High Court Of Gujarat
Gujarat State Plastic Manufacturers Association VS. DDIT (Exemption)
Assessment Year : 2010-2011
Section : 143, 10
M.R. Shah And Ms. Sonia Gokani, Jj.
Special Civil Application No. 4003 Of 2013
June 25, 2013
JUDGMENT
M.R. Shah, J. – By way of this petition under Article 226 of the Constitution of India, petitioner – assessee has prayed for an appropriate order to hold that the notice under section 143(2) of the Income Tax Act (hereinafter referred to as “the Act” for short) dtd. 26/9/2012 is illegal and void as beyond the period mentioned in the first proviso to section 143(2) of the Act. It is also further prayed to quash and set aside the consequent assessment order passed for the Assessment Year 2010-11 dtd. 26/3/2013 computing total income of Rs.3,47,63,560/-and raising demand of Rs.1,48,72,320/- and that the penalty proceedings under notice dtd. 28/3/2013 under section 274 read with section 271(1)(c) of the Act.
2. At the outset, it is required to be noted that the impugned notice issued under section 143(2) of the Act and the consequent assessment order for the Assessment Year 2010-11 dtd. 26/3/2013 are mainly challenged on the ground that notice issued under section 143(2) of the Act dtd. 26/9/2012 has been issued beyond the period mentioned in the first proviso to section 143(2) of the Act. No other submissions have been made.
3. It is the case on behalf of the petitioner that returnof income for A.Y. 2010-11 claiming exemption of Rs.5,09,70,716/- was filed on 29/4/2011. That the said return was processed under section 143(1) of the Act on 30/8/2011. That notice under section 143(2) of the Act came to be issued by the respondent on 26/9/2012 which actually came to be served upon the petitioner – assessee on 1/10/2012. It is the case on behalf of the petitioner that considering the first proviso to section 143(2) of the Act, notice under section 143(2) of the Act was required to be served within a period of six months from the end of accounting year only in which returns were filed and therefore, notice was required to be served by the petitioner – assessee on or before 30/9/2012. However, the said notice was served on the petitioner on 1/10/2012 i.e. beyond the period prescribed in the proviso to section 143(2) of the Act, and therefore, the said notice under section 143(2) of the Act is invalid and consequent assessment order dtd. 26/3/2013 passed on the basis of the aforesaid in valid notice deserves to be quashed and set aside.
4. Mr. Manish Kaji, learned counsel appearing on behalf of the petitioner has heavily relied upon the decision of the Division Bench of this Court in the case of Dy. CIT v. Maxima Systems Ltd. [2012] 344 ITR 204 (Guj.) and in the case of Dy. CIT v. Mahi Valley Hotels & Resorts [2006] 287 ITR 360 (Guj.). He has also relied upon the decision of the Hon’ble Supreme Court in the case of Asstt. CIT v. Hotel Blue Moon [2010] 321 ITR 362/188 Taxman 133.
4.1 Mr. Kaji, learned counsel appearing on behalf of the petitioner has submitted that in the case of Maxima Systems Ltd. (supra), relying upon the decision of the Hon’ble Supreme Court in the case of Hotel Blue Moon (supra) and decision of the Division Bench of this Court in the Mahi Valley Hotels & Resorts (supra), the Division Bench has held that according to the proviso to section 143(2) of the Act, no notice under section 143(2) can be served on the assessee after the expiry of 12 months from the end of the month in which the return is furnished. It is submitted that it is further observed and held in the said decision that the jurisdiction to frame the assessment under section 143(3) pursuant to the notice under section 143(2) can be assumed only if the notice is served on the assessee within a period of 12 months in which the return was filed. It is submitted that by holding so and as it was found that notice issued under section 143(2) of the Act was served upon the assessee, after the expiry of the prescribed period mentioned section 143(2) of the Act, the Division Bench confirmed the order passed by the ITAT quashing and setting aside the order of CIT(A) confirming the order of assessment.
By making above submissions and relying upon the above decisions, it is requested to allow the present Special Civil Application and grant the reliefs as prayed for.
5. Present petition is opposed by Mr. M.R. Bhatt, learned counsel appearing on behalf of the revenue. It is submitted that as such in the facts and circumstances of the case, the decisions relied upon by the learned counsel appearing on behalf of the petitioner shall not be applicable. It is submitted that as such notice under section 143(2) of the Act was in fact, issued on 26/9/2012 which was sent to assessee by Speed Post as one of the mode as mentioned in section 282 of the Act and 30/9/2012 (last date of service of the notice) was Sunday and the postal department was closed and therefore, on the very next available day i.e. on 1/10/2012 (Monday), notice under section 143(2) of the Act has been served. Therefore, relying upon section 10 of the General Clauses Act and applying the analogy / logic of section 10 of the General Clauses Act, it can be said that the notice has been served within prescribed period mentioned under proviso to section 143(2) of the Act and therefore, the said provision has been strictly complied with. In support of his above submissions, Mr. Bhatt, learned counsel appearing on behalf of the revenue has heavily relied upon the decision of the Hon’ble Supreme Court in the case of HUDA v. Dr. Babeswar Kanhar [2005] 1 SCC 191 and in the case of Mohd. Ayub v. State of Uttar Pradeshthrough Principal Secretary [2009] 17 SCC 70 and in the case of Harinder Singh v. S. Karnail Singh AIR 1957 SC 271. Relying upon the aforesaid decisions of the Hon’ble Supreme Court it is further submitted by Mr. Bhatt, learned counsel appearing on behalf of the revenue that as observed by the Hon’ble Supreme Court in the said decisions, it is general principle that the party prevented from doing any act by some circumstances beyond his control, can do so at the first opportunity. It is submitted that, it is further observed by the Hon’ble Supreme Court that law does not compel performance of impossibility. It is submitted that in the present case service of notice upon the assessee on 30/9/2012 was beyond the control of the department as 30/9/2012 was holiday and postal department was closed and on the very next day i.e. first subsequent opportunity i.e. on 1/10/2012 – Monday, notice has been served and therefore, notice under section 143(2) of the Act can be said to have been served within the prescribed period mentioned in breach to section 143(2) of the Act.
By making above submissions and relying upon above decisions, it is requested to dismiss the present Special Civil Application.
6. Heard the learned counsel appearing on behalf of the respective parties at length. The short question which is posed for consideration of this Court in the present petition is, whether in the facts and circumstances of the case when notice under section 143(2) of the Act which was required to be served upon the assessee on or before 30/9/2012 (considering the proviso to section 143(2) of the Act) is actually served upon the assessee on 1/10/2012 i.e. on Monday – 30/9/2012 was holiday and the postal department was closed, can it be said that notice under section 143(2) of the Act upon the assessee has been served within the period mentioned in the first proviso to section 143(2) of the Act and can it be said that there is sufficient compliance of proviso to section 143(2) of the Act?
6.1 At the outset, is required to be noted and it is not in dispute that the notice under section 143(2) of the Act was in fact issued by the department on 26/9/2012 and the same was sent by Speed Post as one of the mode prescribed under section 282 of the Act. It is not in dispute that considering the proviso to section 143(2) of the Act, notice under section 143(2) of the Act was required to be served upon the assessee on or before 30/9/2012. However, 30/9/2012 was the holiday and postal department was closed and therefore, notice under section 143(2) of the Act was served upon the assessee on the first subsequent opportunity i.e. on the next working day on 1/10/2012 i.e. on Monday. It is not in dispute that 30/9/3012 being Sunday was holiday. It also cannot be disputed that when the notice was issued by the department on 26/9/2012 by Speed Post and the same was dispatched on 27/9/2012 under normal circumstances and if 30/9/2012 would not have been holiday – Sunday, notice as such would have been served upon the assessee on or before 30/9/2012. However, as 30/9/2012 being Sunday was holiday, notice upon the assessee could not be served on that day and in fact the same could be served upon the assessee on the very next working day i.e. 1/10/2012 – Monday. The learned counsel appearing on behalf of the revenue has heavily relied upon section 10 of the General Clauses Act, which reads as under :—
“10. Computation of time.—(1) Where, by any Central Act or regulation made after the commencement of this Act, any act or proceedings is directed or allowed to be done or taken in any court or office on a certain day or within a prescribed period, then, if the court or office is closed on that day or the last day of the prescribed period, the act or proceedings shall be considered as done or taken due to time if it is done or taken on the next day afterwards on which the court or office is open:
Provided that nothing in this section shall apply to any act or proceeding to which the Indian Limitation Act, 1877 (15 of 1877), applies.
(2) This section applies also to all Central Acts and regulations made on or after the fourteenth day of January, 1887.”
6.2. Identical question came to be considered by the Hon’ble Supreme Court in the case of Dr. Babeswar Kanhar (supra) and Mohd. Ayub (supra) and somewhat in similar set of facts, it is observed and held by the Hon’ble Supreme Court that logic and analogy of section 10 of the General Causes Act can be applied. In the case before the Hon’ble Supreme Court in the case of Dr. Babeswar Kanhar (supra), allottee was required to intimate / convey in writing about non-acceptance by him within a period of 30 days failing which there shall be forfeiture of earnest money deposited and as such by letter dtd. 28/11/2001 (within a period of 30 days) the allottee conveyed the non-acceptance. However, HUDA office was closed on 1/12/2001 and 2/12/2001 and 30/11/2001 being postal holiday and therefore, on the next day, after the closure period i.e. 3/12/2001 letter was served on HUDA and to that applying analogy / logic of section 10 of the General Clauses Act, it was held by the Hon’ble Supreme Court that there is sufficient compliance by the allottee and it was held that there was a valid performance and sufficient compliance by the allottee. While holding so, in para 5 it is observed and held as under :—
“What is stipulated in clause 4 of the letter dtd. 30/10/2001 is a communication regarding refusal to accept the allotment. This was done on 28/11/2001. Respondent 1 cannot be put to loss for the closure of the office of HUDA on 1/12/2001 and 2/12/2001 and the postal holiday on 30/11/2001. In fact he had no control over these matters. Even the logic of Section 10 of the General Clauses Act, 1897 can be pressed into service. Apart from the said section and various provisions in various other Acts, there is a general principle that a party prevented from doing an act by some circumstances beyond his control, can do so at the first subsequent opportunity [see Sambasiva Chari v. Ramasami Reddi [1898] 8 MLJ 265 : ILR 22 Mad 179]. The underlying object of the principle is to enable a person to do what he could not done on a holiday, on the next working day. Where, therefore, a period is prescribed for the performance of an act in a court or office, and that period expires on a holiday, then the act should be considered to have been done within that period if it is done on the next day on which the court or office is open. The reason is that law does not compel the performance of an impossibility [See Hossein Ally v. Donzelle, ILR (1880 5 Cal 906 : 6 CLR 239]. Every consideration of justice and expediency would require that the accepted principle which underlies Section 10 of the General Clauses Act should be applied in cases where it does not otherwise in terms apply. The principles underlying are lex non cogit ad impossibilia (the law does not compel a man to do the impossible) and actus curiae neminem gravabit (the act of court shall prejudice no man). Above being the position, there is nothing infirm in the order passed by the forums below. However, the rate of interest fixed appears to be slightly on the higherside and is reduced to 9% to be paid with effect from 3/12/2001 i.e. the date on which the letter was received by HUDA.”
6.3. Identical question also came to be considered by the Hon’ble Supreme Court in the case of Mohd. Ayub (supra) and in the said decision similar view is taken and it is held that there is a general principle that a party prevented from doing an act for some reasons beyond his control can do so at the first subsequent opportunity. It is further held that the said principle is based on the doctrine law does not compel performance of an impossibility.
6.4 Considering the aforesaid decisions of the Hon’ble Supreme Court and the observations made therein and the facts of the case on hand, the ratio laid down by the Hon’ble Supreme Court in the aforesaid decisions is squarely applicable to the facts of the present case. As stated above, the notice was in fact issued on 26/9/2012 which was sent by Speed Post and the last date for service of the notice under section 143(2) was 30/9/2012 which was postal holiday – Sunday and therefore, notice under section 143(2) of the Act came to be served upon the assessee on the very next working day i.e. on 1/10/2012 – Monday and therefore applying the logic of section 10 of the General Clauses Act and the aforesaid decisions it cannot be said that the notice is barred by the period stipulated in section 143(2) of the Act. In the aforesaid facts and circumstances of the case, it can be said that there is sufficient compliance of section 143(2), more particularly first proviso to section 143(2) of the Act and therefore, it cannot be said that the notice under section 143(2) of the Act is invalid and consequently it cannot be said that the assessment order is bad on the aforesaid ground.
6.5 Now, so far as the reliance placed upon the decisions of this Court in the case of Maxima Systems Ltd. (supra) and in the case of Mahi Valley Hotels & Resorts (supra), are concerned, on facts the said decisions shall not be applicable and/or of any assistance to the petitioner. In the aforesaid two cases, such a controversy of serving notice on the first available day after last date of service was not there. In the aforesaid cases, no such controversy was there which has arisen in the present case. In the aforesaid two decisions, applicability of section 10 of the General Clauses Act and/or applying logic of section 10 of the General Clauses Act was not there. It appears that even in the case of Mahi Valley Hotels & Resorts (supra), notice under section 143(2) was issued after expiry of period of limitation and to that, it was held that assessment was void ab-initio. Under the circumstances, the aforesaid two decisions would not be of any assistance to the petitioner.
7. In view of the above and for the reasons stated above, as it has been found that there is sufficient compliance of section 143(2) of the Act, more particularly as the notice under section 143(2) of the Act has been served on the first available working day i.e. on 1/10/2012 being Monday, it can be said that the notice has been issued within the prescribed period as mentioned in the first proviso to section 143(2) of the Act and therefore, there is sufficient compliance and therefore, notice issued under section 143(2) of the Act is not invalid and therefore, consequential order of assessment is not bad on the aforesaid ground. Under the circumstances, the present Special Civil Application fails and the same deserves to be dismissed and is accordingly dismissed.
[Citation : 359 ITR 516]
