The Learned Counsel For The Writ Petitioner Relied On Thejudgment Of The Gujarat High Court In The Case Of Kanubhai Mpatel Huf v. Https://Hcservices.ecourts.gov.in/Hcservices

IN THE HIGH COURT OF JUDICATURE AT MADRAS Income Tax Officer,Non-Corporate Ward-11 (2),Chennai.... Respondent in both W.Ps., Common Prayer : Writ Petitions filed under Article 226 of theConstitution of India praying to issue a Writ of CertiorarifiedMandamus, calling for the records of the Respondent comprised inits notice dated 31.03.2018 issued to the Petitioner underSection 148 of the Income Tax Act, 1961, along with theCorrigendum dated 31.03.2018 issued thereto, and to quash thesame as arbitrary, unjust and illegal, and to consequentlyforbear the Respondent from in any manner seeking to reassessthe Petitioner's income under Section 147 of the Income Tax Act,1961 with respect to the assessment year 2011-12. The notice issued under Section 148 of the Income Tax Act,1961, in proceedings dated 31.03.2018, as well as thecorrigendum to notice dated 31.03.2018, are under challenge inthe present writ petitions. https://hcservices.ecourts.gov.in/hcservices/ 2.The petitioner submitted his return of income which wasassessed and an order of assessment was passed. However, therespondent issued notice under Section 148 of the Income TaxAct, for reopening of assessment on 31.03.2018. The learnedcounsel for the petitioner contended that the impugned notice aswell as the corrigendum to notice are challenged on the groundthat it was issued beyond the period of limitation, andtherefore, the notices have no statutory sanction, thus, are tobe set aside. 3.To substantiate the said ground, the learned counsel forthe petitioner solicited the attention of this Court withreference to the postal cover, wherein, the stamp was franked bythe Postal Department on 02.04.2018. It is contended that thelast date for reopening of assessment under Section 147 of theAct was 31.03.2018, however, the despatch was made on02.04.2018, and therefore, the impugned notice is liable to beset aside. It is contended that the corrigendum to notice,dated 31.03.2018, was ante-dated as the said corrigendum tonotice was despatched on 07.04.2018. If at all, the corrigendumto notice was also despatched on 31.03.2018, it must have beenfranked along with the original notice on 02.04.2018, andtherefore, by putting ante-date, the corrigendum under Section148 of the Income Tax Act was issued. In the original noticeissued under Section 148 of the Act, the Assessing Officerstated that he has reasons to believe that the income of thepetitioner chargeable to tax for the Assessment Year 2010-11 hasescaped assessment. If that is so, even the period of limitationexpired on 31.03.2017 itself. However, the corrigendum to noticestates that it was erroneously mentioned as 2010-11 and thereopening of the assessment is made for the assessment year2011-12. Thus, the very initiation of proceedings under Section147 of the Act and issuance of notice under Section 148 of theAct are beyond the period of limitation, and thus, therespondent has no jurisdiction to issue notice, and therefore,they are liable to be set aside. 4.The learned counsel for the writ petitioner relied on thejudgment of the Gujarat High Court in the case of Kanubhai MPatel Huf Vs. Hiren Bhat or his Successors to Office and 4others reported in (2010) 3 GLH 639, wherein, the Court allowedthe writ petition on the ground that the notice was despatchedbeyond the period of limitation. The Hon'ble Supreme Court alsoheld that reopening of assessment is to be done within theperiod of limitation contemplated under the Act. Any such noticeissued beyond the period of limitation lacks sanction under thestatute and to be construed as non-est in law. 4.The learned counsel for the writ petitioner relied on thejudgment of the Gujarat High Court in the case of Kanubhai MPatel Huf Vs. Hiren Bhat or his Successors to Office and 4others reported in (2010) 3 GLH 639, wherein, the Court allowedthe writ petition on the ground that the notice was despatchedbeyond the period of limitation. The Hon'ble Supreme Court alsoheld that reopening of assessment is to be done within theperiod of limitation contemplated under the Act. Any such noticeissued beyond the period of limitation lacks sanction under thestatute and to be construed as non-est in law. 5.The learned Senior Standing Counsel contested the groundsraised by the petitioner by stating that, admittedly, theassessment order was erroneously typed as 2010-11 instead of2011-12. Thus, the respondent issued corrigendum to notice andcorrigendum to notice cannot be construed as a point to reckonthe period of limitation. As far as the original notice underSection 148 of the Act, is concerned, it was issued on31.03.2018 on the last date for reopening of assessment for theAssessment Year 2011-12 and it was despatched on the same day,however, franking was done by the Postal Department on02.04.2018. There was a delay of one day in franking thedespatch cover in view of the fact that 01.04.2018 was Sundayand a holiday. Thus, there is no violation of statutoryprovisions and initiation of proceedings under Section 148 ofthe Act was done within the period of limitation, and thus, thewrit petition is liable to be dismissed. 6.This Court has elaborately considered the differencebetween issuance of a notice under Section 148 of the Act andserving of the notice to the assessee concerned. The issuance ofnotice is one aspect and serving of notice is another aspect.Section 147/148 stipulates issuance of notice and not serving ofnotice. Thus, the principles to be adopted in the present casesquarely falls within the parameters of the judgment deliveredby this Court in W.P. Nos.13425, 13431, 13432 and 11399 of 2018,dated 26.04.2021, which are extracted hereunder: “15.This Court has to consider the relevantprovisions of the Income Tax Act. Section 147 dealswith 'Income Escaping Assessment' . Once theAssessing Officer 'has reason to believe' that anyincome chargeable to tax has escaped assessment forany assessment, he is competent to instituteproceedings under Section 147 of the Act by complyingwith the requirements as contemplated under theprovisions of the Act. 16. Section 148 of the Act denotes 'issue ofnotice where income has escaped assessment'. Once theAssessing Officer has reason to believe that anyincome chargeable to tax has escaped assessment, thenhe is empowered to issue notice under Section 148 ofthe Act and the procedures to be followed underSection 148 are well enumerated in the provisionitself.... 19. Section 149 of the Act denotes 'no noticeunder Section 148 shall be issued for the relevantassessment year if four years have lapsed, whichreads as under:- ?149. Time limit for notice: “(1) No notice under section 148 shall beissued for the relevant assessment year,?(a) if four years have elapsed from theend of the relevant assessment year, unless thecase falls under clause (b) or clause (c);(b) if four years, but not more than sixyears, have elapsed from the end of therelevant assessment year unless the incomechargeable to tax which has escaped assessmentamounts to or is likely to amount to one lakhrupees or more for that year;(c) if four years, but not more thansixteen years, have elapsed from the end of therelevant assessment year unless the income inrelation to any asset (including financialinterest in any entity) located outside India,chargeable to tax, has escaped assessment. ?149. Time limit for notice: “(1) No notice under section 148 shall beissued for the relevant assessment year,?(a) if four years have elapsed from theend of the relevant assessment year, unless thecase falls under clause (b) or clause (c);(b) if four years, but not more than sixyears, have elapsed from the end of therelevant assessment year unless the incomechargeable to tax which has escaped assessmentamounts to or is likely to amount to one lakhrupees or more for that year;(c) if four years, but not more thansixteen years, have elapsed from the end of therelevant assessment year unless the income inrelation to any asset (including financialinterest in any entity) located outside India,chargeable to tax, has escaped assessment. Explanation.?Indeterminingincomechargeable to tax which has escaped assessmentfor the purposes of this sub~section, theprovisions of Explanation 2 of section 147shall apply as they apply for the purposes ofthat section. (2) The provisions of sub~section (1) asto the issue of notice shall be subject to theprovisions of section 151.(3) If the person on whom a notice undersection 148 is to be served is a person treatedas the agent of a non~resident under section163 and the assessment, reassessment orrecomputation to be made in pursuance of thenotice is to be made on him as the agent ofsuch non~resident, the notice shall not beissued after the expiry of a period of sixyears from the end of the relevant assessmentyear. Explanation.?For the removal of doubts, itis hereby clarified that the provisions ofsub~sections (1) and (3), as amended by theFinance Act, 2012, shall also be applicable forany assessment year beginning on or before the1st day of April, 2012.?” 20. Section 149 of the Act unambiguouslystipulates that a notice is to be issued before fouryears from the end of the relevant assessment year.In certain cases beyond four years and within sixyears. Therefore, two circumstances are elaborated inthe provisions. In certain cases, notices can be issued within four years and in certain other cases,notices can be issued beyond four years but withinsix years. 21. The period of four years and six years ascontemplated are enumerated under the provisions ofthe Act. However, the point to be considered is,whether the issuance of notice dispatched and thedelivery of notice to the assessee, which is to betaken into consideration for the purpose ofdetermining the period of limitation. 22. Section 149 of the Act contemplates that nonotice under Section 148 shall be issued. Thus, itcategorically enumerates the issuance of notice bythe Competent Authority to the assessee, within aperiod of four years and six years, as the case maybe. Thus, the language employed indicates ?issuanceof notice?. 23. 'Issuance of Notice' means, the order ofnotice is signed by the Competent Authority. Once theorder of notice is signed by the Competent Authority,that is sufficient that the actions are initiated.Thereafter, delivery or receipt of the order isirrelevant as far as the requirements contemplatedunder the provisions of the Income Tax Act isconcerned. Thus, for the purpose of issuance ofnotice under Section 149 of the Income Tax Act, it issufficient to establish that if such an order/noticeis signed by the Authority Competent and if this factis established, then it is to be construed that theprovisions of the Act are complied with. 23. 'Issuance of Notice' means, the order ofnotice is signed by the Competent Authority. Once theorder of notice is signed by the Competent Authority,that is sufficient that the actions are initiated.Thereafter, delivery or receipt of the order isirrelevant as far as the requirements contemplatedunder the provisions of the Income Tax Act isconcerned. Thus, for the purpose of issuance ofnotice under Section 149 of the Income Tax Act, it issufficient to establish that if such an order/noticeis signed by the Authority Competent and if this factis established, then it is to be construed that theprovisions of the Act are complied with. 24. Let us now examine certain circumstanceswhere there is a delay in delivering the goods eitherby the Process Server or by the Postal Department oron account of sudden declaration of holidays or dueto public holidays etc. Various circumstances andsituations are possible, which would cause delay inserving the consignment to the addressee. Variouscircumstances for causing delay in service of theconsignment cannot be taken into consideration forthe purpose of determining the period of limitationas contemplated under Section 149 of the Income TaxAct. 25. The assessees are taking advantage onaccount of certain unavoidable circumstances andhappenings due to certain omissions on the part of the Postal Department etc. It is possible thatcommissions and omissions are happening in the PostalDepartment also. Whether an assessee can take undueadvantage from such commissions and omissions of thePostal Department or Process Servers. The answer is'No'. If such commissions and omissions of anotherDepartment is taken into consideration for thepurpose of quashing the entire proceedings under theIncome Tax Act, equally it is possible for somemiscreants to create such circumstances, so as toescape from the clutches of law. All these mitigatingfactors are to be considered by the Courts. Thus, apractical and a pragmatic approach with reference tothe legislative intention is to be taken intoconsideration for the purpose of deciding the pointof limitation. 26. Thus if the revenue is able to establishthat an administrative decision is taken underSection 147 of the Income Tax Act and a notice underSection 148 is signed and issued by the AuthoritiesCompetent before the last date, then it is to beconstrued that the notice has been issued incompliance with the provisions of Section 149 of theIncome Tax Act. Make it more clear that issue ofnotice is the requirement contemplated under theprovisions and the service would be the next step andthe same would have been done even after the lastdate and that will not change the character of issueof notice as completed within the meaning of Section149 of the Income Tax Act. The case of the petitionerwould be strong if the provision contemplates“?service of notice?” to the assessee, and suchcontemplation is traceable in some other provisionsof the Act, for example Section 281 of the Income TaxAct. ...28. 'Issue of Notice' by the Competent Authorityis contemplated under Section 149 of the Income TaxAct. However, 'Service of Notice' to the assessee hasnot been contemplated under the said provision. Thus,the 'time limit' prescribed for 'issue of notice'under Section 148 of the Income Tax Act, would notfall under the definition of 'service' under Section27 of the General Clauses Act, 1897. Thus, Section 27of the General Clauses Act, 1897 may not haverelevance with reference to Sections 147, 148 and 149of the Income Tax Act, 1961. 29. 'Issue of Notice' and 'Service of Notice' to ...28. 'Issue of Notice' by the Competent Authorityis contemplated under Section 149 of the Income TaxAct. However, 'Service of Notice' to the assessee hasnot been contemplated under the said provision. Thus,the 'time limit' prescribed for 'issue of notice'under Section 148 of the Income Tax Act, would notfall under the definition of 'service' under Section27 of the General Clauses Act, 1897. Thus, Section 27of the General Clauses Act, 1897 may not haverelevance with reference to Sections 147, 148 and 149of the Income Tax Act, 1961. 29. 'Issue of Notice' and 'Service of Notice' to the assessee cannot be compared at all. What iscontemplated under Section 149 of the Income Tax Actis 'issue of notice' and not 'service of notice' tothe assessee. The service part is to be complied withsubsequently enabling the assessee to defend hiscase. Undoubtedly, the assessee can defend his caseonly after service. However, for reckoning the periodof limitation 'issue of notice' is sufficient.” 7.In view of the facts and circumstances, this Court is ofthe considered view that, in the present case, the initialnotice under Section 148 of the Income Tax Act was issued on31.03.2018, which was despatched on the same day and the coverwas franked by the Postal Department on 02.04.2018, in view ofthe fact that 01.04.2018 was a Sunday, thus, for all purposes,notice was issued for reopening of assessment within the periodof limitation for the assessment year 2011-12, and therefore,the respondent is to proceed further in accordance with law byfollowing the procedures contemplated under the Act as well asthe directives issued by the Hon'ble Supreme Court of India inthe case of GKN Driveshaft (India) Ltd.., Vs. Income TaxOfficer, 259 ITR 19 (SC), and such an exercise is directed to bedone as expeditiously as possible. 8.With these directions, the Writ Petitions stand dismissed.No costs. Consequently, connected miscellaneous petitions areclosed. Sd/- Assistant Registrar(CS-III) //True Copy// Sub Assistant Registrar ssn/mknToIncome Tax Officer,Non-Corporate Ward-11 (2),Chennai. +2cc to Mr.Arun Karthik Mohan, Advocate, S.R.No.30789+2cc to Ms.Hema Murali Krishnan, Advocate, S.R.No.30507,30508 PCH(CO)CB(02/08/2021)