Notice under Section 143(2) issued beyond six-month limitation period held invalid and barred

Gujarat HC held that notice u/s 143(2) issued on 11.08.2018 was barred by limitation. Assessee filed return on 29.11.2016, which was defective. After defects were removed on 19.07.2017 within allowed time, the return related back to original filing date. Limitation period for issuing notice u/s 143(2) was six months from end of financial year in which return was filed, expiring on 30.09.2017. Since notice was issued beyond this period, it was invalid and AO could not proceed with scrutiny assessment. Assessee appeal allowed.

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Issues Involved:
1. Validity of the notice issued under subsection (2) of section 143 of the Income Tax Act, 1961.
2. Determination of the date for computing the period of limitation for the issuance of notice under section 143(2) of the Act.
3. Interpretation of the provisions of section 139(9) of the Act concerning defective returns.

Issue-wise Detailed Analysis:

1. Validity of the Notice Issued under Subsection (2) of Section 143 of the Income Tax Act, 1961:
The petitioner challenged the notice dated 11.08.2018 issued under subsection (2) of section 143 of the Act, arguing it was barred by limitation. The petitioner contended that the original return filed on 29.11.2016 should be considered for computing the limitation period, making the notice issued on 11.08.2018 beyond the permissible time limit. The respondent countered this by asserting that the return filed on 19.07.2017, after rectifying defects, was the valid return, and hence, the notice was within the limitation period.

2. Determination of the Date for Computing the Period of Limitation for the Issuance of Notice under Section 143(2) of the Act:
The court had to decide whether the date of the original return (29.11.2016) or the date of defect removal (19.07.2017) should be used for computing the limitation period for issuing a notice under section 143(2). The court noted that if the original return date was considered, the notice would be barred by limitation. However, if the defect removal date was considered, the notice would be within the limitation period.

3. Interpretation of the Provisions of Section 139(9) of the Act Concerning Defective Returns:
The petitioner argued that a defective return, once rectified, relates back to the original filing date. The respondent argued that a defective return is not valid until corrected, and the limitation period should be computed from the date of defect removal. The court examined the language of section 139(9), which does not require filing a new return but only rectifying defects in the original return. The court concluded that once defects are removed, the original return is considered valid from the date it was initially filed.

Court's Findings:
The court held that the original return filed on 29.11.2016, once rectified, should be considered for computing the limitation period. The removal of defects relates back to the original filing date. Thus, the notice under section 143(2) issued on 11.08.2018 was beyond the limitation period, rendering it invalid.

Conclusion:
The court allowed the petition, quashing the impugned notice dated 11.08.2018 and all proceedings initiated pursuant thereto, as it was barred by limitation. The court emphasized that the notice under section 143(2) is a statutory requirement for assuming jurisdiction for assessment, and if not issued within the prescribed time limit, the entire assessment proceedings would be rendered without jurisdiction.

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