The Commissioner Of Income Tax v. M/S Arya Cycle Works

IN THE HIGH COURT OF PUNJAB AND HARYANA ATCHANDIGARH. I.T.A. No.231 of 2006 & other connected cases beingITA Nos.170 to 172 of 2006 (O&M)Date of decision: 23.7.2010 The Commissioner of Income Tax. Vs. M/s Arya Cycle Works. -----Appellant. -----Respondent CORAM:- HON'BLE MR. JUSTICE ADARSH KUMAR GOELHON'BLE MR. JUSTICE AJAY KUMAR MITTAL Present:-Mr. Yogesh Putney, Sr. Standing Cousnel for Mr. Sukant Gupta, Standing Counselfor the Revenue. Mr. Pankaj Jain, Advocate & Mr. D.K. Goyal, Advocatefor the Assessee. --- ADARSH KUMAR GOEL, J. 1. This order will dispose of four appeals being ITANos.170 to 172 and 231 of 2006, as all the appeals involvecommon question of validity of initiation of proceedings forreassessment under Sections 147/148 of the Income Tax Act,1961 (for short, “the Act”). 2. In I.T.A. No.231 of 2006, the Assessee is apartnership firm. Proceedings were initiated vide notice dated17.3.1997, for reassessment, which was served on advocate forthe Assessee. As a result of reassessment proceedings, higherincome was assessed, against which appeal of the Assessee was partly allowed. On further appeal, the Tribunal set aside theproceedings for initiation of reassessment on the ground thatthere was defect in the notice in as much as assessment yearwas not mentioned and service of notice was not on properperson. 3.Following substantial question of law has been claimed onbehalf of the Revenue:- “Whether on the facts and in the circumstances of thecase the Hon’ble ITAT was right in law in cancellingthe assessment by holding that the service of noticeu/s 148 in which no assessment year has beenmentioned, on Authorised Representative of theassessee is not legal and valid inspite of that fact thatthe assessee filed the return in response to the noticeon the very same date and during reassessmentproceedings or even before CIT(A), no objectionswere raised regarding validity of notice or its service?” 4. Contention raised on behalf of the Revenue is thatSection 292B of the Act provides that deficiency in a notice andservice could not vitiate the proceedings unless prejudice wascaused to the Assessee. 5. We have heard learned counsel for the parties. 6. It is well settled that infirmities of procedure do notaffect the merits of the determination unless there is jurisdictionalerror or prejudice is caused. This principle has been legislativelyrecognised by way of Section 292-B of the Act. This Court considered this aspect of the matter in CITv. Norton Motors[2005] 275 ITR 595 and held:- “A reading of the above reproduced provision makes itclear that a mistake, defect or omission in the returnof income, assessment, notice, summons or otherproceedings is not sufficient to invalidate an actiontaken by the competent authority, provided that suchreturn of income, assessment, notice, summons orother proceeding is in substance and effect inconformity with or according to the provisions of theAct. To put it differently, section 292B can be reliedupon for resisting a challenge to the notice etc., only ifthere is a technical defect or omission in its.However, there is nothing in the plain language of thatsection from which it can be inferred that the samecan be relied upon for curing a jurisdictional defect inthe assessment notice, summons or otherproceeding. In other words, if the notice, summons orother proceeding taken by an authority suffers from aninherent lacuna affecting his/its jurisdiction, the samecannot be cured by having resort to Section 292B. 7. Applying the above principles to the present case, it isundisputed that the Assessee filed the return in pursuance to thenotice and was, thus, aware of the assessment year to which thenotice related and also had the knowledge of the proceedings. Insuch circumstances, any defect in the notice or the defect ofperson on whom the notice was served did not cause anyprejudice. Accordingly, we answer the substantial question of law in favour of the revenue and allow this appeal and hold that thenotice did not affect the reassessment. 8. Learned counsel for the Assessee points out that additions on merit have not been gone into by the Tribunal. 9. Accordingly, we set aside the impugned order andremand the matter for fresh decision on merits in accordance with law. 10. The parties may appear before the Tribunal for furtherproceedings on October 04, 2010. 11. A photocopy of this order be placed on the files ofeach connected case. (ADARSH KUMAR GOEL) JUDGE July 23, 2010ashwani ( AJAY KUMAR MITTAL ) JUDGE