TaxTMI 
TaxTMI 
2012 (2) TMI 121
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....and circumstances of the case, correct in holding that the notice issued to the assessee under Section 148 of the Income Tax Act as also the reassessment framed in pursuance thereto was invalid? (2) In case answer to question No. 1 above is in the affirmative, whether the income originally returned by the assessee could not be brought to tax?" 4. For the sake of convenience, ITA No. 7/2006, which relates to the assessment year 1992-93, is treated as the lead case. However, the relevant facts relating to each assessment year are noticed below. 5. For the assessment year 1989-90, the respondent filed their return of income on 29th December, 1989 declaring income of Rs. 2,29,706/-. For the assessment years 1992-93 to 1995-96, no return of income under Section 139(1) was filed by the respondent. For the Assessment Years 1992-93 to 1995- 96, returns of income were filed on 10th December, 1999 declaring the following incomes: Assessment Year Disclosed Income 1992- 93 Rs. 3,42,322/- 1993- 94 Rs. 7,75,282/- 1994- 95 Rs. 11,88,712/- 1995- 96 Rs. 4,69,949/- 6. These returns were filed beyond the due date of filing as stipulated in the Act. The ....
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.... Add: Income declared under VDIS, 1997 Rs. 311839/- Taxable Income Rs. 541545/- R/of Rs. 541550/- Assessment Year 1992- 93 Income declared in the original return Rs. 342322/- Add: Income declared under VDIS, 1997 Rs. 342322/- Taxable Income Rs. 672369/- R/of Rs. 672370/- Assessment Year 1993- 94 Income declared in the original return Rs. 775282/- Add: Income declared under VDIS, 1997 Rs. 764586/- Taxable Income Rs. 1539868/- R/of Rs. 1539870/- Assessment Year 1994- 95 Income declared in the original return Rs. 1188712/- Add: Income declared under VDIS, 1997 Rs. 1117131/- Taxable Income Rs. 2305843/- R/of Rs. 2305840/- Assessment Year 1995- 96 Income declared in the original return Rs. 469949/- Add: Income declared under VDIS, 1997 Rs. 428719/- Taxable Income Rs. 898668/- R/of Rs. 898670/- 13. The respondent filed appeals. Appeal filed for the assessment year 1992-93 was treated as a lead case by the CIT(Appeals) as the said appeal was disposed of, earlier in point of time. Two principal contentions were raised by the r....
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....made against any reassessment to be made against an assessee u/s 147. Where the notice issued to an assessee is vague. It would not be possible to rely upon it to sustain an assessment made u/s 147. A vague notice is an invalid notice and in such a case the vagueness cannot be removed by reference to other documents on the record or by issuing a copy of the same notice to the Director as pointed out by the AO. In view of the foregoing, I find no justification to sustain the additions made by the AO subsequent to issuing of invalid notice. 6. The appeal is allowed." 15. It is noticeable from the reasoning given by the CIT(Appeals) that she has not specifically dealt with contention Nos. (b) and (c) and had only examined contention No. (a) mentioned in the aforesaid order and held that the notice was vague and, therefore, void or invalid. 16. The aforesaid appellate order was followed in other assessment years. 17. After the orders passed by the CIT(Appeals), consequential orders were passed by the Assessing Officer in the income tax computation form. In the computation form, he gave appeal effect and computed the income of the respondent for the years in question as unde....
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....ion 249(4), on the ground that the respondent had not filed valid returns of the income and, therefore, clause (a) of Section 249(4) was not applicable. With regard to non-payment of advance tax and the effect thereof under of clause (b) to Section 249(4), the tribunal has held that once the CIT(A) had admitted and adjudicated the appeals, it could be assumed that she had exercised her discretionary power and had come to the conclusion that there were good and sufficient reasons for the respondent assessee not to pay the advance tax. 22. Section 249(4) of the Act reads as under:- "249. Form of appeal and limitation.- ** ** ** (4) No appeal under this Chapter shall be admitted unless at the time of filing of the appeal,- (a) where a return has been filed by the assessee, the assessee has paid the tax due on the income returned by him; or (b) where no return has been filed by the assessee, the assessee has paid an amount equal to the amount of advance tax which was payable by him: Provided that in a case falling under clause (b) and on an application made by the appellant in this behalf, [* * *] Commissioner (Appeals) may, ....
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...., [1978] 113 ITR 22 (Gujarat). 27. Section 292-B of the Act reads as under:- "292-B. Return of income, etc., not to be invalid on certain grounds.-No return of income, assessment, notice, summons or other proceeding, furnished or made or issued or taken or purported to have been furnished or made or issued or taken in pursuance of any of the provisions of this Act shall be invalid or shall be deemed to be invalid merely by reason of any mistake, defect or omission in such return of income, assessment, notice, summons or other proceeding if such return of income, assessment, notice, summons or other proceeding is in substance and effect in conformity with or according to the intent and purpose of this Act." 28. The aforesaid provision has been enacted to curtail and negate technical pleas due to any defect, mistake or omission in a notice/summons/return. The provision was enacted by Tax Laws (Amendment) Act, 1975 with effect from 1st October, 1975. It has a salutary purpose and ensures that technical objections, without substance and when there is effective compliance or compliance with intent and purpose, do not come in the way or affect the validity of the assessment proc....
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....ce of technical formalities. The object and purpose of this Section is to ensure that procedural irregularity(ies) do not vitiate assessments. Notice/summons may be defective or there may be omissions but this would not make the notice/summon a nullity. Validity of a summon/notice has to be examined from the stand point whether in substance or in effect it is in conformity and in accordance with the intent and purpose of the Act. This is the purport of Section 292B. Notice/summons are issued for compliance and informing the person concerned, i.e. the assessee. Defective notice/summon if it serves the intent and purpose of the Act, i.e. to inform the assessee and when there is no confusion in his mind about initiation of proceedings under Section 147/148 of the Act, the defective notice is protected under Section 292B. In such circumstances, the defective notice/summon is in substance and in accordance with the intent and purpose of the Act. The primary requirement is to go into and examine the question of whether any prejudice or confusion was caused to the assessee. If no prejudice/confusion was caused, then the assessment proceedings and their consequent orders cannot and should ....
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....hority which had held that the status of the assessee was of a Hindu Undivided Family and not that of an individual. After the said order came to the notice of the Assessing Officer, he issued a fresh notice under Section 34 in the status of Hindu Undivided Family but this was beyond the period of eight years from the close of the previous year. The tribunal decided the matter in favour of the Revenue holding that the second notice in the name of the Hindu Undivided Family was legally valid and held that the period of eight years had to be counted from the end of the assessment year and not from the end of the previous year. The High Court, on reference by the ITAT at the instance of the assessee, reversed the finding holding, inter alia, that the first notice, issued in the name of the individual, was not invalid in law and consequently the second notice was illegal and the assessment made in pursuance thereto was also illegal. The appeal was allowed by the Supreme Court and it was held that the Assessing Officer could not have validly acted on a return filed by the assessee in the status as an individual. The notice under Section 34 should have been issued to the Hindu Undivided ....
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....iven due credence. All issues arising after the insertion of Section 292B, must be adjudicated by applying the provision. Secondly, in the said case, the assessment year itself was wrongly mentioned. The Supreme Court in the appeal noticed that the assessee had raised an objection before of the Assessing Officer during the assessment proceedings but there was no reply or clarification by the Assessing Officer. 34. In P.V. Doshi v. Commissioner of Income Tax, Gujarat, [1978] 113 ITR 22 (Guj.) it was held that the pre-conditions for initiation of reassessment are jurisdictional requirements and these are conditions precedent which must be satisfied before the Assessing Officer invokes and exercises the jurisdiction under Section 147/148 of the Act. These jurisdictional pre-conditions cannot be conferred by consent as jurisdiction is not conferred by waiver, acquiescence or estoppel. The three jurisdictional pre-conditions mentioned by the High Court are (i) the Assessing Officer should have reason to believe, (ii) should record the reasons in writing and (iii) should obtain sanction when required. In the present case, the tribunal has not held that the three pre-conditions are mis....
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....the assessee was having dual capacity as a Karta of an HUF and as an individual. The notice did not specify the capacity in which the assessee was sought to be assessed. The assessment years in question were 1971-72 and 1975- 76. The High Court noticed the factual aspects of the case that there was partition of the HUF but the said aspect itself was in dispute and debatable. The said dispute/debate caused prejudice and the High Court was of the opinion that the failure to mention the status in the notice for reassessment was not a mere procedural or a technical defect but a substantive defect. 38. In Bhagwan Devi Saraogi and Others v. Income Tax Officer, 'E' Ward and Others, [1979] 118 ITR 906 (Cal.) the notice for reopening did not mention that the income was being assessed in the status of association of persons and, therefore, was treated as null and void. 39. In Jayanthi Talkies Distributors v. Commissioner of Income Tax, [1979] 120 ITR 576 (Mad.), notice was served on a person who was not specifically empowered or authorized to receive notice and personal service was not affected. In the said case, best judgment assessment order was passed under Section 144 of the Act. T....
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....mined and dealt with by us above. Service of notice is not the jurisdictional pre-condition but a matter pertaining to making of the order of assessment. Before an assessment order is passed, the notice must be served. As noticed above, on 21st February, 2002, Vijay Narain Seth, Director of the respondent company appeared before the Assessing Officer. The respondent had also filed some details before the Assessing Officer who passed the assessment order. 42. In Commissioner of Income Tax v. Anand and Company [1994] 207 ITR 418 (Cal.), it has been observed as under:- "In our view, the Tribunal has taken an unduly technical view of the whole matter. The judiciary in this country has never gone on technical triviality. Even in the litigation of private parties, the courts have shown a wide measure of forgiveness in similar acts of omission or failure as pointed out by learned counsel for the Revenue. (See Gouri Kumari Devi's case [1959] 37 ITR 220). At page 223 of the Reports, the Patna High Court has observed as follows: "With regard to the analogous provisions of Order 6, rule 14, there is authority for the view that the omission or failure on the part of the plaintiff to s....
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....eme Court in Balchand v. ITO [1969] 72 ITR 197 (SC) wherein it was held that in construing a statutory notice, extraneous evidence may be looked into to find out whether the technical defects or lacuna had any effect on the validity of the notice. The facts had revealed that though there were defects in drafting the preamble of the notice, it did not affect its validity as the notice itself clearly informed the assessee that he had to file a return of income for the relevant year. 46. In Chief Forest Conservator, Government of Andhra Pradesh v. Collector [2003] 3 SCC 472, the Supreme Court examined the question of misdescription or misnomers of parties and the effect thereof and it was held as under:- "12. It needs to be noted here that a legal entity - a natural person or an artificial person - can sue or be sued in his/its own name in a court of law or a tribunal. It is not merely a procedural formality but is essentially a matter of substance and considerable significance. That is why there are special provisions in the Constitution and the Code of Civil Procedure as to how the Central Government or the Government of a State may sue or be sued. So also there are special pr....