2012 (11) TMI 664 - AT - Income Tax

Interpretation of Tax Law Sections and Retrospective Amendments: Tribunal Error Corrected

The judgment focused on the interpretation of amended provisions of section 143(2) of the Income Tax Act, the validity of a notice issued under section ... Rectification of order u/s 254 - Reassessment - notice u/s Sec. 148 - amendment made to section 143(2) with retrospective effect – issuance of notice within 12 months from the end of the month in which the return in response to notice under section 148 was submitted. - Held that:- On account of the said amendment, as long as a notice u/s.143(2) is issued before the expiry of the time limit as prescribed in 2nd proviso(b) for making the re-assessment, even if had been issued beyond the one year time limit from the date of the filing of the return, the effect of this amendment is to validate all those notices. In the result, since these provisos retrospectively made with effect from 1/10/1999 that would indicate that the provisos are transitional in character merely validating those notices in respect of re-assessment proceedings but otherwise not disturbing the law being limited upto 30/09/2005 but nothing to apply a return furnished on or after 1st day of October-2005. Apparent mistake so as to rectify u/s.254(2) - held that:- while deciding this appeal the Tribunal had only limited scope and ought to remain confined to the observation of the Tribunal as expressed vide an earlier order dated 22/03/2005. Firstly, those directions were meant for the A.O. and secondly, the applicable provisions of section 148 were not either referred or considered hence tantamount to per incuriam in nature. - We therefore re-call our order dated 31/12/2010 so that the relevant dates of issuance of notice u/s.148 and the returns filed in compliance of the said notice be examined in the light of the 2nd proviso to section 148(1) of the Act. The order is recalled and the Registry is directed to fix the appeal for hearing in due course as per law. - Decided against the assessee. Issues:1. Interpretation of amended provisions of section 143(2) of the Income Tax Act.2. Validity of notice u/s.143(2) issued beyond prescribed time limit.3. Application of retrospective amendment in section 148 for reassessment proceedings.Analysis:1. The judgment involves the interpretation of the amended provisions of section 143(2) of the Income Tax Act. The Revenue raised a legal ground that the Tribunal overlooked the amendment made to section 143(2) vide finance bill 2006 with retrospective effect from 01/10/1991. The Tribunal had relied on the proviso annexed to sub-clause (ii) of sub-section 2 of section 143, which had undergone an amendment with effect from 01/04/2008, curtailing the period of service of notice from 12 months to 6 months from the end of the financial year in which the return is furnished.2. The issue of the validity of the notice u/s.143(2) issued beyond the prescribed time limit was also addressed in the judgment. The Revenue contended that the Tribunal erred in holding that the notice was issued beyond the time prescribed. It was argued that the Tribunal mistakenly relied on a Special Bench decision without considering the amended provisions. The Tribunal's decision was based on the dates of filing the return and issuance of the notice, leading to a discrepancy in the assessment process.3. The judgment delved into the application of the retrospective amendment in section 148 for reassessment proceedings. It was highlighted that the Tribunal failed to consider that the case involved reassessment following the issuance of a notice u/s.148. The Tribunal's decision was limited to specific dates without taking into account the retrospective amendment made by the Finance Act, 2006. The amendment aimed to validate notices issued between 01/10/1991 to 30/09/2006 for reassessment proceedings, addressing the challenges faced by the Revenue Department due to previous court judgments.4. The conclusion of the judgment emphasized the importance of applying the correct law to arrive at a just decision within the legal framework. It was noted that the Tribunal's decision was flawed as it did not consider the applicable provisions of section 148 and the retrospective amendment's implications. The judgment allowed the Revenue's miscellaneous application, recalling the earlier order and directing a re-examination of the relevant dates concerning the issuance of notices u/s.148 in light of the 2nd proviso to section 148(1) of the Act.