2009 (5) TMI 132 - AT - Income Tax

Invalid Notice Period Renders Assessment Proceedings Void

The Tribunal held that a notice served under section 143(2) beyond the 12-month limitation period from the filing of the return renders the subsequent ... Limitation Issues Involved:1. Validity of the notice u/s 143(2) served beyond the prescribed limitation period.2. Impact of the delayed service of notice on the assessment proceedings.Summary:Issue 1: Validity of the notice u/s 143(2) served beyond the prescribed limitation period.The assessee filed a return of income on 14th Oct., 2003. Notice u/s 143(2) was issued on 11th Oct., 2004 and served on 1st Nov., 2004. The assessee contended that the notice was served beyond the limitation period of 12 months from the end of the month in which the return was filed, rendering the proceedings initiated by the notice invalid and illegal ab initio. The Tribunal referred to the provisions of s. 143 and various judicial precedents, including the Supreme Court's decision in CIT vs. Kurban Hussain Ibrahimji Mithiborwala, which emphasized that the jurisdiction to reopen an assessment depends on the issuance of a valid notice. The Tribunal concluded that the notice served after the expiry of the limitation period is invalid, making the subsequent assessment illegal and void.Issue 2: Impact of the delayed service of notice on the assessment proceedings.The Tribunal noted that the notice should have been served on or before 31st Oct., 2004, but was actually served on 1st Nov., 2004. The CIT-Departmental Representative argued that the notice was dispatched on 25th Oct., 2004, and the delay was due to non-working days (30th and 31st Oct., 2004 being Saturday and Sunday). However, the Tribunal held that the statutory requirement is the service of the notice within the prescribed period, not its issuance. The Tribunal rejected the Departmental Representative's reliance on the General Clauses Act and various High Court decisions, as they did not support the contention in the context of the undisputed service date. Consequently, the Tribunal ruled that the assessment passed pursuant to an invalid notice is illegal and void, thereby canceling the assessment and allowing the cross-objection of the assessee.