2014 (1) TMI 462 - HC - Income Tax

Validity of Notice under Section 143(2) Upheld: Assessment Order Valid

GUJARAT STATE PLASTIC MANUFACTURERS ASSOCIATION Versus DEPUTY DIRECTOR OF INCOME TAX (EXEMPTION)

The court held that the notice under section 143(2) was validly served within the prescribed period, applying the logic of section 10 of the General ... Validity of notice u/s 143(2) - Held that:- Following Mohd. Ayub Versus State of Uttar Pradesh through Principal Secretary and others [2009 (11) TMI 820 - SUPREME COURT] - The last date for service of the notice under section 143(2) was 30/9/2012 which was postal holiday – Sunday - The notice u/s 143(2) of the Act has been served on the first available working day i.e. on 1/10/2012 being Monday - There is sufficient compliance of section 143(2) of the Act - The notice has been issued within the prescribed period as mentioned in the first proviso to section 143(2) of the Act - There is sufficient compliance and therefore, notice issued under section 143(2) of the Act is not invalid - Decided against petitioner. Issues Involved:1. Legality of the notice under section 143(2) of the Income Tax Act.2. Validity of the consequent assessment order for Assessment Year 2010-11.3. Applicability of section 10 of the General Clauses Act to the service of notice.Detailed Analysis:Issue 1: Legality of the Notice under Section 143(2) of the Income Tax ActThe petitioner contended that the notice dated 26/9/2012 under section 143(2) of the Income Tax Act was illegal and void as it was served beyond the period mentioned in the first proviso to section 143(2). The petitioner filed the return of income for A.Y. 2010-11 on 29/4/2011, which was processed under section 143(1) on 30/8/2011. According to the first proviso to section 143(2), the notice should have been served within six months from the end of the accounting year in which the return was filed, i.e., by 30/9/2012. However, the notice was served on 1/10/2012, making it invalid and the consequent assessment order dated 26/3/2013 void.Issue 2: Validity of the Consequent Assessment Order for Assessment Year 2010-11The petitioner argued that since the notice under section 143(2) was served beyond the prescribed period, the assessment order dated 26/3/2013, which computed a total income of Rs. 3,47,63,560/- and raised a demand of Rs. 1,48,72,320/-, should be quashed. The petitioner relied on precedents from the Gujarat High Court and the Supreme Court, which held that jurisdiction to frame an assessment under section 143(3) could only be assumed if the notice under section 143(2) was served within the prescribed period.Issue 3: Applicability of Section 10 of the General Clauses Act to the Service of NoticeThe respondent opposed the petition, arguing that the notice was issued on 26/9/2012 and sent by Speed Post. Since 30/9/2012 was a Sunday and the postal department was closed, the notice was served on the next working day, 1/10/2012. The respondent invoked section 10 of the General Clauses Act, which allows an act to be done on the next day if the prescribed period ends on a holiday. The respondent cited Supreme Court decisions supporting the principle that a party prevented from doing an act due to circumstances beyond their control can do so at the first opportunity.Judgment Analysis:The court considered whether the notice served on 1/10/2012, due to 30/9/2012 being a holiday, constituted sufficient compliance with the proviso to section 143(2). The court acknowledged that the notice was issued on 26/9/2012 and dispatched on 27/9/2012. Given that 30/9/2012 was a Sunday, the notice was served on the next working day, 1/10/2012. The court applied section 10 of the General Clauses Act, which states that if the last day of a prescribed period is a holiday, the act can be done on the next working day.The court referenced Supreme Court cases, including Dr. Babeswar Kanhar and Mohd. Ayub, which upheld the principle that if an act cannot be performed on a holiday, it can be done on the next working day. The court concluded that there was sufficient compliance with section 143(2) since the notice was served on the first available working day after the holiday.The court found that the decisions in Maxima Systems Ltd. and Mahi Valley Hotels and Resorts were not applicable as they did not involve the issue of serving notice on the first available day after the last date of service.Conclusion:The court held that the notice under section 143(2) was validly served within the prescribed period, applying the logic of section 10 of the General Clauses Act. Consequently, the assessment order was not invalid. The petition was dismissed, affirming the legality of the notice and the validity of the assessment order.