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Director Of Income-Tax v. Society For Worldwide Interbank Financial, Telecommunications
Judgment Summary
Factual and Procedural Background
The Revenue appealed against the Income Tax Appellate Tribunal's order dated 27.02.2009 in ITA No. 2512.DEL/2001 relating to Assessment Year 1997-98. The assessee filed the return of income on 27.03.2000 and the assessment was completed on 31.03.2000. Both the Commissioner of Income Tax (Appeals) and the Income Tax Appellate Tribunal found that a notice under Section 143(2) of the Income Tax Act, 1961 was recorded as issued on 23.03.2000, i.e., before the return was filed; on that basis they held the notice invalid and set aside the assessment. Before the High Court, the learned counsel for the appellant/revenue contended that the notice was in fact issued on 27.03.2000 (the date of filing), and that the date 23.03.2000 recorded on the notice was a mistake. The Revenue also relied on Section 292B of the Income Tax Act. The application for condonation of delay in re-filing the appeal (CM No. 3927/2010) was allowed and disposed of orally.
Legal Issues Presented
- Whether the notice under Section 143(2) of the Income Tax Act, 1961 was validly issued prior to the filing of the return (recorded as 23.03.2000) or whether the notice was actually issued on 27.03.2000 (the date the return was filed), and if the latter, whether the recorded date being erroneous affects the validity of the assessment.
- Whether the appellant/revenue could raise, for the first time before the High Court, the contention that the notice was actually issued on 27.03.2000 when lower authorities had concurrently found the date to be 23.03.2000.
Arguments of the Parties
Appellant's (Revenue) Arguments
- The notice under Section 143(2) was recorded as issued on 23.03.2000 but was in fact issued on 27.03.2000, the date the return was filed; the recorded date was a mistake.
- Reliance was placed on Section 292B of the Income Tax Act in support of the contention regarding the notice/date error.
- Para 3.4 of the memorandum of appeal was relied upon, which stated that the return was filed on 27.03.2000 and the notice was served by hand on the Authorized Representative at that time, the date being mistakenly mentioned as 23.03.2000.
Table of Precedents Cited
No precedents were cited in the provided opinion.
Court's Reasoning and Analysis
The Court examined the assessment order, the Commissioner of Income Tax (Appeals) order and the Tribunal's impugned order, and heard submissions from the learned counsel for the appellant/revenue.
The Court noted that both the Commissioner (Appeals) and the Tribunal had returned concurrent findings of fact that the Section 143(2) notice was issued on 23.03.2000. Because the return was filed on 27.03.2000, the Court accepted the lower authorities' conclusion that the notice, being issued prior to the filing of the return as recorded, was not a valid notice and that the assessment completed on that basis was invalid and had been set aside.
The Court rejected the Revenue's contention that the notice was actually issued on 27.03.2000 because that contention was being raised for the first time before the High Court; no such challenge to the recorded date had been raised before the lower appellate authorities, and therefore it could not be entertained at this stage.
Further, the Court observed that even if the Revenue's factual contention were accepted, the memorandum of appeal (para 3.4) itself stated that the notice was served on the Authorized Representative simultaneously when the return was filed and that the notice's date was mistakenly recorded as 23.03.2000. That circumstance—service of a Section 143(2) notice at the same time as the filing of the return—indicated the notice was ready prior to filing. Section 143(2) requires that the Assessing Officer examine the return before serving such a notice; serving it simultaneously with filing would be inconsistent with the statutory scheme and would amount to a gross violation of Section 143(2).
For these reasons the Court held that the impugned order did not call for interference.
Holding and Implications
Holding: The appeal is DISMISSED.
Implications:
- The concurrent factual findings of the Commissioner of Income Tax (Appeals) and the Income Tax Appellate Tribunal that the Section 143(2) notice was issued on 23.03.2000 (before the return filed on 27.03.2000) stand undisturbed.
- The assessment completed on the basis of that notice remained invalid and the order setting it aside stands.
- The Revenue's contention about the actual date of issuance of the notice, raised for the first time before the High Court, was not permitted and did not alter the result; even accepting it would not have validated the notice given the manner of service described in the record.
- No substantial question of law arose for consideration, and the Court made no new precedent beyond affirming the lower authorities' factual and legal conclusions in this case.
Order pronounced by Badar Durrez Ahmed, J. (Oral); V.K. Jain, J. also on the Bench.
Badar Durrez Ahmed, J. (Oral)
CM No. 3927/2010
The delay in re-filing the appeal is condoned. This application stands disposed of.
ITA 441/2010
1. The Revenue is in appeal against the Income Tax Appellate Tribunal's order dated 27.02.2009 in ITA No. 2512.DEL/2001 pertaining to the Assessment Year 1997-98.
2. The only issue sought to be raised before us is with regard to the validity of the assessment proceedings. The admitted position is that the assessee filed the return of income on 27.03.2000 and the assessment was completed on 31.03.2000 The learned counsel for the appellant/revenue contended before us that both the Commissioner of Income Tax (Appeals) and Income Tax Appellate Tribunal have returned findings of fact that the notice under Section 143(2) of the Income Tax Act, 1961 was issued on 23.03.2000, whereas the return of income was filed on 27.03.2000 and was served on the same date on the assessee.
3. The submission is that there was a mistake in the notice which recorded the date of issuance as 23.03.2000 whereas it was actually issued on 27.03.2000 He also placed reliance on Section 292 B of the said act.
4. We have examined the assessment order, the order passed by the Commissioner of Income Tax (Appeals) as well as impugned order passed by the Tribunal and have heard the submissions made by the learned counsel for the appellant/revenue.
5. We are of the view that the impugned order does not call for any interference. Both the Commissioner of Income Tax (Appeals) and the Income Tax Appellate Tribunal have returned a concurrent and clear finding of fact that the notice under Section 143(2) was issued on 23.03.2000 and since the return was filed on 27.03.2000, the notice was not a valid one and, therefore, the assessment completed on the basis of the notice was also invalid and was consequently set aside. It is for the first time before us that the learned counsel for the appellant contends that the notice, in fact, was issued on 27.03.2000 and not on 23.03.2000, the date which is recorded on the notice itself. No such contention was raised before the Lower Appellate Authorities. Consequently, the said contention cannot be raised before us for the first time.
6. However, even if we accept what the learned counsel for the appellant/revenue submits, it does not make the case any better for him. In para 3.4 of the memorandum of appeal, the appellant has stated that the return was filed by the assessee on 27.03.2000 and the notice under Section 143(2) was served upon the Authorized Representative of the assessee by hand when the Authorized Representative of the assessee came and filed return. However, the date of the notice was mistakenly mentioned as 23.03.2000
7. Assuming the aforesaid to be true, the notice was served on the Authorized Representative simultaneously on his filing the return which clearly indicates that the notice was ready even prior to the filing of the return. Section 143(2) of the said Act clearly indicates that where a return has been furnished under Section 139, or in response to a notice under Section 142(1), the Assessing Officer shall-
(i) Where he has reason to believe that any claim of loss, exemption, deduction, allowance or relief made in the return is inadmissible, serve on the assessee a notice specifying particulars of such claim of loss, exemption, deduction, allowance or relief and require him, on a date to be specified therein to produce, or cause to be produced, any evidence or particulars specified therein or on which the assessee may rely, in support of such claim.
(ii) Notwithstanding the aforesaid, if the Assessing Officer considers it necessary or expedient to ensure that the assessee has not under-stated the income or has not computed excessive loss or has not under-paid the tax in any manner, he may serve the assessee a notice requiring him, on a date to be specified therein, either to attend his office or to produce, or cause to be produced, any evidence on which the assessee may rely in support return.”
8. The provisions of Section 143(2) make it clear that the notice can only be served after the Assessing Officer has examined the return filed by the assessee. Whereas what para 3.4 indicates is that when the assessee came to file the return, the notice under Section 143(2) was served upon the Authorized Representative by hand. Thus, even if we take the statement of the Assessing Officer at face value, it would amount to gross violation of the scheme of Section 143(2) of the said Act.
9. In any event, we do not agree with the contentions raised by the learned counsel for the appellant that the notice was issued on 27.03.2000 in as much as the Tribunal has already returned a finding that the notice was issued on 23.03.2000 That being the case, no interference with the impugned order is called for.
No substantial question of law arises for our consideration.
The appeal is dismissed.
BADAR DURREZ AHMED, J.
V.K JAIN, J.
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