High Court Of Allahabad
Tulsi Food Products vs. DCIT
Section 144A, 143(2)/115WD, 139(1), 2(9), 292BB
Asst. Year 2007-08
Devi Prasad Singh & Dr. Satish Chandra,JJ.
Misc. Bench No. 3505/2009
3rd April, 2012
Counsel appeared:
Shalabh Singhf for the Petitioner.: Sanjeev Shankhdhar for the Respondent
DR. SATISH CHANDRA, J.
By this writ petition, the petitioner has assailed the impugned order dated 24.03.2009 (Annexure-5) under Section 144A of the Income-Tax Act, 1961, also impugned notice dated 26.09.2008 (Annexure-2) under Section 143(2)/115WD, passed by the opposite parties for the assessment year 2007-08.
Sri Shalabh Singh, learned counsel for the petitioner submits that the return under Section 139(1) of the Income Tax Act, 1961 (for short, ‘the Act’) was filed on 24.07.2007 though the last date was 31.07.2007. He also submits that the opposite party had issued a notice on 26.09.2008 under Section 143(2)/115WE(2) of the Act. The objections filed by the assessee were rejected by the Additional Commissioner as well as the Assessing Officer on the ground that in the Finance Bill, 2008, proviso to Section 143(2) has been amended and now, it is provided that no notice under Section 143(2)(ii) shall be served on the assessee, after the expiry of six months from the end of the financial year, in which the return is furnished.
According to the learned counsel, the petitioner has filed the return on 24.07.2007, a notice could not have been served on/or before 23.07.2008 or maximum by the end of month i.e. 01.08.2008 i.e. one year. For this purpose, he has submitted that the provision applicable for the assessment year 2007-2008, categorically lays down that the notice under Section 143 (2)/115WE(2) has to necessarily be served within 12 months from the end of the month in which the return was furnished. However, in the instant case, the impugned notice has actually served on 26.09.2008 which is beyond the limitation period twelve months ending 31.07.2008, laid alone the service of the said notice, which was made on 30.09.2008. He read out provision to Section 143(2) of the Act, which on reproduction, reads as under:
“Provided that no notice under clause(ii) shall be served on the assessee after the expiry of six months from the end of the financial year in which the return is furnished.”
4. The return is furnished in the month of July, 2007, therefore, the impugned notice under Section 143(2) has necessarily to be served not later on expiry of twelve months from the end of the month in which the return was filed, meaning thereby, a notice was to be served on or before 01.08.2008, but in the instant case, the notice was issued beyond twelve months i.e. on 26.09.2008.
5. To support his arguments, he relied on the ratio laid down in the case of Premier Cable Co. Ltd. vs. Commissioner of Income-Tax, (1999) ITR Vol.-237, Page 202, where the assessment year has been defined as under:
“Section 2(9) of the Income-tax Act, 1961 defines the assessment year to be the period of 12 months commencing on the first day of April every year. It is a standard period of 12 months commencing on April 1 ofevery year. It does not depend upon one or other assessee and whether or not he had a previous year relevant to a particular assessment. It is as invariable as the calender year.”
He also submits that in the instant case, thecalender year will have to apply. Lastly, he made a request that the impugned order/notice may kindly be set aside.
On the other hand, Sri D.D. Chopra, learned counsel for the Department relied on the impugned order. He submits that on a plain reading of the amended proviso as well as old proviso, it is seen that it does not say anything about the return of any particular assessment year which has been furnished. Neither it speaks of assessment year 2007-08; nor 2008-09, 2009-10 alike. In a financial year, returns can be filed for different assessment years. Therefore, the ground that the amended proviso does not apply to the assessment year 2007-08, has no meaning.
He further submits that in the instant case, the return of income has been furnished on 24.07.2007 i.e. during the financial year 2007-08, therefore, as per amended proviso to Section 143(2) w.e.f. 01.04.2008, the period of six months expires on 30.09.2008. Notice under Section 143(2) was issued on 26.09.2008 and the same was served on 29.09.2008 upon the assessee which is well in time. So, the direction issued under Section 144A of the Act is valid one.
Learned counsel for the Department has drawn the attention to the explanatory notes to the provisions of the Finance Act, 2008 (Circular No. 1/2009) where it was mentioned that the amendment has been made applicable with effect from 1st April, 2008. This means that the amended provision shall apply in all proceedings which are pending on 1st April, 2008 as applicable in the case of Section 292BB. On the similar analogy, he further submits that the proceedings of the assessee were pending and the amended proviso is applicable in the assessee’s case. Lastly, he made a request to dismiss the petition.
We have heard both the parties at length and gone through the material available on records.
From the perusal of the record, it appears that proviso to Section 143(2)(i), prior to 01.04.2008 reads as under:
“Provided that no notice under clause (ii) shall be served on the assessee after the expiry of twelve months from the end of the month in which the return is furnished.”
Later, the said proviso after the Finance Act, 2008 w.e.f. 01.04.2008 was amended and the amended provision reads as under:
“Provided that no notice under clause (ii) shall be served on the assessee after the expiry of six months from the end of the financial year in which the return is furnished.”
(Emphasis added)
In the instant case, the return was filed on 24.07.2009. As per thethen law i.e. prior to amendment, the period was twelve months from the end of month in which the return is furnished. Twelve months means calender months and certainly not assessment year.
Needless to mention that if there are two interpretations then the interpretation favourable to assessee will have to be adopted as per the ratio laid down in the case of CIT vs. Shaan Finance (P) Ltd., (1998) 231 ITR 308 (SC).Relied.
Thus, the beneficial provision to assessee will have to be adopted.
Further, in the case of Jai Kumari and Dilharkumari vs. CIT,(1986) 165 ITR 792, it was observed as under:
“Law to be applied is that in force in assessment year.-Though the subject of the charge is the income ofthe previous year, the law to be applied is that in force in the assessment year, unless otherwise stated or implied; and any amendment which is in force at the beginning of the relevant assessment year must govern the case though the amendment is made after the income under assessment is earned. In other words, the Income-tax Act is it stands amended on the 1st April of a financial year must apply to theassessment for that year.”
That is also the view taken by the Gujarat High Court inManeklalVallabhdas Parikh’s case [1969] 72 ITR 637.
In the instant case, twelve moths’ period from the end of the month in which the return was filed, expires in 31st July, 2008, so a notice was supposed to be served maximum on/or before 1st August, 2008, but it was given on 26.09.2008. It is belated less than about two months. When the notice was issued after the expiry of the period of limitation, the effect of proceeding is void as per ratio laid down by the Gujarat High Court in Deputy Commissioner of Income-tax vs. Mahi Valley Hotels and Resorts, (2006) 287 ITR 360 (Guj.). It is well settled that if any notice issued by the department is invalid for any reason, entire proceedings taken by the department would become void for want of jurisdiction as per ratio laid down in the case of CIT vs. KurbanHussain, (1971) 271 ITR 821 (SC).
In view of above, it appears that the impugned order/notice were issued by the Department were not within the period prescribed and it was barred by about less than two months, therefore, the same cannot be sustained in the eye of law.
In view of above, the petition filed by the petitioner succeeds and allowed. The impugned order dated 24.03.2009 passed under Section 144A of the Act, and impugned notice dated 26.09.2008 passed under Section 143(2) and 115WD are set aside.
No cost.
[Citation : 380 ITR 192]
