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TMI Blog2012 (12) TMI 78X X X X Extracts X X X X X X X X Extracts X X X X ..... and the foreign company, the petitioner had to pay the contract price for supply, installment and erection of the machinery. For the purpose of erection of the machinery, the foreign company deputed one Mr. Ivo Perica, one of its employees for supervising the work. It is the case of the petitioner that no payment was made by the petitioner-company to said Mr. Ivo Perica towards such services rendered by him. 1.3 On 19.11.2001, the petitioner addressed a letter to the Assistant Commissioner of Income Tax regarding the payments made by the foreign company to Mr. Ivo Perica in connection with the work done for erection of the machinery and the question of deduction of tax at source by the petitioner-company and conveyed as under: "In this connection, we bring to your kind notice that to the best of our knowledge, the assessee company had not made any payment referred to herein above in the name of Mr. Ivo Perica during C.Y. 1998 and C.Y.1999. It may be appreciated that the assessee company had entered into contract with M/s. A Monforts Textilmachinen Gmbh and Co. for supply of machineries and spares and the prices of machinery was inclusive of erection charges." 1.4 Not satisfied w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2003, on similar grounds, in connection with the salary payments to very same Mr. Ivo Perica, the petitioner was visited with a separate notice also dated 28.03.2003 under Section 148 of the Act, whereby the Assessing Officer desired to reopen the assessment for the year 2000-01 in case of the petitioner as the agent of the foreign company. 2. Mr. Bandish Soparkar, counsel for the petitioner submitted that in Special Civil Application No. 8858 of 2003, impugned notice was clearly time barred. He pointed out that the notice was issued on 28.03.2003. Under Section 149(3) of the Act, such notice could be issued only within a period of two years from the end of relevant assessment year. The time limit for issuance of notice, thus expired on 31.03.2001. 3. With respect to both the petitions, counsel vehemently contended that before notice under Section 148 of the Act could be issued, the Assessing Officer was required to pass an order under Section 163(2) of the Act holding that the petitioner be treated as an agent of the principal, whose income, the Assessing Officer desired to tax in the hands of the assessee. Counsel submitted that in the present case, without passing any order u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and, indeed, there was initially a difference of opinion between the two judges, but then it would appear that if two views are possible, the view which ultimately found favour with the majority will be required to be upheld inasmuch as it is the view in favour of the assessee. If the period of limitation of two years prescribed under Section 149(3) creates a difficulty for the working out of these provisions, it is for the Revenue to seeks an amendment of those provisions." 3. In case of CIT v. S.G. Sambandam & Co. [2000] 242 ITR 708 wherein Madras High Court observed that in absence of any notice to the assessee treating him as an agent under Section 163 of the Act, it was not open to the Income Tax Officer to treat the assessee as an agent of a non-resident. Finding that notice was not issued under Section 163 of the Act but issued under Section 148 of the Act; the Court held that it was impermissible to straightaway treat the assessee as an agent of a non-resident. 5. Our attention was also drawn to the decision of Division Bench of this Court in case of CIT v. Mukesh B. Shah wherein in the context of the provisions of Section 163 of the Act, the Court observed t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , pertains to the impugned notice under Section 148 of the Act being time barred. The notice is issued seeking to reopen the assessment for the year 1999-2000. As per Section 149(3) of the Act, such notice could be issued only within a period of two years from the end of relevant assessment year. Section 149(3) of the Act reads as under: "149(3) If the person on whom a notice under section 148 is to be served is a person treated as the agent of a non-resident under section 163 and the assessment reassessment or recomputation to be made in pursuance of the notice is to be made on him as the agent of such non-resident, the notice shall not be issued after the expiry of a period of two years from the end of the relevant assessment year." Such period thus ended on 31.03.2002. The notice which was issued on 20.03.2003 was thus clearly barred by limitation. On this ground alone notice impugned in Special Civil Application No. 8858 of 2000 is required to be quashed. We may at this stage, notice certain statutory provisions relevant for our discussion. Section 160 of the Act pertains to "representative assessee" relevant provision thereof reads as under: "160(1) For the purposes of thi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ub-section (1) of section 9 of this Act.] (2) No person shall be treated as the agent of a non-resident unless he has had an opportunity of being heard by the [Assessing] Officer as to his liability to be treated as such." 9. We may now deal with the third contention of the petitioner which is common for both the petitions. Here we may recall the challenge to the notice is on the ground of incongruity in the impugned notice itself. We may peruse the material on record more closely in this connection. The Assessing Officer issued a notice under Section 163(1) of the Act to the petitioner on 15.03.2002 and called upon the petitioner to show cause why the petitioner in terms of Section 163 be not treated as an agent of Mr. Ivo Perica and his tax liability be not recovered from the petitioner. The entire proceedings including the contents of the show cause notice proceeded on such basis. 10. In the reasons recorded also, the Assessing officer elaborated his stand with respect to the petitioner's liability to pay tax as an agent of Mr. Ivo Perica who, though had earned income for the work done in India, had paid no tax. In such context in the reasons, he recorded as under: "The inco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hinery. In the process, if Mr. Ivo Perica received any salary from the foreign company, it is the firm stand of the petitioner that petitioner company cannot be treated as an agent of Mr. Ivo Perica. We are in the present petition not concerned with the validity of such a stand of the petitioner-company. It can, however, not be denied that the foreign company and Mr. Ivo Perica were legally completely in different position vis-a-vis the petitioner-company. Under the circumstances, the impugned notice, in our opinion, was wholly defective. The defect cannot be treated as one of curable nature. The same goes to the very root of the matter and would strike at the Assessing Officer's jurisdiction to issue the notice. 12. If we now deal with the second contention, as noted, the Punjab and Haryana High Court in case of Kanhaya Lal Gurmukh Singh (supra) and Bombay High Court in case of Belapur Sugar & Allied Industries Ltd. (supra) have held that before issuing notice under Section 148 of the Act, the Assessing Officer must pass an order under Section 163(2) of the Act treating the assessee as an agent. In the present case, we may not go to such a length, since we have already held that ..... X X X X Extracts X X X X X X X X Extracts X X X X
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