2013 (1) TMI 515 - HC - Income Tax

Court affirms assessment validity under Section 144, dismisses challenge. Failure to raise notice issue earlier.

M/s. PP. ABDUL KHADER & CO. Versus THE COMMISSIONER OF INCOME TAX. CALICUT & Others

The court upheld the validity of the assessment conducted under Section 144 and subsequent orders passed, dismissing the writ petition challenging the ... No notice u/s 143(2) issued before completing the scrutiny assessment - assessment under Section 144 without notice u/s 144(1) - Held that:- The petitioner is not entitled to succeed as so far as the absence of notices u/s 143(2) and the proviso to Section 144(1) which is canvassed before this Court are concerned, a reading of Ext.P12 order passed by the Revisional Authority shows that such a contention was never urged by the petitioner before the revisional authority. Similarly the inapplicability of Section 144 for want of the circumstances specified in Section 144(1) (a) to (c) which is also canvassed before this Court is also not seen urged before the revisional authority. Therefore, these contentions are urged before this Court for the first time. A contention which was not urged before the statutory authorities and which the authority had no occasion to deal with, cannot be allowed to be raised for the first time before this Court. Therefore, not inclined to take cognizance of these arguments raised by the petitioner and invalidate the impugned proceedings. Moreover, it is also seen that by Ext.P4 notice, the petitioner was informed that there are certain points to be clarified in connection with the returns filed by them. Accordingly, they were required to attend the office of the AO with documents, accounts and other evidence to support the return filed. This notice is a notice under Section 143(2). In so far as the proviso to Section is concerned, Ext.P7 notice shows that the petitioner was informed that the assessment is posted for hearing to 11/2/97. Therefore, Ext.P4 is a notice under Section 143(2) and Ext.P7 is a notice under the proviso to Section 144(1). Therefore, the absence of the statutory notices canvassed by the learned counsel for the petitioner is clearly erroneous - against assessee. Issues:1. Assessment under Section 144 without issuing notice under Section 143(2).2. Disallowance of interest paid on capital deposit and remuneration to partners.3. Revision under Section 264 challenging assessment orders.4. Contention regarding absence of statutory notices and circumstances for assessment under Section 144.Analysis:1. The petitioner, a partnership firm, filed a return for the assessment year 1995-96. The firm was issued a notice under Section 143(2) and subsequently an assessment order was passed under Section 144 determining the taxable income. The petitioner appealed against the order disallowing interest on capital deposit and partner's remuneration, which was later allowed by the appellate authority (Ext.P6).2. Following this, the assessing officer issued another notice (Ext.P7) for producing chalans, but proceeded to complete the assessment under Section 144 without further notice. The petitioner filed a revision under Section 264 challenging the assessment orders (Ext.P8 and P9), which was dismissed (Ext.P12). The revisional authority held that the assessment under Section 144 was independent of the previous assessment under Section 143(1)(a).3. The petitioner contended that no notice under Section 143(2) was issued before the assessment under Section 144 (Ext.P8). They argued that the assessment under Section 144 could only be completed under specific circumstances, which were absent in this case. The petitioner also claimed that the notice as required by the proviso to Section 144(1) was not issued.4. However, the court noted that the contentions regarding the absence of notices under Section 143(2) and the proviso to Section 144(1) were not raised before the revisional authority. The court held that arguments not presented before the statutory authorities cannot be raised for the first time in court. It was observed that the notices issued (Ext.P4 and Ext.P7) fulfilled the requirements under Section 143(2) and the proviso to Section 144(1).5. The court concluded that the petitioner failed to establish a case warranting interference. The writ petition challenging the assessment orders was dismissed, upholding the validity of the assessment conducted under Section 144 and the subsequent orders passed.This detailed analysis of the judgment provides insights into the issues raised, the contentions presented by the petitioner, and the court's reasoning leading to the dismissal of the writ petition.