The Commissioner Of Income Taxtrichy v. M/S.fathima Thanga Maaligai141

IN THE HIGH COURT OF JUDICATURE AT MADRAS CORAM THE HONOURABLE MR. JUSTICE R.SUDHAKARAND THE HONOURABLE MR. JUSTICE G.M.AKBAR ALI T.C.A. NOS. 582 & 583 OF 2014ANDM.P. NO. 1 OF 2014 The Commissioner of Income TaxTrichy....Appellant in both the appeals - Vs - M/s.Fathima Thanga Maaligai141/1, Bharathiar RoadKaraikal 609 602....Respondent in both the appeals Appeals filed against the order dated 24.2.2012 passed by IncomeTax Appellate Tribunal, Madras 'D' Bench, in ITA Nos.1995/Mds/2010and ITA No.21/Mds/2011 against the order of the Commissioner ofIncome Tax (Appeals), Tiruchirapalli, dated 18.10.2010 and made inITA No. 336/09-10 for the Assessment year 2007-2008 against the orderof the Income Tax Officer, Ward I (1) Nagapattinam, dated 31.12.2009and made in AABFF6602J/F-318 for the Assessment year 2007-2009 (inTCA No.582 & 583 of 2014) COMMON JUDGMENT (DELIVERED BY G.M.AKBAR ALI, J.) The present appeals have been filed against the order dated24.2.2012 passed by Income Tax Appellate Tribunal, Madras 'D' Bench,in ITA No.1995/Mds/2010 and ITA No.21/Mds/2011. 2. The assessee firm is engaged in jewellry business and inpursuance of a notice dated 16.12.08 under Section 148 of the IncomeTax Act, the assessee filed its return on 31.12.08, which wasinitially processed under Section 143 (1) of the Act. However, thenotice under Section 143 (2) of the Income Tax Act was issued to theassessee only on 20.11.09, whereas according to the assessee, thetime for issuance of the notice expired on 30.09.09. Questioning theassessment for want of notice under Section 143 (2) of the IncomeTax, the assessee preferred two cross appeals and one cross-objectionhttps://hcservices.ecourts.gov.in/hcservices/ before the Tribunal, all pertaining to the assessment year 2007-2008.The Tribunal found that the notice issued by the Revenue is beyondthe limitation period prescribed under Section 143 (2) of the Act,allowed the appeal and set aside the order following the judgment ofthe Supreme Court in ACIT – Vs – Hotel Blue Moon (321 ITR 362).Aggrieved against the said order of the Tribunal, the present appealshave been filed by the Revenue. 3. The following substantial questions of law have been framedfor consideration in the present appeals :- “Whether on the facts and in the circumstances ofthe case the Tribunal was right in holding that theassessment proceedings passed under Section 143 (3)r/w 147 is time barred on the ground that the noticeunder Section 143 (2) was issued beyond six monthsfrom the end of the financial year in which thereturn was furnished by relying on the proviso underSection 143 (2) (ii)?” 4. Mr.Narayanasamy, learned standing counsel appearing for theappellant/Revenue submits that in terms of Proviso (1) and (2) toSection 148 of the Income Tax Act, notice under Section 143 (2) issaved by the 12 months limitation period and, therefore, the noticeissued on the assessee is well within the period of limitation.However, the Tribunal has not appreciated the said proviso in theright perspective and dismissed the appeal filed by the Revenue and,therefore, the said order of the Tribunal is liable to be set aside. 5. Heard Mr.Narayanasamy, learned standing counsel appearing forthe appellant/Revenue and perused the papers available in the typedset of papers as also the relevant provisions of law. 6. Even at the very outset, it can be very safely stated thatthis Court is not inclined to accept the contention as put forth bythe learned standing counsel for the appellant/Revenue, as is evidentfrom the provision of law, as notice under Section 143 (2) ismandatory. For better clarity, Section 143 (2) is extractedhereunder :- 5. Heard Mr.Narayanasamy, learned standing counsel appearing forthe appellant/Revenue and perused the papers available in the typedset of papers as also the relevant provisions of law. 6. Even at the very outset, it can be very safely stated thatthis Court is not inclined to accept the contention as put forth bythe learned standing counsel for the appellant/Revenue, as is evidentfrom the provision of law, as notice under Section 143 (2) ismandatory. For better clarity, Section 143 (2) is extractedhereunder :- (i) where he has reason to believe that any claim ofloss, exemption, deduction, allowance or relief madein the return is inadmissible, serve on the assesseea notice specifying particulars of such claim ofloss, exemption, deduction, allowance or relief andrequire him, on a date to be specified therein tohttps://hcservices.ecourts.gov.in/hcservices/ produce, or cause to be produced, any evidence orparticulars specified therein or on which theassessee may rely, in support of such claim: [Provided that no notice under this clause shall beserved on the assessee on or after the 1st day ofJune, 2003;] (ii) notwithstanding anything contained in clause(i), if he considers it necessary or expedient toensure that the assessee has not understated theincome or has not computed excessive loss or has notunder-paid the tax in any manner, serve on theassessee a notice requiring him, on a date to bespecified therein, either to attend his office or toproduce, or cause to be produced, any evidence onwhich the assessee may rely in support of the return: [Provided that no notice under clause (ii) shall beserved on the assessee after the expiry of six monthsfrom the end of the financial year in which thereturn is furnished.].” 7. In Sapthagiri Finance & Investments – Vs – Income Tax Officer(TCA No.159/06 – dated 17.07.2012), a Division Bench of this Courtheld that notice under Section 143 (2) is mandatory and the sameshould have been served on the assessee before the expiry of sixmonths. The relevant portion of the abovesaid decision is extractedhereinbelow for reference:- “13. As far as the present case is concerned, theprovisions of Section 148 also uses the expression"so far as may be apply accordingly as if such returnwere a return required to be furnished under Section139". Thus, understanding this provisions in thebackground of the decision of the Apex Court, on thefacts available, we are of the view that incompleting the assessment under Section 148 of theAct, compliance of the procedure laid down underSections 142 and 143(2) is mandatory. On the admittedfact that beyond notice under Section 142(1), therewas no notice issued under Section 143(2), and in thelight of the fact that the very basis of thereassessment was the failure on the part of theassessee in not disclosing the capital gains arisingon the transfer of property for assessment and thatadmittedly the assessee had requested the officer toaccept the original return as a return filed inresponse to Section 148 of the Act, we hold thatthere was total failure on the part of the Revenuefrom complying with the procedure laid down underSection 143(2) of the Act, which is mandatory one asheld by the Apex Court.” This Court is of the considered view that the abovesaid judgmentis squarely applicable to the facts of the present case.https://hcservices.ecourts.gov.in/hcservices/ This Court is of the considered view that the abovesaid judgmentis squarely applicable to the facts of the present case.https://hcservices.ecourts.gov.in/hcservices/ 8. The further contention of Mr.Narayanasamy, learned standingcounsel for the Revenue that Proviso (1) to Section 148 is attractedto the case on hand is not sustainable. Proviso (1) to Section 148is not attracted to the present case for the simple reason that theassessment in the present case is for the period 2007-2008, whereasthe above proviso is applicable only for the period 1991 to 2005.For better appreciation, Section 148 (2) is extracted hereinbelow :-“Issue of notice where income has escapedassessment.148. [(1)] Before making the assessment,reassessment or recomputation under section 147, theAssessing Officer shall serve on the assessee anotice requiring him to furnish within such period,as may be specified in the notice, a return of hisincome or the income of any other person in respectof which he is assessable under this Act during theprevious year corresponding to the relevantassessment year, in the prescribed form and verifiedin the prescribed manner and setting forth such otherparticulars as may be prescribed; and the provisionsof this Act shall, so far as may be, applyaccordingly as if such return were a return requiredto be furnished under section 139.[Provided that in a case—(a) where a return has been furnished during theperiod commencing on the 1st day of October, 1991 andending on the 30th day of September, 2005 in responseto a notice served under this section, and(b) subsequently a notice has been served under sub-section (2) of section 143 after the expiry of twelvemonths specified in the proviso to sub-section (2) ofsection 143, as it stood immediately before theamendment of said sub-section by the Finance Act,2002 (20 of 2002) but before the expiry of the timelimit for making the assessment, reassessment orrecomputation as specified in sub-section (2) ofsection 153, every such notice referred to in thisclause shall be deemed to be a valid notice:*********” The period of assessment in the present case being beyond theperiod as covered by Proviso (1) to Section 148, the said provisiondoes not stand attracted to the case on hand. 9. For the reasons aforesaid, this Court is of the consideredopinion that the order passed by the Tribunal deserves nointerference at the hands of this Court and the present appeals,being devoid of merits, deserves to be dismissed. 10. Accordingly, both the tax case appeals are dismissedaffirming the order passed by the Income Tax Appellate Tribunal.Consequently, connected miscellaneous petition is closed. Sd/-Assistant Registrar(Records)//True Copy//Sub Assistant RegistrarGLNTo1. The Commissioner of Income Tax (Appeals)Trichirapalli.2. The Income Tax Appellate Tribunal,Madras 'D' Bench,Chennai.3. The Income Tax Officer,Ward -I (1),Nagapattinam.1 CC to Mr.J.Narayanaswamy, Advocate SR.No. 43945T.C.A. NOS. 582 & 583 OF 2014JSV (CO)PSI (07.11.2014)