Wp/13425/2018 Of Sadhana Tolasariya v. The Income Tax Officer

IN THE HIGH COURT OF JUDICATURE AT MADRAS THE HONOURABLE MR. JUSTICE S.M.SUBRAMANIAM WP Nos.13425, 13431, 13432 and 11399 of 2018AndWMP Nos.15819, 15826, 15827, 13308 and 13309 of 2018 Sadhna Tolasariya .. Petitioner in WP 13425/2018Rajesh Gupta .. Petitioner in WP 13431/2018Laxmi Kanta Tolasariya .. Petitioner in WP 13432/2018Smt.Parveen Amin Bhathara .. Petitioner in WP 11399/2018 The Income Tax Officer,Non Corporate Ward 12(4)CHE,BSNL Tower,No.16, Greams Road,Chennai-600 006... Respondent in WP 13425/2018 The Assistant Commissioner of Income Tax,Non Corporate Circle – 12(1) CHE,BSNL Tower, No.16, Greams Road,Chennai-600 006... Respondent in WP 13431/2018 The Income Tax Officer,Non Corporate Ward 11(5)CHE,BSNL Tower,No.16, Greams Road,Chennai-600 006... Respondent in WP 13432/2018 The Income Tax Officer,Non Corporate Ward 12(3),Greams Road,Chennai-600 006... Respondent in WP 11399/2018WP No.13425 of 2018 is filed under Article226 of the Constitution of India, praying for the issuance of aWrit of Certiorari, calling for the records on the file of therespondent in notice under Section 148 in NoticeNo.ITBA/AST/S/148/2017-18/1009607803(1) in PAN.No. forAY 2011-2012, dated 31.03.2018, issued on 02.04.2018 andreceived on 04.04.2018 by Speed Post and quash the same asillegal and barred by limitation. https://hcservices.ecourts.gov.in/hcservices/ WP No.13431 of 2018 is filed under Article226 of the Constitution of India, praying for the issuance of aWrit of Certiorari, calling for the records on the file of therespondent in notice under Section 148 in NoticeNo.ITBA/AST/S/148/2017-18/1009570255(1) in PAN.No. forAY 2011-2012 dated 30.03.2018, issued on 02.04.2018 and receivedon 03.04.2018 by Speed Post and quash the same as illegal andbarred by limitation. WP No.13432 of 2018 is filed under Article226 of the Constitution of India, praying for the issuance of aWrit of Certiorari, calling for the records on the file of therespondent in notice under Section 148 in NoticeNo.ITBA/AST/S/148/2017-18/1009575753(1) in PAN.No. forAY 2011-2012 dated 30.03.2018, signed on 31.03.2018, issued on02.04.2018 and received on 04.04.2018 by Speed Post and quashthe same as illegal and barred by limitation. WP No.11399 of 2018 is filed under Article226 of the Constitution of India, praying for the issuance of aWrit of Certiorari, calling for the records on the file of therespondent in notice under Section 148 in PAN.No. /NCW12(3)/11-12 dated 31.03.2018, attached with email dated18.04.2018 and quash the same as illegal and barred bylimitation. WP Nos.13425, 13431 and 13432 of 2018 are filed challengingthe notices issued under Section 148 of the Income Tax Act, 1961(hereinafter referred to as the 'Act', in short) for reopeningof the assessment.2. The very notice itself is challenged in WP Nos.13425,13431 and 13432 of 2018 mainly on the ground of limitation. 3. The learned counsel, appearing on behalf of the writpetitioners in WP Nos.13425, 13431 and 13432 of 2018 mainlycontended that the notice under Section 148 of the Act had notbeen served on the petitioners before the last date as per the https://hcservices.ecourts.gov.in/hcservices/ provisions of the Act. In fact, notice had franked in theconcerned Post Office only after the last date and therefore,the very issuance of notice is bad in law. 4. To substantiate the said contentions, the learned counselfor the petitioners in WP Nos.13425, 13431 and 13432 of 2018relied on Section 27 of the General Clauses Act, 1897, whereinthe meaning of 'Service by Post' is defined and the same readsas under:- 3. The learned counsel, appearing on behalf of the writpetitioners in WP Nos.13425, 13431 and 13432 of 2018 mainlycontended that the notice under Section 148 of the Act had notbeen served on the petitioners before the last date as per the https://hcservices.ecourts.gov.in/hcservices/ provisions of the Act. In fact, notice had franked in theconcerned Post Office only after the last date and therefore,the very issuance of notice is bad in law. 4. To substantiate the said contentions, the learned counselfor the petitioners in WP Nos.13425, 13431 and 13432 of 2018relied on Section 27 of the General Clauses Act, 1897, whereinthe meaning of 'Service by Post' is defined and the same readsas under:- 27. Meaning of service by post.—Where any Central Act or Regulation madeafter the commencement of this Actauthorizes or requires any document to beserved by post, whether the expression“serve” or either of the expressions “give”or “send” or any other expression is used,then, unless a different intention appears,the service shall be deemed to be effectedby properly addressing, pre-paying andposting by registered post, a lettercontaining the document, and, unless thecontrary is proved, to have been effectedat the time at which the letter would bedelivered in the ordinary course of post.” 5. Referring the abovesaid Section 27 of the General ClausesAct, the learned counsel for the petitioners in WP Nos.13425,13431 and 13432 of 2018 reiterated that the service shall bedeemed to be effected by properly addressing, prepaying andposting by Registered Post, a letter containing the document,and, unless the contrary is proved, to have been effected at thetime at which the letter would be delivered in the ordinarycourse of post. 6. Thus, it is not sufficient to establish that therespondents have served the letter on the last date, but it isto be established that the letter containing the notice servedon the assessee on the last date. However, in WP Nos.13425,13431 and 13432 of 2018, notices were not even served on thelast date and were registered in the Post Office beyond theperiod of limitation. Therefore, the very issuance of noticeitself is in violation under Section 27 of the General ClausesAct, 1897. 7. The learned counsel, appearing on behalf of the writpetitioners in WP Nos.13425, 13431 and 13432 of 2018 relying onthe typed set of papers filed by the respondents, raised certaindiscrepancies in sending the impugned notices to thepetitioners. 8. It is contended that there are certain discrepancies inthe matter of making entries in the Dispatch Register andtherefore, the respondents had not actually sent the impugnednotices on the last date i.e., on 31.03.2018. As per theFranking facility provided by the Postal Department, thepetitioners could able to find out that the consignment itselfwas booked on 02.04.2018 after the last date i.e., on 31.03.2018and therefore, the notice itself is liable to be quashed. 9. The learned counsel, appearing on behalf of the writpetitioners in WP Nos.13425, 13431 and 13432 of 2018 relied onthe franking details provided by the Postal Department and theseal affixed in the Post Office and contended that all thesedocuments would establish that the impugned notice had been sentto the petitioners beyond the period of limitation andtherefore, the very initiation is to be construed as Non est inLaw. 10. The learned counsel, appearing on behalf of the writpetitioners in WP Nos.13425, 13431 and 13432 of 2018 strenuouslycontended that 'service' does not mean that 'mere sending ofconsignment'. The service is complete only if the impugnednotices are dispatched from the Office of the respondents to thepetitioners. 11. In view of the fact that the notices are not evendispatched on the last date i.e., on 31.03.2018, the impugnednotices are liable to be set aside. 10. The learned counsel, appearing on behalf of the writpetitioners in WP Nos.13425, 13431 and 13432 of 2018 strenuouslycontended that 'service' does not mean that 'mere sending ofconsignment'. The service is complete only if the impugnednotices are dispatched from the Office of the respondents to thepetitioners. 11. In view of the fact that the notices are not evendispatched on the last date i.e., on 31.03.2018, the impugnednotices are liable to be set aside. 12. The learned Senior Standing Counsel appearing on behalfof the respondents in WP Nos.13425, 13431 and 13432 of 2018,disputed the said contentions of the learned counsel appearingon behalf of the petitioners in WP Nos.13425, 13431 and 13432of 2018, by holding that the notices were dispatched on the lastdate i.e., on 31.03.2018 itself. The typed set of papers filedby the respondents, which contains the dispatch slip andrelevant pages of the Dispatch Register. 13. With respect to the notices sent to the petitioners inWP Nos.13425, 13431 and 13432 of 2018 would reveal that theimpugned notices were dispatched on 31.03.2018 itself and theprocesses undertook by the Post Office were not relevant as faras the dispatch from the Office of the respondents areconcerned. 14. In view of the fact that the Dispatch Registermaintained by the Income Tax Department reveals that theimpugned notices are dispatched properly by making entries inthe Dispatch Register on the last date i.e., on 31.03.2018 andthe consignments were handed over to the Postal Department and https://hcservices.ecourts.gov.in/hcservices/ the same would be sufficient to meet out the requirements of lawand therefore WP Nos.13425, 13431 and 13432 of 2018 are devoidof merits and are liable to be dismissed. 15. This Court has to consider the relevant provisions ofthe Income Tax Act. Section 147 deals with 'Income EscapingAssessment' . Once the Assessing Officer 'has reason to believe'that any income chargeable to tax has escaped assessment for anyassessment, he is competent to institute proceedings underSection 147 of the Act by complying with the requirements ascontemplated under the provisions of the Act. 16. Section 148 of the Act denotes 'issue of notice whereincome has escaped assessment'. Once the Assessing Officer hasreason to believe that any income chargeable to tax has escapedassessment, then he is empowered to issue notice under Section148 of the Act and the procedures to be followed under Section148 are well enumerated in the provision itself. 17. Section 149 deals with 'time limit for notice'. Thus,Section 149 would be relevant as far as the grounds raised in WPNos.13425, 13431 and 13432 of 2018 are concerned. 18. Initiation of Section 147 of the Act, cannot be dealtwith at this point of time. The issue of notice under Section148 and the time limit for notice under Section 149 would berelevant. In WP Nos.13425, 13431 and 13432 of 2018, admittedly,the petitioners have received the notices issued under Section148 and however, they contend that it was dispatched belatedlyand after expiry of the period of limitation. 19. Section 149 of the Act denotes 'no notice under Section148 shall be issued for the relevant assessment year if fouryears have lapsed, which reads 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, unlessthe case falls under clause (b) or clause (c);(b) if four years, but not more thansix years, have elapsed from the end of therelevant assessment year unless the incomechargeable to tax which has escapedassessment amounts to or is likely to amountto one lakh rupees or more for that year;(c) if four years, but not more thansixteen years, have elapsed from the end of 19. Section 149 of the Act denotes 'no notice under Section148 shall be issued for the relevant assessment year if fouryears have lapsed, which reads 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, unlessthe case falls under clause (b) or clause (c);(b) if four years, but not more thansix years, have elapsed from the end of therelevant assessment year unless the incomechargeable to tax which has escapedassessment amounts to or is likely to amountto one lakh rupees or more for that year;(c) if four years, but not more thansixteen years, have elapsed from the end of the relevant assessment year unless theincome in relation to any asset (includingfinancial interest in any entity) locatedoutside India, chargeable to tax, has escapedassessment. Explanation.—Indeterminingincomechargeable to tax which has escapedassessment for the purposes of this sub-section, the provisions of Explanation 2 of section 147 shall apply as they applyfor the purposes of that section. (2) The provisions of sub-section (1) asto the issue of notice shall be subject tothe provisions of section 151. (3) If the person on whom a noticeunder section 148 is to be served is a persontreated as the agent of a non-residentunder section163 andtheassessment,reassessment or recomputation to be made inpursuance of the notice is to be made on himas the agent of such non-resident, the noticeshall not be issued after the expiry of aperiod of six years from the end of therelevant assessment year. Explanation.—For the removal of doubts,it is hereby clarified that the provisions ofsub-sections (1) and (3), as amended by theFinance Act, 2012, shall also be applicablefor any assessment year beginning on orbefore the 1st day of April, 2012.” 20. Section 149 of the Act unambiguously stipulates that anotice is to be issued before four years from the end of therelevant assessment year. In certain cases beyond four years andwithin six years. Therefore, two circumstances are elaborated inthe provisions. In certain cases, notices can be issued withinfour years and in certain other cases, notices can be issuedbeyond four years but within six years. 21. The period of four years and six years as contemplatedare enumerated under the provisions of the Act. However, thepoint to be considered is, whether the issuance of noticedispatched and the delivery of notice to the assessee, which isto be taken into consideration for the purpose of determiningthe period of limitation. 22. Section 149 of the Act contemplates that no notice underSection 148 shall be issued. Thus, it categorically enumerates https://hcservices.ecourts.gov.in/hcservices/ the issuance of notice by the Competent Authority to theassessee, within a period of four years and six years, as thecase may be. Thus, the language employed indicates “issuance ofnotice”. 23. 'Issuance of Notice' means, the order of notice issigned by the Competent Authority. Once the order of notice issigned by the Competent Authority, that is sufficient that theactions are initiated. Thereafter, delivery or receipt of theorder is irrelevant as far as the requirements contemplatedunder the provisions of the Income Tax Act is concerned. Thus,for the purpose of issuance of notice under Section 149 of theIncome Tax Act, it is sufficient to establish that if such anorder/notice is signed by the Authority Competent and if thisfact is established, then it is to be construed that theprovisions of the Act are complied with. 23. 'Issuance of Notice' means, the order of notice issigned by the Competent Authority. Once the order of notice issigned by the Competent Authority, that is sufficient that theactions are initiated. Thereafter, delivery or receipt of theorder is irrelevant as far as the requirements contemplatedunder the provisions of the Income Tax Act is concerned. Thus,for the purpose of issuance of notice under Section 149 of theIncome Tax Act, it is sufficient to establish that if such anorder/notice is signed by the Authority Competent and if thisfact is established, then it is to be construed that theprovisions of the Act are complied with. 24. Let us now examine certain circumstances where there isa delay in delivering the goods either by the Process Server orby the Postal Department or on account of sudden declaration ofholidays or due to public holidays etc. Various circumstancesand situations are possible, which would cause delay in servingthe consignment to the addressee. Various circumstances forcausing delay in service of the consignment cannot be taken intoconsideration for the purpose of determining the period oflimitation as contemplated under Section 149 of the Income TaxAct. 25. The assessees are taking advantage on account of certainunavoidable circumstances and happenings due to certainomissions on the part of the Postal Department etc. It ispossible that commissions and omissions are happening in thePostal Department also. Whether an assessee can take undueadvantage from such commissions and omissions of the PostalDepartment or Process Servers. The answer is 'No'. If suchcommissions and omissions of another Department is taken intoconsideration for the purpose of quashing the entire proceedingsunder the Income Tax Act, equally it is possible for somemiscreants to create such circumstances, so as to escape fromthe clutches of law. All these mitigating factors are to beconsidered by the Courts. Thus, a practical and a pragmaticapproach with reference to the legislative intention is to betaken into consideration for the purpose of deciding the pointof limitation. 26. Thus if the revenue is able to establish that anadministrative decision is taken under Section 147 of the IncomeTax Act and a notice under Section 148 is signed and issued bythe Authorities Competent before the last date, then it is to beconstrued that the notice has been issued in compliance with the provisions of Section 149 of the Income Tax Act. Make it moreclear that issue of notice is the requirement contemplated underthe provisions and the service would be the next step and thesame would have been done even after the last date and that willnot change the character of issue of notice as completed withinthe meaning of Section 149 of the Income Tax Act. The case ofthe petitioner would be strong if the provision contemplates“service of notice” to the assessee, and such contemplation istraceable in some other provisions of the Act, for exampleSection 281 of the Income Tax Act. 27.As far as the contentions of the petitioners in WPNos.13425, 13431 and 13432 of 2018 that Section 27 of theGeneral Clauses Act, is to be invoked, this Court is of anopinion that the very provision states that, where any CentralAct or Regulation made after the commencement of this Actauthorizes or requires any document to be 'served' by post.Therefore, the meaning of 'service by post' as defined underSection 27 of the General Clauses Act, 1897, may not have anyapplicability or relevancy as far as Section 149 of the IncomeTax Act is concerned. 27.As far as the contentions of the petitioners in WPNos.13425, 13431 and 13432 of 2018 that Section 27 of theGeneral Clauses Act, is to be invoked, this Court is of anopinion that the very provision states that, where any CentralAct or Regulation made after the commencement of this Actauthorizes or requires any document to be 'served' by post.Therefore, the meaning of 'service by post' as defined underSection 27 of the General Clauses Act, 1897, may not have anyapplicability or relevancy as far as Section 149 of the IncomeTax Act is concerned. 28. 'Issue of Notice' by the Competent Authority iscontemplated under Section 149 of the Income Tax Act. However,'Service of Notice' to the assessee has not been contemplatedunder the said provision. Thus, the 'time limit' prescribed for'issue of notice' under Section 148 of the Income Tax Act, wouldnot fall under the definition of 'service' under Section 27 ofthe General Clauses Act, 1897. Thus, Section 27 of the GeneralClauses Act, 1897 may not have relevance with reference toSections 147, 148 and 149 of the Income Tax Act, 1961. 29. 'Issue of Notice' and 'Service of Notice' to theassessee cannot be compared at all. What is contemplated underSection 149 of the Income Tax Act is 'issue of notice' and not'service of notice' to the assessee. The service part is to becomplied with subsequently enabling the assessee to defend hiscase. Undoubtedly, the assessee can defend his case only afterservice. However, for reckoning the period of limitation 'issueof notice' is sufficient. 30. As far as the issues are concerned, the petitioners inWP Nos.13425, 13431 and 13432 of 2018 are bound to defend theproceedings by following the principles laid down in GKNDriveshafts (India) Ltd vs. Income Tax Officer and Others [259ITR 19]. The respondents are bound to provide opportunities andassign reasons by following the procedures contemplated as wellas the principles settled. 31. With reference to the point of limitation, it is to beconstrued that the impugned notices under Section 148 of theAct, were signed by the Competent Authorities on 31.03.2018 andas per the typed set of papers filed by the respondents, thenotices were dispatched on the same date i.e., on 31.03.2018,which would be sufficient to satisfy the requirements underSection 149 of the Act and thus, the petitioners in WPNos.13425, 13431 and 13432 of 2018 are at liberty to defend thecase as contemplated under the provisions of the Act. 32. Accordingly, WP Nos.13425, 13431 and 13432 of 2018 standfail and the same are dismissed. However, there shall be noorder as to costs. 33. As far as WP No.11399 of 2018 is concerned, the learnedcounsel for the petitioner made a submission that the notice hasnot been served at all. However, the impugned notice, which isenclosed in WP No.11399 of 2018 reveals that the impugned noticeissued under Section 148 of the Act has been signed by theAuthority on 31.03.2018. However, the petitioner says that thesaid notice has not been received. 34. As per the discussions made in the aforementionedparagraphs, it is sufficient if the notice under Section 147 ofthe Act has been signed and issued by the authority. Thus, thepoint of period of limitation is satisfied and in WP No.11399 of2018, which is to be construed as issuance of proceedings ascontemplated under Section 149 of the Act. Therefore, the delayin receiving the documents would not provide any ground for thepetitioner to quash the entire proceedings. 35. Accordingly, WP Nos. WP Nos.13425, 13431, 13432 and11399 of 2018 fail and all the writ petitions stand dismissed.However, there shall be no order as to costs. Consequently,connected miscellaneous petitions are also dismissed. 1.The Income Tax Officer, Non Corporate Ward 12(4)CHE, BSNL Tower, No.16, Greams Road, Chennai-600 006. 35. Accordingly, WP Nos. WP Nos.13425, 13431, 13432 and11399 of 2018 fail and all the writ petitions stand dismissed.However, there shall be no order as to costs. Consequently,connected miscellaneous petitions are also dismissed. 1.The Income Tax Officer, Non Corporate Ward 12(4)CHE, BSNL Tower, No.16, Greams Road, Chennai-600 006. 2.The Assistant Commissioner of Income Tax, Non Corporate Circle – 12(1) CHE, BSNL Tower, No.16, Greams Road, Chennai-600 006. 3.The Income Tax Officer, Non Corporate Ward 11(5)CHE, BSNL Tower, No.16, Greams Road, Chennai-600 006. 4.The Income Tax Officer, Non Corporate Ward 12(3), Greams Road, Chennai-600 006.+6ccs to M/s.Pramod Kumar Chopda, Advocate Sr.25563, 25564, 25565, 25566, 25475, 25478WP No.13425, 13431, 13432 and 11399 of 2018gmi[co]srg 01/07/2021