CIT v. Kant Travels - Taxpublishers.in

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The Tax Publishers2012 TaxPub(DT) 2073 (All-HC) : (2012) 046 (I) ITCL 0250 : (2012) 250 CTR 0089 : (2012) 071 DTR 0033 INCOME TAX ACT, 1961 --Reassessment--Validity of notice under section 148Non-specification of status--A notice under section 148 was issued to the assessee, on 12-8-1991, in response to which the assessee filed his statement on 5-9-1991 stating that he has already filed return on 17-5-1991 which may be treated in compliance to the above notice. The assessee appeared before the assessing officer. Notices under section 143(2) were issued, in response to which the assessee through his advocate appeared before the assessing officer and assessment order was passed by the assessing officer on 16-11-1993, completing the assessment on total income of Rs. 1,56,040. The assessee filed an appeal before the Commissioner (Appeals) on 7-1-1994 against the assessment order dt. 16-11-1993. The said appeal was dismissed by order dt. 20-4-1994. In the appeal filed before the Tribunal, no ground was taken challenging the validity of the notice issued under section 148. However, permission was sought the Tribunal to raise additional ground, i.e., (1) 'That the order passed under section 148 in the status of URF is illegal and without jurisdiction.' The Tribunal, considered the aforesaid additional ground and held, that notice under section 148 is bad in law, hence the assessment framed is bad and void ab initio. *Held:* The assessee continuously appeared through his counsel and participated in the proceedings and at no point of time he had raised any objection regarding validity of the notice nor any objection regarding description of the assessee. Books of account and other documents were called from the assessee. From the facts which have come on the record, including the order of assessment, it is clear that the assessee had at no point of time any doubt about the proceedings or notice under section 148 has not been issued against the assessee. Neither any objection was raised before the assessing officer nor even in appeal before the Commissioner (Appeals) regarding the validity of the notice issued under section 148. Even when the appeal was filed before the Tribunal no such objection was raised and the objection was raised only as an additional ground before the Tribunal challenging the validity of the notice issued under section 148. The assessment order also indicates that the assessee has been assessed as an unregistered firm which is clear from column 5 of the assessment order dt. 16-11-1993, therefore, notice issued under section 148 was valid and contention that it ought to have been assessed as registered firm was not justified. Further, section 292B provides the same. Section 292B provides that no return of income, assessment, notice, summons or other proceeding, shall be deemed to be invalid merely by reason of any mistake, defect or omission in such return of income, assessment, notice, summons provided such notice or summons is in substance and effect in conformity with or according to the intent and purpose of this Act. [Para 13] Section 148 mandates service of notices on the assessee requiring him to furnish return of his income. No particular format of notice has been provided under section 148. The key words in section 148 are 'service of notice' on the assessee. There cannot be any dispute to the proposition that the service of notice under section 148, is a precondition for proceeding with the assessment or reassessment. The present is not a case where the assessee is denying service of the notice. The assessee was issued a notice under section 148 in response to which he appeared before the assessing officer and participated in the proceedings. No objection was taken by the assessee at any point of time regarding invalidity of the notice issued under section 148 and it is only when his appeal was dismissed by the Commissioner (Appeals) he filed an appeal before the Tribunal, taking additional ground. The facts of the present ease clearly prove that the notice is in substance and effect in conformity with and according to the intent and purpose of the Act. The intent and purpose of the Act is to inform the assessee that income has escaped assessment. The provision of section 292B is fully attracted and present is not a case where notice under section 148 can be said to be invalid. [Para 15] The Tribunal, in its judgment dt. 19-9-2001, has allowed the appeal on the sole ground that notice under section 148 is not valid since it does not indicate that the notice is issued to a registered firm or to an individual who may be carrying the proprietary business or the firm whether registered or unregistered. The Tribunal took the view that notice is addressed. In such a manner that it does not specify the status of the assessee and in view of the fact that the status of the assessee has not been specified, the notice is not valid in the eyes of law. Holding that the notice was valid, the appeal was allowed and the entire proceedings were set aside. The status of the addressee in the notice under section 148 should be relevant when the notice is addressed to a different entity and the assessment is framed against another entity. However, when the entity to whom the notice is addressed and the entity against whom the assessment is framed is one, the notice cannot be said to be invalid. [Para 16] The question of status of assessee and correct description is a relevant factor, but the description of the status may or may not invalidate the proceedings. Sometimes, it may not invalidate the proceedings and can be saved under section 292B and in some cases the invalidity may go to the very root of the proceedings. [Para 18] Present is a case where the assessee was addressed as M/s Kant Travels, 917, Daraganj, Allahabad and was assessed as an unregistered firm. The assessee does not dispute its status as a firm, but the only distinction sought to be made is that it is a registered firm. Court is not persuaded to accept the distinction of status of the unregistered firm and registered firm is of such nature that it may vitiate the entire proceedings, moreso, when the assessee which is a firm had participated in the proceedings in response to the notice issued under section 148 without raising any objection. [Para 20] In view of the foregoing discussion, present is not a case where notice under section 148 can be said to be illegal and without jurisdiction. The Tribunal committed error in allowing the appeal of the assessee on the aforesaid ground. However, since the Tribunal has not entered into other grounds raised in the appeal, it is appropriate that the matter may be remitted to the Tribunal for deciding the appeal afresh. [Para 27] SUBSCRIBE FOR FULL CONTENT

The Tax Publishers2012 TaxPub(DT) 2073 (All-HC) : (2012) 046 (I) ITCL 0250 : (2012) 250 CTR 0089 : (2012) 071 DTR 0033

INCOME TAX ACT, 1961

--Reassessment--Validity of notice under section 148Non-specification of status--A notice under section 148 was issued to the assessee, on 12-8-1991, in response to which the assessee filed his statement on 5-9-1991 stating that he has already filed return on 17-5-1991 which may be treated in compliance to the above notice. The assessee appeared before the assessing officer. Notices under section 143(2) were issued, in response to which the assessee through his advocate appeared before the assessing officer and assessment order was passed by the assessing officer on 16-11-1993, completing the assessment on total income of Rs. 1,56,040. The assessee filed an appeal before the Commissioner (Appeals) on 7-1-1994 against the assessment order dt. 16-11-1993. The said appeal was dismissed by order dt. 20-4-1994. In the appeal filed before the Tribunal, no ground was taken challenging the validity of the notice issued under section 148. However, permission was sought the Tribunal to raise additional ground, i.e., (1) 'That the order passed under section 148 in the status of URF is illegal and without jurisdiction.' The Tribunal, considered the aforesaid additional ground and held, that notice under section 148 is bad in law, hence the assessment framed is bad and void ab initio. Held: The assessee continuously appeared through his counsel and participated in the proceedings and at no point of time he had raised any objection regarding validity of the notice nor any objection regarding description of the assessee. Books of account and other documents were called from the assessee. From the facts which have come on the record, including the order of assessment, it is clear that the assessee had at no point of time any doubt about the proceedings or notice under section 148 has not been issued against the assessee. Neither any objection was raised before the assessing officer nor even in appeal before the Commissioner (Appeals) regarding the validity of the notice issued under section 148. Even when the appeal was filed before the Tribunal no such objection was raised and the objection was raised only as an additional ground before the Tribunal challenging the validity of the notice issued under section 148. The assessment order also indicates that the assessee has been assessed as an unregistered firm which is clear from column 5 of the assessment order dt. 16-11-1993, therefore, notice issued under section 148 was valid and contention that it ought to have been assessed as registered firm was not justified. Further, section 292B provides the same.

Section 292B provides that no return of income, assessment, notice, summons or other proceeding, shall be deemed to be invalid merely by reason of any mistake, defect or omission in such return of income, assessment, notice, summons provided such notice or summons is in substance and effect in conformity with or according to the intent and purpose of this Act. [Para 13] Section 148 mandates service of notices on the assessee requiring him to furnish return of his income. No particular format of notice has been provided under section 148. The key words in section 148 are 'service of notice' on the assessee. There cannot be any dispute to the proposition that the service of notice under section 148, is a precondition for proceeding with the assessment or reassessment. The present is not a case where the assessee is denying service of the notice. The assessee was issued a notice under section 148 in response to which he appeared before the assessing officer and participated in the proceedings. No objection was taken by the assessee at any point of time regarding invalidity of the notice issued under section 148 and it is only when his appeal was dismissed by the Commissioner (Appeals) he filed an appeal before the Tribunal, taking additional ground. The facts of the present ease clearly prove that the notice is in substance and effect in conformity with and according to the intent and purpose of the Act. The intent and purpose of the Act is to inform the assessee that income has escaped assessment. The provision of section 292B is fully attracted and present is not a case where notice under section 148 can be said to be invalid. [Para 15] The Tribunal, in its judgment dt. 19-9-2001, has allowed the appeal on the sole ground that notice under section 148 is not valid since it does not indicate that the notice is issued to a registered firm or to an individual who may be carrying the proprietary business or the firm whether registered or unregistered. The Tribunal took the view that notice is addressed. In such a manner that it does not specify the status of the assessee and in view of the fact that the status of the assessee has not been specified, the notice is not valid in the eyes of law. Holding that the notice was valid, the appeal was allowed and the entire proceedings were set aside. The status of the addressee in the notice under section 148 should be relevant when the notice is addressed to a different entity and the assessment is framed against another entity. However, when the entity to whom the notice is addressed and the entity against whom the assessment is framed is one, the notice cannot be said to be invalid. [Para 16] The question of status of assessee and correct description is a relevant factor, but the description of the status may or may not invalidate the proceedings. Sometimes, it may not invalidate the proceedings and can be saved under section 292B and in some cases the invalidity may go to the very root of the proceedings. [Para 18] Present is a case where the assessee was addressed as M/s Kant Travels, 917, Daraganj, Allahabad and was assessed as an unregistered firm. The assessee does not dispute its status as a firm, but the only distinction sought to be made is that it is a registered firm. Court is not persuaded to accept the distinction of status of the unregistered firm and registered firm is of such nature that it may vitiate the entire proceedings, moreso, when the assessee which is a firm had participated in the proceedings in response to the notice issued under section 148 without raising any objection. [Para 20] In view of the foregoing discussion, present is not a case where notice under section 148 can be said to be illegal and without jurisdiction. The Tribunal committed error in allowing the appeal of the assessee on the aforesaid ground. However, since the Tribunal has not entered into other grounds raised in the appeal, it is appropriate that the matter may be remitted to the Tribunal for deciding the appeal afresh. [Para 27]