Ita/56/2010 Of Coconut Palm Beach Garden v. Commissioner Of Income Tax

IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT: THE HON'BLE THE CHIEF JUSTICE DR. MANJULA CHELLUR & THE HONOURABLE MR.JUSTICE A.M.SHAFFIQUE WEDNESDAY, THE 18TH DAY OF DECEMBER 2013/27TH AGRAHAYANA, 1935 ITA.No. 56 of 2010 ------------------- AGAINST THE ORDER IN ITA 636/COCH/2008 of I.T.A.TRIBUNAL,COCHIN BENCH DATED 26.08.2009 ............ APPELLANT/APPELLANT :---------------------------- COCONUT PALM BEACH GARDEN, NEROTH HOUSE, ALAPPUZHA. BY ADVS.SRI.ANIL D. NAIR SMT.NIVEDITA A.KAMATH RESPONDENT/RESPONDENT : --------------------------------- COMMISSIONER OF INCOME TAX, ALAPPUZHA. BY SRI.JOSE JOSEPH, SC, FOR INCOME TAX THIS INCOME TAX APPEAL HAVING BEEN FINALLY HEARD ON 18-12-2013, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: Manjula Chellur, C.J. & A.M. Shaffique, J.- - - - - - - - - - - - - - - - - - - - - - - - - - - - I.T.A. No. 56 OF 2010 - - - - - - - - - - - - - - - - - - - - - - - - - - - - Dated this the 18[th] day of December, 2013 Shaffique, J. JUDGMENT The assessee has filed this appeal challenging the order passed by the Income Tax Appellate Tribunal, CochinBench in ITA No.636/Coch/08 with reference to the assessmentyear 2001-02. The facts of the case would disclose that theassessee filed return of income on 31.07.2001 by way ofshort-term capital gains on sale of certain buildings sold toM/s.Surya Samudra Holiday Resorts Pvt. Ltd. The assessee didnot disclose any amount by way of capital gains on sale of theland to the same person. Hence the assessing officer was ofthe opinion that there is escapement of income chargeable totax. It was contended by the assessee that he has filed returnof income on 06.05.2005. The assessing officer did not acceptthe explanation offered by assessee and computed capital gainon the entire transaction. 2. Though an appeal was filed before theCommissioner of Income Tax (Appeals), the findings of theassessing officer was confirmed. The assessee preferred an ITA No. 56 of 2010 -:2:- appeal before the Tribunal. After considering the rivalcontentions raised in the matter, Tribunal concurred with theview expressed by Commissioner of Income Tax (Appeals). 3. Learned counsel for the appellant had raised the following substantial questions of law: “i) In the facts and circumstances of the case, ought notthe Tribunal had held that the reopening is bad in law for wantof statutory notice under Section 143(2) of the Act ? ii) In the facts and circumstances of the case ought notthe Tribunal had held that the demand of interest underSection 234-B of the Act is liable to be set aside ?” 4. During the course of argument learned counsel for the appellant contended that the very issuance of notice underSection 143(2) and the time provided under Section 143(2)(ii)was over. Section 143(2)(ii) reads as under: “143. xxxxxx (2) (ii) 'Provided that no notice under clause (ii) shall beserved on the assessee after the expiry of twelve months fromthe end of the month in which the return is furnished.'” 5. It is not in dispute that even as per the Revenue notice had been served under Section 143(2) to the assessee on 03.11.2006. Though there was some dispute regarding service of ITA No. 56 of 2010 -:3:- notice, it is submitted that for the purpose of this appeal therewas service of notice under Section 142(1) of the Act whichaccording to the assessee is bad in law. On going through theprovisions of Section 143(2) (ii) of the Act, the notice is beyondthe time specified under the said provision. Hence furtherproceedings cannot be taken against the assessee. 6. The learned counsel for the appellant would submit that though specific ground had been raised in the memorandumof appeal before the Commissioner of Income Tax(Appeals) aswell as before the Tribunal, there was no consideration of theaforesaid factual situation. 7. Heard learned Standing Counsel appearing for therevenue as well. 03.11.2006. Though there was some dispute regarding service of ITA No. 56 of 2010 -:3:- notice, it is submitted that for the purpose of this appeal therewas service of notice under Section 142(1) of the Act whichaccording to the assessee is bad in law. On going through theprovisions of Section 143(2) (ii) of the Act, the notice is beyondthe time specified under the said provision. Hence furtherproceedings cannot be taken against the assessee. 6. The learned counsel for the appellant would submit that though specific ground had been raised in the memorandumof appeal before the Commissioner of Income Tax(Appeals) aswell as before the Tribunal, there was no consideration of theaforesaid factual situation. 7. Heard learned Standing Counsel appearing for therevenue as well. 8. As far as the merits of the appeal is concerned,after perusing the order passed by the Tribunal, we do not thinkthat there is any question of law involved in the case as thefinding of the authorities are based on factual materials.However, if the question of limitation is decided in favour of theappellant, the entire proceedings will be vitiated. We are of the ITA No. 56 of 2010 opinion, the question of limitation is a matter to be considered bythe Tribunal. If the notice under Section 143(2)(ii) is beyondthe time specified and if so it is not in dispute that furtherproceedings will be vitiated. The Writ Appeal is allowed asfollows: The impugned order is set aside and we direct the Tribunalto consider the matter afresh in the light of the observationsmade above. Manjula Chellur, Chief Justice. A.M. Shaffique, Judge. ttb/19/12