The Commissioner Of Income Taxamritsar v. Rajbir Singh Karta Of Ch. Kesho Dass (Huf), Pathankot

IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH. --- Income Tax Reference Nos. 15 of 2000Date of decision: 6.12.2010 The Commissioner of Income TaxAmritsar --- Petitioner Versus Rajbir Singh Karta of Ch. Kesho Dass (HUF), Pathankot --- Respondent CORAM:HON’BLE MR. JUSTICE ADARSH KUMAR GOELHON’BLE MR. JUSTICE AJAY KUMAR MITTAL --- Present:Mr. Sukant Gupta, Standing Counselfor the Revenue Mr. Salil Kapoor, Mr. Saurabh Kapoor andMr. Ankit Gupta, Advocatesfor the respondent. --- AJAY KUMAR MITTAL, J. This order will dispose of three References, Income TaxReference Nos. 15 to 17 of 2000 as the same question of law isinvolved therein. The facts have been taken from Income TaxReference No. 15 of 2000. In this reference under Section 256(2) of the Income-taxAct, 1961 (for short “the Act’”), the Income Tax Appellate Tribunal,Amritsar Bench, Amritsar, (in short “the Tribunal”) on the direction ofthis Court, vide order dated 28.8.1997, arising out of ITA No. 350 (ASR/1991 at the instance of the Revenue, relating to assessmentyear 1977-78, has referred the following question of law, for theopinion of this Court: “Whether on the facts and in the circumstances of thecase and also in the light of the provisions of Section292B of the Income Tax Act, 1961, notice issued undersection 148 of the Act was not invalid specially when theassessee had consciously and intentionally waived hisright to object to the defect in the notice? The facts, in brief, necessary for adjudication and asnarrated in the reference, are that no return of income had been filedby the assessee for the assessment years 1976-77, 1977-78 and1978-79 within the time permissible under Section 139 of the Act.Later on, having come to know that certain income chargeable to taxhad escaped assessment, the assessing officer initiatedproceedings under Section 147(a) and issued notices under Section148 on 18.3.1985. Thereafter, it was conveyed on behalf of theassessee vide his letter dated 10.12.1987 and also through hiscounsel Shri Anil Mahajan, Chartered Accountant, vide his letterdated 21.1.1988 and order sheet entry dated 4.2.1988, that thereturn of income already filed on 16.6.1982 in the capacity of HUFmay be treated as return filed in compliance to notice under Section148 dated 18.3.1985. Ultimately, assessments were completedunder Section 144 read with Section 147, but the same werechallenged by the assessee before the appellate authority on theground that the notices issued under Section 148 did not specify thestatus of the assessee. The plea raised, in other words, was that it was not discernible from the notices, whether the notices underSection148 had been issued to the assessee in his individualcapacity or in the capacity of HUF. The appellate authority held thatthe assessment had been completed in the status of HUF correctly.The Tribunal, however, cancelled the assessments by holding thatthe notices under Section 148 were totally vague and did not specifythe status in which the returns were to be filed and such noticeswould not give rise to assume jurisdiction for framing validassessment. The Commissioner of Income-tax {in short “the CIT”}, fileda Reference Application under Section 256(1) of the Act requestingthe Tribunal to refer the aforesaid question of law for the opinion ofthis Court. The application was, however, dismissed by the Tribunaland the Revenue thereafter filed a petition under Section 256(2) ofthe Act and it was in that petition that this Court directed the Tribunalto refer the aforesaid question for its opinion, and it is how the samehas been referred to. We have heard learned counsel for the parties and haveperused the record. The Commissioner of Income-tax {in short “the CIT”}, fileda Reference Application under Section 256(1) of the Act requestingthe Tribunal to refer the aforesaid question of law for the opinion ofthis Court. The application was, however, dismissed by the Tribunaland the Revenue thereafter filed a petition under Section 256(2) ofthe Act and it was in that petition that this Court directed the Tribunalto refer the aforesaid question for its opinion, and it is how the samehas been referred to. We have heard learned counsel for the parties and haveperused the record. Learned counsel for the Revenue submitted that noticeunder Section 148 of the Act were issued in the name of Kesho Dassand the learned counsel for the assessee had admitted and made astatement that the returns already filed by the assessee be treated tohave been filed in response to notices issued under Section 148 ofthe Act in the status of Hindu Undivided Family (HUF). According tothe learned counsel, once the assessee had filed returns in responseto re-assessment notice under Section 148 in the status of HUF, he could not take a plea that the notice issued by the assessing officerdid not disclose the status of the assessee and was, thus, invalid.Alternatively, it was urged by the learned counsel that it was not adefect which could not be cured under Section 292B of the Act, andthe reassessment proceedings had been validly initiated. It was alsoargued that no prejudice has been caused to the assessee byissuance of notice in which there was no specific mention of thestatus of the assessee. Reliance was placed on the judgments inSwaran Kanta v. Commissioner of Income Tax, (1989) 176 ITR291 (Pb. & Hr.) and Deoria Oxygen Company v. Commissioner ofIncome Tax, (2007) 210 CTR Reports 509. Controverting the above submissions, learned counsel forthe assessee submitted that the defect in the notice under Section148 for re-assessment was a jurisdictional defect which could not becured under Section 292B of the Act by the Revenue. The counselsubmitted that the Tribunal had rightly rejected the plea of theRevenue and the question of law as claimed deserves to be decidedagainst it. Support in that behalf was sought from the judgments inCommissioner of Income Tax v. Ram Das Deokinandan Prasad(HUF), (2005) 277 ITR 197 (All.), Sri Nath Suresh Chand RamNaresh vs. Commissioner of Income Tax, (2006) 280 ITR 396(All.), Commissioner of Income Tax vs. Rohtas, (2009) 311 ITR460 (P&H) and Commissioner of Income Tax v. K. AdinarayanaMurty, (1967) 65 ITR 607 (SC). We have given our thoughtful consideration to thesubmissions of the learned counsel for the parties and find weight in the submissions made by the learned counsel for the Revenue. Section 292B was incorporated by Taxation Law(Amendment) Act, 1975, w.e.f. 1.10.1975 which reads as under: “292B. No return of income, assessment, notice,summons or other proceeding furnished or made orissued or taken or purported to have been furnished ormade or issued or taken in pursuance of any of theprovisions of this Act shall be invalid or shall be deemedto be invalid merely by reason of any mistake, defect oromission in such return of income, assessment, notice,summons or other proceeding if such return of income,assessment, notice summons, or other proceeding is insubstance and effect in conformity with or according tothe intent and purpose of this Act.” The Section was inserted whereby no return of income, the submissions made by the learned counsel for the Revenue. Section 292B was incorporated by Taxation Law(Amendment) Act, 1975, w.e.f. 1.10.1975 which reads as under: “292B. No return of income, assessment, notice,summons or other proceeding furnished or made orissued or taken or purported to have been furnished ormade or issued or taken in pursuance of any of theprovisions of this Act shall be invalid or shall be deemedto be invalid merely by reason of any mistake, defect oromission in such return of income, assessment, notice,summons or other proceeding if such return of income,assessment, notice summons, or other proceeding is insubstance and effect in conformity with or according tothe intent and purpose of this Act.” The Section was inserted whereby no return of income, assessment, notice, summons or other proceeding shall be renderedinvalid merely on account of any mistake, defect or omission wherethe return, assessment, notice, summons or other proceeding insubstance and effect are in conformity with or according to theintention and purpose of the Act. By incorporating this provision, ithas been made clear that purely technical objections carrying nosubstance shall not come in the way of validity of assessmentproceedings etc. In other words, minor defects or irregularities in thecircumstances aforesaid, would not negate the validity of the proceedings initiated by the assessing officer and the assesseewould not be able to raise technical or venial defects in this regard. It has been recorded in the assessment order that theassessee vide letter dated 10.12.1987 and also his counsel, Shri AnilMahajan, Chartered Accountant, vide his letter dated 21.1.1988 andhad submitted that the return of income which had been filed on16.6.1982 in the capacity of H.U.F. be treated to have been filed inpursuance to notice issued under Section 148 of the Act. In such asituation, learned counsel for the assessee was unable to point outany prejudice having been caused to the assessee. In the present facts and circumstances, notice issued under Section 148 of the Act by the assessing officer shall not renderthe proceedings invalid as the same are in substance and effectaccording to the intent and purpose of the Act falling under Section292B of the Act and the proceedings cannot be held to be vitiated. Inview of the aforesaid findings, the judgments on which reliance hasbeen placed by the assessee have no applicability and do notsupport the case of the assessee. Resultantly, the question of law is answered in favour ofthe Revenue and against the assessee. The References stand disposed of. (AJAY KUMAR MITTAL) JUDGE (ADARSH KUMAR GOEL) JUDGE