individuals. The assessee filed a return in individual status but the Assessing Officer completed assessment in the status of Association of Persons. In these circumstances, it was held that the assessments were invalid. Reliance placed on Section 292-B was rejected on the ground that this was not merely a technical objection or mere irregularity which could be cured or obliterated by relying upon the said Section. 37. In Gokul Chand v. ITO , [1995] 211 ITR 738 (All.) it was noticed that the assessee was having dual capacity as a Karta of an HUF and as an individual. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as lapsed. Section 148(1) provides for service of notice as a condition precedent to making the order of assessment. Once a notice is issued within the period of limitation, jurisdiction becomes vested in the Income-tax Officer to proceed to reassess. The mandate of section 148(1) is that reassessment shall not be made until there has been service. The requirement of issue of notice is satisfied when a notice is actually issued. In this case, admittedly, the notice was issued within the prescribed period of limitation as March 31, 1970, was the last day of that period. Service under the new Act is not a condition precedent to conferment of jurisdiction on the Income-tax Officer to deal with the matter but it is a condition precedent to the making of the order of assessment." 41. The aforesaid observations are significant. In the present case, the tribunal has not held that the jurisdictional pre-conditions were missing or not satisfied. Reasons to believe have been recorded. Notice has also been issued within the limitation period. The question whether the notice was addressed to the correct person has been examined and dealt with by us above. Service of notice is not the juris ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ffecting the validity of the proceeding." 43. In Hind Samachar Limited v. Union of India [2011] 330 ITR 266 (P H) reference was made to Section 292B and Section 139(9) of the Act. In the said case, return of income, filed by the company was signed by someone other than the authorized person. It was observed that the question was of removal of defect, which could be rectified. Reference was made to another decision of the Punjab and Haryana High Court in CIT v. Norton Motors [2005] 275 ITR 595. 44. Bombay High Court in Prime Securities Ltd. v. Varinder Mehta, Assistant Commissioner of Income-tax [2009] 317 ITR 27 (Bom) has observed that Section 292B of the Act makes it clear that a return of income shall not be treated as invalid merely by reason of any mistake, defect or omission, if the return of income is in substance and effect in conformity with or according to the intent and purpose of the Act. The return of income, if not signed by the authorized signatory, as contemplated under Section 140 of the Act, would be a mistake, defect or omission stated in Section 292B of the Act. 45. We may note, observations of the Supreme Court in Balchand v. ITO [1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ings." 47. One of the questions, which arises for consideration, in such cases is whether there was prejudice. The test to be applied is whether the party receiving the notice would be in doubt whether the said notice is meant for him or not. If the recipient of notice was not in doubt that it was meant for him, the misnomer or misdescription is not fatal. Thus failure to mention the words "Principal Officer" on the notices is not fatal. 48. Similarly, we do not think in the facts of the present case and it has not been held by the tribunal or the CIT (Appeals) that there was misnomer or misdescription because the words 'Private Limited' were missing in 4 out of 5 notices though the name "Jagat Novel Exhibitors" were clear. It has not resulted in misnomer or misdescription of parties which is fatal and makes the entire proceedings null and void. 49. In view of the aforesaid findings recorded above, the question framed in ITA Nos. 4/2006, 7/2006, 11/2006, 17/2006 and 22/2006, and the first question in ITA Nos. 2/2006, 3/2006, 5/2006, 8/2006 and 10/2006 are answered in negative and in favour of the Revenue and against the respondent. In view of the above findings, we need ..... X X X X Extracts X X X X X X X X Extracts X X X X
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