Wp v. The Income Tax Officer Ward 1[3], Tambaram, Chennai 600 045

IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED 12.03.2010 CORAM THE HONOURABLE MR.JUSTICE K.N.BASHA WP.No.29278/2008 & MP No.1/2008 Smt.S.Nachiar .. Petitioner Vs 1.The Income Tax Officer Ward 1[3], Tambaram, Chennai 600 045. 2.The Commissioner of Income Tax-VII 121, Nungambakkam High Road, Chennai. 3.The Tax Recovery Officer 4[th] Floor, 130-B, Mudichur Road, Tambaram, Chennai-45... Respondents Writ petition filed under Article 226 of the Constitution ofIndia praying for a writ of certiorarified mandamus calling for therecords on the file of the 2[nd] respondent in C.No.7032[1]/264/CIT-VII/2003-04 and to quash the impugned order dated 23.02.2005 andconsequently direct the 1[st] respondent herein to issue a valid noticeu/s.148 in accordance with law. For Petitioner :Mr.R.SivaramanFor Respondents:Mr.T.Ravikumar, Standing Counselfor Income Tax ORDER By mutual consent of both the learned counsel for the petitionerand the learned Standing Counsel appearing [Income Tax ] for therespondents, the main writ petition is taken up for final disposal. 2.The petitioner has come forward with the petition seeking forthe relief of quashing the order of the 2[nd] respondent dated23.02.2005 and to direct the 1[st] respondent to issue valid noticeu/s.148 in accordance with law. 3.The learned counsel for the petitioner submitted that thepetitioner has not been served with the notice as contemplated https://hcservices.ecourts.gov.in/hcservices/ u/s.148 of the Income Tax Act, 1961 [hereinafter referred to as "theAct"]. It is contended that without serving such notice u/s.148 ofthe Act, the 1[st] respondent porceeded to issue a letter dated16.10.2000 calling for the return of Income for the assessment year1994-1995 from the petitioner herein. The learned counsel wouldsubmit that only after serving the notice u/s.148, the otherprocedures should be followed by the respondents as per section 143[2] of the Act. It is further contended that the notice prescribedu/s.148 cannot be regarded as a mere procedural requirement and once,if the notice is not served on the assessee, the entire proceedingsinitiated for the assessment, on the basis of the invalid notice,would be illegal and void. It is also contended that the issue ofnotice u/s.142[1] calling for the assessee to submit his return,would not amount to a notice u/s. 148 of the Act. Therefore, it issubmitted that the impugned order dated 23.02.2005 passed by the 2[nd]respondent is liable to be set aside. 4.The learned counsel for the petitioner would also contend thatthe provision of alternative remedy of filing an appeal can always bewaived by the assessee as per section 264 of the Act and the assesseecan file a revision before the Commissioner seeking for the relief ofsetting aside the exparte order of assessment and as the saidrevision was dismissed through the impugned order, the petitioner haschallenged the same before this court by way of filing the above writpetition. 5.The learned counsel for the petitioner, in support of hiscontention, placed reliance on the following decisions:-[a]Y.NARAYANA CHETTY & ANR. Vs. INCOME TAX OFFICER & OTHERS[1959 [35] ITR 388 ]; and[b]THANGAM TEXTILES Vs. INCOME TAX OFFICER [1973 [90] ITR 421 ] 4.The learned counsel for the petitioner would also contend thatthe provision of alternative remedy of filing an appeal can always bewaived by the assessee as per section 264 of the Act and the assesseecan file a revision before the Commissioner seeking for the relief ofsetting aside the exparte order of assessment and as the saidrevision was dismissed through the impugned order, the petitioner haschallenged the same before this court by way of filing the above writpetition. 5.The learned counsel for the petitioner, in support of hiscontention, placed reliance on the following decisions:-[a]Y.NARAYANA CHETTY & ANR. Vs. INCOME TAX OFFICER & OTHERS[1959 [35] ITR 388 ]; and[b]THANGAM TEXTILES Vs. INCOME TAX OFFICER [1973 [90] ITR 421 ] 6.Per contra, the learned Standing counsel appearing for therespondents would submit that the notice contemplated u/s.148 of theAct was issued against the petitioner on 17.09.1999 and dulydispatched on 22.09.1999 as per the Despatch Register. It iscontended that thereafter, a reminder letter dated 16.10.2000 wasalso issued to the petitioner for the return of income for theassessment year 1994-1995 in response to notice u/s.148 and the saidnotice was also served on 20.10.2000 and the acknowledgment was alsoavailable on record. Learned Standing Counsel would further contendthat even the notice u/s.142[1] of the Act was also issued againstthe petitioner on 11.03.2002 and the same was duly served on13.02.2002. Therefore, it is contended that there is no illegalityor infirmity in the impugned order dated 23.02.2005 warrantinginterference of this court. https://hcservices.ecourts.gov.in/hcservices/ either side and also perused the materials available on recordincluding the impugned order. 8.The undisputed fact remains that the petitioner has sufferedan exparte order of assessment and as against the same, thepetitioner has preferred a revision u/s.264 of the Act and the saidrevision was dismissed through the impugned order dated 23.02.2005.However, it is stated in the counter affidavit to the effect that thepetitioner was served with the notice of the 3[rd] respondent dated26.04.2006 u/s.221 of the Act asking the petitioner to pay thearrears of tax for the assessment year 1994-1995 and the same isavailable on record and inspite of the same, the petitioner has notappeared, resulting in passing an exparte assessment order. It isalso stated in the counter that it is not the fault of therespondents for necessitating the authority to pass an exparte order.9.The crux of the question involved in this matter is to theeffect that whether the assessment order could be passed withoutserving the notice u/s.148 of the Act. 10.In respect of such question, it is categorically stated bythe petitioner in the affidavit and also contended by the learnedcounsel for the petitioner that the notice contemplated u/s.148 ofthe Act was not served on the petitioner. On the other hand, it isstated in the counter filed by the respondents and also contended bythe learned Standing Counsel that the notice contemplated u/s.148 wasissued on 17.09.1999 and duly despatched on 22.09.1999 as per theDespatch Register. It is also further stated in the counter thatsubsequently on 16.10.2000, a reminder letter was issued calling forthe return of income for the assessment year 1994-1995 in response tonotice u/s.148. The above said statement made in counter makes itcrystal clear that though notice said to have been issued u/s.148 ofthe Act, the fact remains that the said notice was not served on thepetitioner. Therefore, this court has no hesitation to hold that therespondents have not complied with the requirements contemplatedu/s.148 by serving a notice on the assessee, viz., the petitionerherein. It is also pertinent to point out that though it is claimedby the respondents that subsequently a reminder letter dated16.10.2000 was issued to the petitioner and the same was also dulyserved on the petitioner on 20.10.2000, the said reminder letter isonly for calling the petitioner to submit the return of income and byno stretch of imagination the said letter could be construed to be anotice u/s.148 of the Act. 11.The Hon'ble Apex court has held in paragraph 4 of theJudgment in Y.NARAYANA CHETTY & ANR. Vs. INCOME TAX OFFICER & OTHERSreported in [1959] 35 ITR 388 that:-"4......... The notice prescribed by s.34 cannot beregarded as a mere procedural requirement; it is onlyif the said notice is served on the assessee asrequired that the ITO would be justified in taking https://hcservices.ecourts.gov.in/hcservices/ proceedings against him. If no notice is issued orif the notice issued is shown to be invalid then thevalidity of the proceedings taken by the ITO withouta notice or in pursuance of an invalid notice wouldbe illegal and void. That is the view taken by theBombay and Calcutta High Courts in CIT Vs. RamsukhMotilal [1955] 27 ITR 54 [Bom] and R.K.Das & Co.Vs.CIT [1956] 30 ITR 439 [Cal] and we think that thatview is right." 12.The above said decision was also subsequently followed by aDivision Bench of this court in THANGAM TEXTILES Vs. INCOME TAXOFFICER reported in [1973] 90 ITR 412 [Mad] wherein the DivisionBench has held in paragraph 7 which reads here under:-"7.In Narayanan Chetty Vs. ITO [1959] 35 ITR 388 , the Supreme Court held that the service ofrequisite notice on the assessee, is a conditionprecedent to the validity of any reassessment madeunder s.34 of the IT Act, 1922 [which corresponds tos.147 of the IT Act, 1961], and if a valid notice andconsequent orders of reassessment passed by him wouldbe void and inoperative". 13.Section 34 of the Old Act referred in the decision citedsupra, is equivalent to section 148 of the Act, 1961. The principleslaid down by the Hon'ble Apex court as well as this court, aresquarely applicable to the facts of the instant case as in this casealso, the notice contemplated u/s.148 of the Act was not served onthe petitioner. As a result, the entire proceedings culminating intothe present impugned order dated 23.02.2005 passed by the 1[st]respondent is vitiated. 13.Section 34 of the Old Act referred in the decision citedsupra, is equivalent to section 148 of the Act, 1961. The principleslaid down by the Hon'ble Apex court as well as this court, aresquarely applicable to the facts of the instant case as in this casealso, the notice contemplated u/s.148 of the Act was not served onthe petitioner. As a result, the entire proceedings culminating intothe present impugned order dated 23.02.2005 passed by the 1[st]respondent is vitiated. 14.The learned standing counsel for the respondents has also putforward the contention to the effect that the petitioner is havingthe alternative remedy of filing an appeal as per section 246 of theAct to the Commissioner [Appeals], Income Tax, against the order ofassessment and without exhausting such alternative remedy, thepetitioner is not entitled to maintain a writ petition before thiscourt. I am not able to countenance the said contention of thelearned standing counsel for the respondents for the simple reasonthat the assessee, viz., the petitioner can very well waive the rightto file an appeal as per the provision u/s.264 by preferring arevision. It is seen that accordingly, the petitioner waived hisright to file an appeal and filed a revision as per section 264 andthe said revision was dismissed through the impugned order dated23.02.2005 passed by the 2[nd] respondent. 15.For the aforesaid reasons, this court is constrained to setaside the impugned order dated 23.02.2005 passed by the 2[nd] respondent https://hcservices.ecourts.gov.in/hcservices/ in his proceedings C.No.7032[1]/264/CIT-VII/2003-04 and remand thematter to the first respondent to proceed with the assessment for theperiod 1994-1995 by issuing notice u/s.148 of the Act. Accordingly,the writ petition is allowed. No costs. It is made clear that theconsumption of time taken during the pendancy of this proceedings bygranting the relief of the stay, would not stand in the way oflimitation. Consequently connected miscellaneous petition is closed. Sd/Assistant Registrar/True Copy/Sub Assistant RegistrarapTo1.The Income Tax Officer Ward 1[3], Tambaram, Chennai 600 045.2.The Commissioner of Income Tax-VII 121, Nungambakkam High Road, Chennai.3.The Tax Recovery Officer 4[th] Floor, 130-B, Mudichur Road, Tambaram, Chennai-45.+1 C.C to Mr.R. Sivaraman Advocate Sr.No. 16876+1 C.C to Mr.J. Nareshkumar Advocate Sr.No. 16707WP.No.29278/200812.03.2010AKR – C.O https://hcservices.ecourts.gov.in/hcservices/