Friend a very useful case law when notice under Section 143(2) was either not served upon the assessee or was not served upon the assessee within the prescribed period of limitation provided u/s 143(2) of the Act then the assessment order liable to be quashed
PRINCIPAL COMMISSIONER OF INCOME TAX vs.NEXUS SOFTWARE LTD. HIGH COURT OF GUJARAT DB TAX APPEAL NO. 240 of 2017 held on Apr 11, 2017 citation (2017) 98 CCH 0167 GujHC Legislation Referred to Section 143(2) Cases Referred to Banarsi Debi vs. The Income-tax Officer, District IV, Calcutta reported in AIR 1964 SC 1742 Nulon India Ltd. vs. Income-tax Officer reported in [2010] 323 ITR 681 (Delhi)
Relevant portion of the order is as under:-
It is not in dispute that as per Section 143(2) of the Act, for the Assessment Year 2008-09, notice under Section 143(2) of the Act was required to be served within the period of six months i.e. on or before 30/09/2009. It is not in dispute that for the first time notice under Section 143(2) of the Act was issued on29/09/2009 and in fact dispatched to the postal authority to serve the service upon the assessee on 30/09/2009. Nothing is on record and/or there is no acknowledgment received on record to show and/or suggest that in fact the notice under section 143(2) dated 29/09/2009 was served upon the assessee. Under the circumstances, notice under Section 143(2) of the Act was not served upon the assessee within the prescribed period of limitation provided under Section 143(2)of the Act i.e. on or before 30/09/2009. Under the circumstances, as such, the learned tribunal has rightly confirmed the order passed by the learned CIT(A) setting aside the assessment order under Section 143(3) of the Act on the ground that the notice under Section 143(2) of the Act has not been served upon the assessee within the prescribed period of limitation provided under Section 143(2) of the Act.
Full decision
1. Feeling aggrieved and dissatisfied with the impugned judgment and order passed by the learned Income Tax Appellate Tribunal “C” Bench, Ahmedabad (hereinafter referred to as “the learned tribunal”) dated 18/10/2016 in ITA No.1258/Ahd/2012 for the Assessment Year 2008-09 by which the learned tribunal has dismissed the said Appeal preferred by the revenue and has confirmed the order passed by the learned CIT(A) quashing and setting aside the assessment order under Section 143(3) of the Income Tax Act (hereinafter referred to as “the Act”) on the ground that within the period of limitation provided under Section 143 of the Act no notice under Section 143(2) of the Act was served upon the assessee within the time prescribed under Section 143 of the Act, revenue has preferred the present Tax Appeal.
2. The facts leading to the present Tax Appeal in nutshell are as under;
2.1 The assessee filed the return of income on 30/09/2008 declaring the total income at Rs.31,879/-. The case of the assessee was selected for scrutiny with prior approval of CCIT, Baroda and accordingly notice under Section 143(2) of the Act was issued on 29/09/2009. However, it appears that notice dated 29/09/2009 was dispatched to the postal authority for speed post on 30/09/2009. Nothing is on record and even otherwise it is not the case on behalf of the revenue that the notice issued on 29/09/2009, which was given to the postal authority on 30/09/2009, was served upon the assessee on or before 30/09/2009. Even the said notice was served upon the assessee or not is also not on record as the acknowledgment of the notice under Section 143(2) of the Act is not available. It appears that thereafter notice under Section 142(1) of the Act dated 17/02/2010 was served upon the assessee and at that time it came to the knowledge of the assessee that the case of the assessee was selected for scrutiny. The assessee – Company raised objection before the Assessing Officer that the notice under Section 143(2) was not validly served within the statutory limits, and therefore, it was requested not to proceed further with the notice under Section 143(2) of the Act. However, the Assessing Officer did not accept the same and treated the assessee having been served with the notice under Section 143(2) of the Act before the due date provided under Section 143(2) of the Act i.e. on or before 30/09/2009 and thereafter the Assessing Officer passed the scrutiny assessment order under Section 143(3) of the Act determining the return of income at Rs.11,88,35,320/-.
2.2 Feeling aggrieved and dissatisfied with the scrutiny assessment order under Section 143(3) of the Act, the assessee preferred Appeal before the learned CIT(A). The learned CIT(A) allowed the said Appeal preferred by the assessee and set aside the scrutiny assessment order under Section 143(3) of the Act solely on the ground that the notice under Section 143(2) of the Act was not served upon the assessee within the prescribed period of limitation provided under Section 143(2) of the Act i.e. within the period of six months, and therefore, the assessment order is bad in law.
2.3 Feeling aggrieved and dissatisfied with the order passed by the learned CIT(A), revenue preferred Appeal before the learned tribunal and by the impugned judgment and order the learned tribunal has dismissed the said Appeal preferred by the revenue and has confirmed the order passed by the learned CIT(A).
2.4 Feeling aggrieved and dissatisfied with the impugned judgment and order passed by the learned tribunal, revenue has preferred the present Tax Appeal with the following proposed questions of law;
(A) Whether the learned tribunal was right in law and on facts and circumstances of the case that notice under Section 143(2) of the Act was not served upon the assessee legally without appreciating the fact that notice under Section 143(2) of the Act was issued on 29/09/2009 well within the time limit and sent through speed post on 30/09/2009 on the address given by the assessee in its return of income for the Assessment Year 2008-09?
(B) Whether the learned tribunal was right in law and on facts and circumstances of the case that notice under Section 143(2) of the Act was not served upon the assessee legally without appreciating the fact that notice under Section 143(2) of the Act was issued on 29/09/2009 well within the time limit and the address of the assessee’s premises was sealed by the Hon’ble Gujarat High Court since 25/02/2009?
(C) Whether the learned tribunal was right in law and on facts and circumstances of the case that notice under Section 143(2) of the Act was not served upon the assesee legally without appreciating the fact that the assessee was frequently changing its addresses and it did not intimate the Department regarding its change in addresses?
(D) Whether the learned tribunal was right in law and on facts and circumstances of the case that notice under Section 143(2) of the Act was not served upon the assessee legally without appreciating the fact that the assessee had given such address on its return for the year under consideration which was sealed by the Hon’ble Gujarat High Court on 25/02/2009?
(E) Whether the learned tribunal was right in law and on facts and circumstances of the case that notice under Section 143(2) of the Act was not served upon the assessee legally without appreciating the fact that the assessee did not prove the fact that the notice under Section 143(2) of the Act dated 29/09/2009 was issued beyond the time limit?
3. Shri K.M. Parikh, learned advocate has appeared on behalf of the revenue. It is submitted by Shri K.M. Parikh, learned advocate appearing on behalf of the revenue that in the facts and circumstances of the case, the learned tribunal has materially erred in confirming the order passed by the learned CIT(A) and in holding that the notice under Section 143(2) was not served upon the assessee on or before 30/09/2009.
3.1 It is further submitted by Shri K.M. Parikh, learned advocate appearing on behalf of the revenue that the learned tribunal has not properly appreciated the fact that as such notice under Section 143(2) of the Act was issued on 29/09/2009 at the address mentioned in the return of income, and therefore, it is ought to have been presumed that the assessee has been served with the notice under Section 143(2) of the Act within the prescribed limit of limitation under Section 143(2) of the Act. It is further submitted by Shri K.M. Parikh, learned advocate appearing on behalf of the revenue that the learned tribunal has not properly appreciated the fact that as such notice under Section 143(2) of the Act was issued on 29/09/2009 well within the prescribed time limit and was sent through speed post on 30/09/2009 at the address given by the assessee in its return of income for the Assessment Year 2008-09.
3.2 It is further submitted by Shri K.M. Parikh, learned advocate appearing on behalf of the revenue that the learned tribunal has not properly appreciated the fact that the notice under Section 143(2) of the Act was in fact issued on 29/09/2009 well within the prescribed time limit and in fact the premises of the assessee was sealed by the High Court since 25/02/2009. It is further submitted by Shri K.M. Parikh, learned advocate appearing on behalf of the revenue that the learned tribunal has not appreciated the fact that the assessee was frequently changing his address and did not intimate its change in address.
3.3 It is further submitted that therefore in the facts and circumstances of the case the learned tribunal ought not to have confirmed the order passed by the learned CIT(A) setting aside the scrutiny assessment order on the ground that the notice under Section 143(2) of the Act was not served upon the assessee on or before 30/09/2009 i.e. within the period of limitation prescribed under Section 143(2) of the Act. For the aforesaid, Shri K.M. Parikh, learned advocate appearing on behalf of the revenue has relied upon Section 27 of the General Clauses Act as well as the decision of the Hon’ble Supreme Court in the case of Banarsi Debi Vs. The Income-tax Officer, District IV, Calcutta reported in AIR 1964 SC 1742 and the decision of the Punjab & Haryana High Court dated 27/09/2011 passed in V.R.A. Cotton Mills (P) Ltd. Vs. Union of India and Others. Making the above submissions and relying upon the above decisions, it is requested to admit /allow the present Tax Appeal.
4. We have heard Shri K.M. Parikh, learned advocate appearing on behalf of the revenue at length. It is not in dispute that as per Section 143(2) of the Act, for the Assessment Year 2008-09, notice under Section 143(2) of the Act was required to be served within the period of six months i.e. on or before 30/09/2009. It is not in dispute that for the first time notice under Section 143(2) of the Act was issued on 29/09/2009 and in fact dispatched to the postal authority to serve the service upon the assessee on 30/09/2009. Nothing is on record and /or there is no acknowledgment received on record to show and /or suggest that in fact the notice under Section 143(2) dated 29/09/2009 was served upon the assessee. Under the circumstances, notice under Section 143(2) of the Act was not served upon the assessee within the prescribed period of limitation provided under Section 143(2) of the Act i.e. on or before 30/09/2009. Under the circumstances, as such, the learned tribunal has rightly confirmed the order passed by the learned CIT(A) setting aside the assessment order under Section 143(3) of the Act on the ground that the notice under Section 143(2) of the Act has not been served upon the assessee within the prescribed period of limitation provided under Section 143(2) of the Act.
4.1 Now so far as the submission on behalf of the revenue that the learned tribunal has not properly appreciated the fact that the premises of the assessee was sealed by the High Court since 25/02/2009 and /or that the assessee was frequently changing its address and did not intimate the Department regarding the change of address is concerned, at the outset it is required to be noted that as such and so stated even in the assessment order that after the notice under Section 143(2) of the Act was issued on 29/09/2009 (which has not been served on or before 30/09/2009 and naturally could not have been served as the same was dispatched to the postal authority on 30/09/2009), first notice under Section 142(1) of the Act was issued on 17/02/2010 and the same was served upon the assessee – Company through speed post. In the assessment order it has been observed by the Assessing Officer that subsequently due to the change of the Assessing Officer and also due to the change of the address of the assessee, notices under Section 142(1) of the Act were issued on 19/07/2010, 23/07/2010, 10/08/2010, 02/11/2010 and 15/12/2010 respectively. Till the Assessing Officer issued the notice under Section 143(2) of the Act dated 29/09/2009 the Assessing Officer was not even aware and /or had no knowledge that the premises of the assessee has been sealed by the High Court since 25/02/2009, and therefore, the aforesaid factum shall not help the Assessing Officer /revenue.
4.2 Now so far as the submission on behalf of the revenue that as the notice under Section 143(2) of the Act was issued on 29/09/2009 and was sent to the postal authority to serve the notice upon the assessee on 30/09/2009, and therefore, it can be said to have been served upon the assessee within the prescribed period of limitation provided under Section 143(2) of the Act and reliance placed upon Section 27 of the General Clauses Act is concerned, it is required to be noted that in the facts and circumstances of the case, Section 27 of the General Clauses Act shall not be applicable and /or the same shall not be of any assistance to the revenue. There is no question of presumption of having been served the notice upon the assessee, when the notice itself was given /dispatched by the Assessing Officer on 30/09/2009 only. It is not believable that the assessee would have been served and /or presumed to have been served on 30/09/2009 itself. Identical question came to be considered by the Delhi High Court in the case of Nulon India Ltd. Vs. Income-tax Officer reported in [2010] 323 ITR 681 (Delhi). In the case before the Delhi High Court notice for assessment was sent by speed post on 30/10/2002 for the Assessment Year 2001-02 to the address mentioned in the return of income. The notice was redirected and was served at the redirected address on 06/11/2002. The learned tribunal held that the notice had been served within the prescribed period of limitation and the assessment made pursuant to the search was valid assessment. The matter was carried to the Delhi High Court. Before the High Court it was contented on behalf of the revenue that the notice under Section 143(2) of the Act was issued on 29/10/2002 and was sent by speed post on 30/10/2002, and therefore, it ought to have been treated as having been served with the notice. Even the revenue contended that it ought to have been presumed under law that any notice sent by speed post must have been delivered to the assessee. However, the Delhi High Court did not accept the same and allowed the Appeal preferred by the assessee on the ground that there is no presumption under the law that any notice sent by speed post must have been delivered to the assessee within 24 hours. In the present case also there cannot be any presumption that the notice which was dispatched to the postal authority for delivering it to the assessee on 30/09/2009 must have been delivered to the assessee on the same day i.e. 30/09/2009. Under the circumstances, even in the facts and circumstances of the case, Section 27 of the General Clauses Act shall not be of any assistance to the revenue.
4.3 Now so far as the reliance placed upon the decision of the Hon’ble Supreme Court in the case of Banarsi Debi (Supra) is concerned, on facts the same shall not be applicable to the facts of the case on hand. In the case of Banarsi Debi (Supra) Hon’ble Supreme Court was considering Section 34(1) of the Indian Income Tax Act, 1922 as well as subsequent amendment i.e. Section 4 of the Amending Act (Act 1 of 1959), where the word used were “notice issued” within the period of limitation but “served” upon the assessee subsequently. Under the circumstances, the aforesaid decision shall not be applicable to the facts of the case on hand.
4.4 Now so far as the reliance upon the decision of the Punjab & Haryana High Court in the case of V.R.A. Cotton Mills (P) Ltd. (Supra) is concerned, as such, in the case before the Punjab & Haryana High Court the notice was served upon the assessee by affixation at 11:20 p.m. on 30/09/2010. It was found to be a valid service in terms of the Code of Civil Procedure, and therefore, as such on facts the said decision shall not be applicable to the facts of the case on hand. However, we are not in agreement with the view taken by the Punjab & Haryana High Court that the expressions “serve” and “issue” would have the same meaning. The word “served” used in Section 143(2) of the Act is very significant and very clear. However in appropriate case being made out within the four corners of the General Clauses Act, if the notices are issued before reasonable time of the prescribed period of limitation and it has been dispatched /sent for delivery within the reasonable time, in that case, there can be presumption under Section 27 of the General Clauses Act. However, in the facts and circumstances of the case, as the notice dated 29/09/2009 was given to the postal authority for speed post delivery on 30/09/2009, as observed hereinabove, there is no question of any presumption that the same must have been delivered to the assessee on the very day i.e. 30/09/2009.
5. In view of the aforesaid facts and circumstances of the case, it cannot be said that the learned tribunal has committed any error in confirming the order passed by the learned CIT(A) quashing and setting aside the assessment order under Section 143(3) of the Act on the ground that the notice under Section 143(2) of the Act was not served upon the assessee and /or was not served upon the assessee within the prescribed period of limitation provided under Section 143(2) of the Act. We are in complete agreement with the view taken by the learned tribunal. No substantial questions of law arise as suggested on behalf of the revenue.
6. In view of the above and for the reasons stated hereinabove, the present Tax Appeal fails and the same deserves to be dismissed and is accordingly dismissed.