The Commissioner Of Income Tax, Bathinda v. M/S Panchvati Motors (P) Ltd

IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH ITA No. 292 of 2008 Date of Decision: 3.5.2011 The Commissioner of Income Tax, Bathinda Versus M/s Panchvati Motors (P) Ltd. ....Appellant. ...Respondent. CORAM:-HON'BLE MR. JUSTICE ADARSH KUMAR GOEL, ACTING CHIEF JUSTICE HON'BLE MR. JUSTICE AJAY KUMAR MITTAL. PRESENT: Ms. Savita Saxena, Standing Counsel, for the appellant. Mr. K.L. Goyal, Senior Advocate with Mr. Sandeep Goyal, Advocate for the respondent. AJAY KUMAR MITTAL, J. 1.This order shall dispose of ITA Nos. 292, 460, 461 and 462of 2008 as, according to the learned counsel for the parties, thecommon questions of law are involved therein. For brevity, the facts arebeing taken from ITA No. 292 of 2008. 2.This appeal has been preferred by the revenue underSection 260A of the Income Tax Act, 1961 (in short “the Act”) againstthe order dated 6.7.2007 passed by the Income Tax Appellate Tribunal,Amritsar Bench, Amritsar (hereinafter referred to as “the Tribunal”) in ITA Nos. 638 and 634/ASR/2004, for the assessment year 1998-99,claiming the following substantial questions of law:- “(i)Whether in the facts and circumstances of the casethe Hon'ble ITAT was right in law to hold that theservice of notice u/s 148 was invalid and, therefore, itwas not correct in quashing the assessment orderson the said grounds? (ii) Whether assessment order can be termed invalidmerely by the reason of any mistake or omission inservice of notice when Section 292B of I.T. Act, 1961states that if the proceeding is in substance andeffect in conformity with or according to the intent andpurpose of I.T. Act, 1961, the assessmentproceedings cannot be termed invalid merely byreason of any mistake, defect or omission in thenotice?” 3.Briefly stated, the facts necessary for adjudication asnarrated in the appeal are that the assessee filed return on 26.11.1998declaring nil income after adjusting brought forward losses of Rs.8671/-.The said return was processed under Section 143(1)(a) on 30.8.1999granting refund of Rs.3,50,280/- including interest under Section 244Aof the Act at Rs.50,881/-. Thereafter, notice under Section 148 of theAct was issued to the assessee on 12.3.2003. In response thereto, theassessee filed its return on 23.2.2004 declaring nil income and theassessment was completed vide order dated 17.3.2004 at a totalincome of Rs.95,90,410/- by making additions under the following heads:- 5.We have heard learned counsel for the parties. 6.Learned counsel for the revenue submitted that the noticeissued under Section 148 of the Act was validly issued on 12.3.2003 heads:- 5.We have heard learned counsel for the parties. 6.Learned counsel for the revenue submitted that the noticeissued under Section 148 of the Act was validly issued on 12.3.2003 and was duly served through affixation on 23.3.2003. The said servicewas in accordance with the provisions of Section 282 of the Act. It wasfurther submitted that the notice under Section 142(1) of the Act wasissued to the assessee and in response thereto an appearance was putby the assessee on 10.2.2004. The reassessment order was passedon 17.3.2004 after affording final hearing on 12.3.2004. Though initiallyaid was sought from the provision of Section 292B of the Act but inview of insertion of Section 292BB of the Act, learned counsel for therevenue pleaded in the alternative, that the provision of Section 292B ofthe Act protected the revenue against such technical pleas being raisedby the assessee regarding non-service of valid notice under Section148 of the Act. It was vehemently urged that Finance Act, 2008 hadinserted Section 292BB w.e.f. 1.4.2008 which dealt with the noticeswhich were deemed to be valid and the assessee was precluded fromtaking objection in any of the proceedings or enquiry under this Act thatnotice was not served upon him or not served in time or was served inimproper manner. The assessee having failed to raise any suchobjection before the assessing officer was not entitled to raise suchobjection in the appellate proceedings. According to him, the amendedprovision being procedural applied to all pending proceedings. Learnedcounsel produced a certified copy of the return which was filed by theassessee and drew the attention to column No.12 thereof, where theassessee itself had written that the return was filed in response to thenotice issued under Section 148 of the Act. Learned counsel for therevenue placed reliance on a Division Bench judgment of this Court inHind Samachar Limited v. Union of India and others [2011] 330 ITR ITA No. 292 of 2008-5- 266 (P&H) to submit that the technical defects would not make theassessment order invalid merely by reason of any mistake, defect oromission, if such return in substance and effect is in conformity with oraccording to the intent and purpose of the Act. 7.On the other hand, learned counsel for the assesseesupported the order passed by the Tribunal. He submitted that thedefect in the service of notice was jurisdictional defect which was notcurable in terms of Section 292B of the Act. He placed reliance on thefollowing judgments:- I.(1973) 88 ITR 374 (Cal)II.(2002) 253 ITR 334 (Gau)III.(1963) 47 ITR 775 (Ker)II.(2002) 253 ITR 334 (Gau)III.(1963) 47 ITR 775 (Ker) IV.(1999) 238 ITR 694 (Cal) V.(1977) 110 ITR 27 (ALL) VI.(1983) 139 ITR 73 (P&H) VII.(1959) 35 ITR 388 (SC) VIII.(1967) 66 ITR 147 (SC)IX.(1983) 144 ITR 954 (All)IX.(1983) 144 ITR 954 (All) 8.Rebutting the arguments of the revenue relating to Section292BB of the Act, learned counsel for the assessee submitted thatSection 292BB was prospectively effective from 1.4.2008 and had noapplicability to the facts of the present case. 9.We have given our thoughtful consideration to therespective submissions of learned counsel for the parties and do notfind any merit in the submission of learned counsel for the assessee. 10.Section 292BB of the Act was inserted by Finance Act, 2008, w.e.f. 1.4.2008. It reads thus : - “292BBWhere an assessee has appeared in anyproceeding or cooperated in any inquiry relating to anassessment or reassessment, it shall be deemed thatany notice under any provision of this Act, which isrequired to be served upon on him has been duly servedupon him in time in accordance with the provisions ofthis Act and such assessee shall be precluded fromtaking any objection in any proceeding or inquiry underthis Act that the notice was -- (a)not served upon him; or (b)not served upon him in time; or (c) served upon him in any impropermanner. manner. 10.Section 292BB of the Act was inserted by Finance Act, 2008, w.e.f. 1.4.2008. It reads thus : - “292BBWhere an assessee has appeared in anyproceeding or cooperated in any inquiry relating to anassessment or reassessment, it shall be deemed thatany notice under any provision of this Act, which isrequired to be served upon on him has been duly servedupon him in time in accordance with the provisions ofthis Act and such assessee shall be precluded fromtaking any objection in any proceeding or inquiry underthis Act that the notice was -- (a)not served upon him; or (b)not served upon him in time; or (c) served upon him in any impropermanner. manner. Provided that nothing contained in this section shallapply where the assessee has raised such objectionbefore the completion of such assessment orreassessment.” 11.A presumption has been raised under the said provisionrelating to service of notice upon the assessee in respect of assessmentor reassessment proceedings. According to this provision, where anassessee appears in any proceedings or cooperates in any enquiryrelating to assessment or reassessment proceedings, it shall bepresumed that the assessee has been validly served and it shall not beopen to the assessee to object that the notice was not served upon himor was not served in time or was served upon him in an improper manner. However, an exception to the aforesaid presumption has beenmade in a case where such objection has been raised beforecompletion of assessment or reassessment. The provision has beenmade effective from 01.04.2008 and therefore, shall apply to all pendingproceedings. The Central Board of Direct Taxes issued circular No. 1 of2009 dated 27[th] March, 2009 (2009) 310 ITR (St.) 42 giving explanatorynotes on the provisions relating to direct taxes contained in Finance Act,2008. Clause 42.7 (at page 86 of the report) is relevant which relates toapplicability of this provision and reads thus: “42.7 Applicability – This amendment has beenmade applicable with effect from 1[st] April, 2008. Thismeans that the provision of new-section 292BB shallapply in all proceedings which are pending on 1[st] April,2008.” 12.Further, scope of Section 292B of the Act was consideredby this Court in Income Tax Reference No. 15 of 2000 (TheCommissioner of Income Tax Amritsar vs. Rajbir Singh Karta ofCh. Kesho Dass (HUF), Pathankot), decided on 06.12.2010, wherein itwas observed as under: - “The Section was inserted whereby no return ofincome, assessment, notice, summons or otherproceeding shall be rendered invalid merely onaccount of any mistake, defect or omission wherethe return, assessment, notice, summons or otherproceeding in substance and effect are inconformity with or according to the intention and purpose of the Act. By incorporating this provision,it has been made clear that purely technicalobjections carrying no substance shall not come inthe way of validity of assessment proceedings etc.In other words, minor defects or irregularities in thecircumstances aforesaid, would not negate thevalidity of theproceedings initiated by the assessingofficer and the assessee would not be able to raisetechnical or venial defects in this regard.” 13.It is not disputed that in the return which was filed by theassessee, it was mentioned that the same was filed in response tonotice under Section 148 of the Act. No objection regarding validservice of notice under Section 148 of the Act was raised before theassessing officer. Once that is so, the argument of the assessee thatthere was no valid service of notice under Section 148 of the Act fails.The Tribunal was, thus, in error in concluding otherwise and holding theproceedings to be invalid. 13.It is not disputed that in the return which was filed by theassessee, it was mentioned that the same was filed in response tonotice under Section 148 of the Act. No objection regarding validservice of notice under Section 148 of the Act was raised before theassessing officer. Once that is so, the argument of the assessee thatthere was no valid service of notice under Section 148 of the Act fails.The Tribunal was, thus, in error in concluding otherwise and holding theproceedings to be invalid. 14.Suffice it to notice, that the plethora of judgments on whichlearned counsel for the assessee had placed reliance, does notadvance the case of the assessee as either in those cases, Section292BB or Section 292B of the Act was not under consideration or it wason individual fact situation involved therein that the cases had beendecided. 15.In view of the above, the substantial questions of law areanswered in favour of the revenue and against the assessee. Theappeals are allowed and the matter is remanded to the Tribunal to ITA No. 292 of 2008 decide the same afresh on merits in accordance with law. 16. The parties through their counsel are directed to appear before the Tribunal on 18.7.2011. (AJAY KUMAR MITTAL) JUDGE May 3, 2011gbs (ADARSH KUMAR GOEL)ACTING CHIEF JUSTICE -10- IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH ITA No. 460 of 2008 Date of Decision: 3.5.2011 The Commissioner of Income Tax, Bathinda ....Appellant. Versus M/s Panchvati Motors (P) Ltd. ...Respondent. CORAM:-HON'BLE MR. JUSTICE ADARSH KUMAR GOEL, ACTING CHIEF JUSTICE HON'BLE MR. JUSTICE AJAY KUMAR MITTAL. PRESENT: Ms. Savita Saxena, Standing Counsel, for the appellant. Mr. K.L. Goyal, Senior Advocate with Mr. Sandeep Goyal, Advocate for the respondent. AJAY KUMAR MITTAL, J. The appeal is allowed. For reasons, see the detailed order of even date recorded in ITA No. 292 of 2008 (The Commissioner of Income Tax, Bathinda v. M/s Panchvati Motors (P) Ltd). (AJAY KUMAR MITTAL) JUDGE (ADARSH KUMAR GOEL)ACTING CHIEF JUSTICE IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH ITA No. 461 of 2008 Date of Decision: 3.5.2011 The Commissioner of Income Tax, Bathinda ....Appellant. Versus M/s Panchvati Motors (P) Ltd. ...Respondent. CORAM:-HON'BLE MR. JUSTICE ADARSH KUMAR GOEL, ACTING CHIEF JUSTICE HON'BLE MR. JUSTICE AJAY KUMAR MITTAL. PRESENT: Ms. Savita Saxena, Standing Counsel, for the appellant. Mr. K.L. Goyal, Senior Advocate with Mr. Sandeep Goyal, Advocate for the respondent. AJAY KUMAR MITTAL, J. The appeal is allowed. For reasons, see the detailed order of even date recorded in ITA No. 292 of 2008 (The Commissioner of Income Tax, Bathinda v. M/s Panchvati Motors (P) Ltd). (AJAY KUMAR MITTAL) JUDGE (ADARSH KUMAR GOEL)ACTING CHIEF JUSTICE IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH ITA No. 462 of 2008 Date of Decision: 3.5.2011 The Commissioner of Income Tax, Bathinda ....Appellant. Versus M/s Panchvati Motors (P) Ltd. ...Respondent. CORAM:-HON'BLE MR. JUSTICE ADARSH KUMAR GOEL, ACTING CHIEF JUSTICE HON'BLE MR. JUSTICE AJAY KUMAR MITTAL. PRESENT: Ms. Savita Saxena, Standing Counsel, for the appellant. Mr. K.L. Goyal, Senior Advocate with Mr. Sandeep Goyal, Advocate for the respondent. AJAY KUMAR MITTAL, J. The appeal is allowed. For reasons, see the detailed order of even date recorded in ITA No. 292 of 2008 (The Commissioner of Income Tax, Bathinda v. M/s Panchvati Motors (P) Ltd). (AJAY KUMAR MITTAL) JUDGE (ADARSH KUMAR GOEL)ACTING CHIEF JUSTICE