2016 (5) TMI 725 - HC - Income Tax

Court affirms deeming provision under Income Tax Act, emphasizes timely notice issuance. No substantial question of law.

Commissioner of Income Tax (Exemption), Lucknow Versus M/s Sushila Umrao Singh Charitable & Educational Trust, Allah

The court upheld the deeming provision of Section 292BB, which removes the notice requirement once an assessee responds to proceedings initiated under ... Deeming provision of Section 292BB - distinction between the issuance of notice and the service of a notice - notice after expiry period - Held that:- Section 292BB uses the words 'service of notice'. The Division Bench after taking notice of the same has clearly came to the conclusion that the issuance of notice is a sine qua non within the prescribed limits of six months. The same cannot be cured as if the issuance of notice itself is after six months then it is an incurable defect and for that reliance has been placed by the Division Bench on the apex court judgement in the case of Assistant Commissioner of Income Tax and another v. Hotel Blue Moon, (2010 (2) TMI 1 - SUPREME COURT OF INDIA). The interpretation given by the Division Bench in the judgement of Salarpur Cold Storage [2014 (8) TMI 732 - ALLAHABAD HIGH COURT] Section 292 BB of the Act cannot come to the aid of the revenue in a situation where the issuance of a notice itself was not within the prescribed period, in which event the question of whether it was served correctly or otherwise, would be of no relevance whatsoever - Failure to issue a notice within the prescribed period would result in the AO assuming jurisdiction contrary to law. - Decided in favour of assessee. Issues:Deeming provision of Section 292BB overcoming the hurdle of notice, issuance of notice under Section 148, interpretation of Section 143(2) and Section 292BB, distinction between issuance and service of notice, reliance on prior judgments, substantial question of law.Deeming Provision of Section 292BB:The judgment dealt with the contention regarding the deeming provision of Section 292BB, which creates a fiction overcoming the hurdle of notice once a response is filed by an assessee to proceedings initiated upon the issuance of a notice under Section 143(2) of the Income Tax Act, 1961. The court analyzed the facts where a return was filed, queries were made, and replies were submitted within specific timelines. The court emphasized the importance of the deeming provision and its application in determining the validity of notices issued to taxpayers.Issuance of Notice under Section 148:The judgment discussed a situation where a notice was said to have been issued under Section 148 of the Income Tax Act, 1961, after the assessee had already submitted a reply to earlier queries. The court examined the timeline of events, including the submission of replies by the assessee and the subsequent issuance of notices. The court highlighted the significance of timely issuance of notices and its impact on the validity of assessments.Interpretation of Section 143(2) and Section 292BB:The court delved into the interpretation of Section 143(2) and Section 292BB of the Income Tax Act, 1961. It discussed the distinction between the issuance and service of notice as contemplated under these sections. The court referred to prior judgments and legal provisions to analyze the requirements for the issuance of notices and the consequences of any delays or defects in the process. The interpretation of these sections played a crucial role in determining the outcome of the case.Substantial Question of Law:The judgment addressed the argument regarding the existence of a substantial question of law arising from the interpretation of Section 292BB. The court considered the application of the deeming provision and its implications on the legal framework. It discussed the relevance of prior judgments and legal precedents in determining the correct interpretation of the law. The court ultimately concluded that no substantial question of law existed for further consideration.In conclusion, the judgment dismissed the appeal, stating that the interpretation given by the Division Bench in a prior case was in agreement with the facts of the present case. The court found no substantial question of law requiring an answer or any ground for the admission of the appeal. The decision was based on a thorough analysis of the legal provisions, prior judgments, and the specific circumstances of the case.