Blue Star Ltd , Mumbai vs Department Of Income Tax
- CitationI.T.A. No. 6213/Mum/2011
Ratio decidendi
The rule this decision rests on
The jurisdiction of the Assessing Officer to assess or reassess under section 147 is assumed by the issue of a notice under section 148, not by its service; a notice bearing a date earlier than the date on which the reasons recorded under section 148(2) were signed is not a valid notice, so that the proceedings initiated by it are without jurisdiction and bad in law, and cannot be cured by issuing a later-dated notice retrospectively. The statutory requirement under section 148(2) is the recording of the reasons to believe before the issue of notice under section 148(1); the recording is complete only when the reasons are reduced to writing and signed, and the Assessing Officer's mental satisfaction or information held prior to that date does not by itself satisfy the requirement. An affidavit by the Assessing Officer, filed to contradict the dating of the notice and the recording of reasons on the face of the record, is irrelevant to the question of the validity of the notice and may be refused admission where it seeks to prove a fact contrary to the documents recorded. A defect in the issue of a jurisdictional notice under section 148(1) is not a mere irregularity amenable to the ordinary procedural rule of restoring proceedings to the stage of the irregularity, but goes to the foundation of the jurisdiction to reassess, and the resulting assessment is therefore liable to be quashed.
Written by Miss Lucy from the judgment below, not taken from a headnote.
Judgment
As delivered
ी संजय अरोड़ा, लेखा सद य एवं ी अ मत श ु ला, या यक सद य के सम ।
BEFORE SHRI SANJAY ARORA, AM AND SHRI AMIT SHUKLA, JM
आयकर अपील सं./I.T.A. No. 6213/Mum/2011 ( नधा रण वष / Assessment Year: 2005-06)
Asst. CIT-1(1) Blue Star Ltd.
Room No. 579, Aayakar Bhavan, बनाम/ Kasturi Building, Mumbai-400 020 Vs. Mohan T. Advani Chowk, J. Tata Road, Mumbai - 400 020 थायी ले खा सं . /जीआइआर सं . /PAN/GIR No. AAACB 4487 D (अपीलाथ% /Appellant) : (&'यथ% / Respondent)
अपीलाथ% क( ओर से / Appellant by : Shri Akhilendra Yadav
&'यथ% क( ओर से/Respondent by : Shri Firoz Andhiyarjina & Shri Laxmikant Kothari
सनु वाई क( तार-ख / : 19.02.2015 Date of Hearing घोषणा क( तार-ख / : 18 .03.2015 Date of Pronouncement
आदे श / O R D E R Per Sanjay Arora, A. M.:
This is an Appeal by the Revenue directed against the Order by the Commissioner of Income Tax (Appeals)-I, Mumbai ('CIT(A)' for short) dated 20.06.2011, allowing the Assessee's appeal contesting its assessment u/s.143(3)/147 of the Income Tax Act, 1961 ('the Act' hereinafter) for the assessment year (A.Y.) 2005-06 vide order dated 29.12.2010.
2. The principal issue arising in the instant case is the maintainability or otherwise in law of the assessment proceedings initiated vide notice u/s.148 dated 30.03.2010; the ld.
2 ITA No. 6213/Mum/2011 (A.Y. 2005-06) Asst. CIT vs. Blue Star Ltd.
CIT(A) having quashed the said proceedings on the basis that the said notice is bad in law.
Cases of the respective parties
3. The assessee's case, which found acceptance by the ld. CIT(A), is that he impugned notice u/s.148 cannot be considered as valid for want of satisfaction of the condition of section 148(2) in-as-much as the reason/s for its issue were recorded on 31.03.2010 (copy on record). Clearly, therefore, the same cannot form the basis for the issue of notice on 30.03.2010. The Revenue, on the other hand, contends that the said reason/s, which is per a typed written document, were in fact dictated by the Assessing Officer (A.O.) to his stenographer on 30.03.2010, though actually typed and signed on 31.03.2010. Further, even considering the notice to be dated 31.03.2010, the same would be in time, i.e., within four years of the end of the relevant assessment year and, besides, not vitiated for having been purportedly issued without recording the reasons for the same.
4. We have heard the parties, and perused the material on record.
The assessment proceedings in the instant case were initiated vide notice u/s.148 dated 30.03.2010. This is borne out of the fact of not only the notice (copy on record) being dated 30.03.2010, but also the said date subscribed thereto by the A.O. in his hand below his signature thereon, signifying that the said notice was not only processed, but also signed on that dated (i.e., 30.03.2010). The said notice, thus, irrespective of the date when the steps for its issue may have been initiated, has been issued only on 30.03.2010. Likewise, irrespective of the date when the 'reason/s' informing the A.O.'s belief for the issue of the said notice may have come to his notice or belief as to escapement of income in its respect formed by him, which may well be prior to 31.03.2010, their recording is complete on being signed by him on 31.03.2010, i.e., the date subscribed to the sheet recording the same. This is why an affidavit by the A.O. to the effect that the reason/s were in fact dictated on 30.03.2010, sought to be placed on record by the ld. Departmental Representative (DR), was considered irrelevant and, accordingly, denied 3 ITA No. 6213/Mum/2011 (A.Y. 2005-06) Asst. CIT vs. Blue Star Ltd.
permission by the Bench during hearing. The same rather proves the assessee's case against the Revenue's action. It is only upon affixing his signature on the said sheet of typed paper that renders it as a valid document in law. For all we know, the A.O. may have been in possession of the relevant information or the material, and may thus have had valid grounds to infer escapement of income, forming his reason/s to believe, i.e., in his mind, for long, but it is only upon affixing his signature thereto, recorded in writing, that the process of recording of reasons becomes complete, and could be recognized as such in law, in satisfaction of the mandate of section 148(2). The law, per section 148(2), does not stipulate a procedural requirement of satisfaction by the A.O. (as to escapement of income), but that of recording of the reason/s to believe, and before the issue of notice u/s. 148(1). Again, the assumption of jurisdiction for assessment u/s.147 is by issue of notice u/s.148, and not its service (R. K. Upadhyaya vs. Shanabhai P. Patel [1987] 166 ITR 163 (SC)) which in the present case is on 31.03.2010. The assumption of jurisdiction is thus also not dependent on its subsequent service. A valid service, though mandatory for a valid assessment, is yet procedural, not disturbing the initiation of otherwise legally valid proceedings in law, i.e., where the jurisdiction for assessment stands validly assumed, with the law being amended since, so that w.e.f. 01/4/2010 service could only be agitated where challenged in the assessment proceedings. What has been served on 31.03.2010, a matter subsequent, is not a legally valid notice, so that its service is of no consequence in law. The same, i.e., a valid assumption of jurisdiction u/s. 147, is, accordingly, missing in the present case.
True, the notice u/s. 148, if signed by the A.O. on 31.03.2010 instead of 30.03.2010, i.e., a day later, would have conferred validity to its' issue and, resultantly, to the reassessment proceedings. The same may though appear odd in-as-much as a later action, i.e., in time, would be valid, as against the earlier one, which is not, yet would not in any manner, to our mind, bestow validity in law to the notice issued without adhering strictly to the procedural requirements of the provision. That is, the same cannot be regarded as an irregularity, concern as to it does with the deficiency in the very process of assumption of jurisdiction to assess (or reassess). It was open for the A.O. to issue a fresh 4 ITA No. 6213/Mum/2011 (A.Y. 2005-06) Asst. CIT vs. Blue Star Ltd.
notice u/s. 148(1) on 31.03.2010, that dated 30.03.2010 being bad in law and, thus, not valid. The requirement, though procedural, which generally renders the proceedings as irregular, so that they would need to be restored to the stage at which the same, i.e., the said irregularity, occurred (Guduthur Bros. vs. ITO [1960] 40 ITR 298 (SC)), is strict in- as-much as it concerns a jurisdictional notice. A comparison could be made with the time limitation for the issue of such notice or for the completion of (say) assessment proceedings. The requirement, though procedural, directly impacts the very foundation or edifice on which the legal validity of the ensuing proceedings or document rests.
We are conscious that the apex court in Pooran Mal vs. DIT [1974] 93 ITR 505 (SC) clarified that the test of admissibility of evidence under the Indian jurisprudence lies in its relevance, so that even materials or information found during or as a result of an illegal search could also be put to use or relied on in framing an assessment. Why, even independent of the said decision, an assessment could only be on the strength of the materials and, further, upon duly confronting the same to the assessee, and the validity of the reliance would not be impacted on the process or the manner in which the information/material has came in the possession of the Revenue. So, however, it is the validity of the assessment proceedings itself that is at stake in the present case. The proceedings initiated without a valid notice u/s. 148(1) cannot be recognized in the eyes of the law.
5. In view of the foregoing, we declare the impugned notice u/s.148 and, consequently, the assessment proceedings initiated thereby, as bad in law. The quashing of the assessment is consequently upheld. We decide accordingly.
6. In the result, the Revenue's appeal is dismissed.
प1रणामतः राज व क( अपील खा1रज क( जाती है ।
Order pronounced in the open court on March 18 , 2015
Sd/- Sd/-
(Amit Shukla) (Sanjay Arora) या यक सद य / Judicial Member लेखा सद य / Accountant Member 5 ITA No. 6213/Mum/2011 (A.Y. 2005-06) Asst. CIT vs. Blue Star Ltd.
मुंबई Mumbai; 5दनांक Dated :18 .03.2015 व. न.स./Roshani, Sr. PS
आदे श क" # त%ल&प अ'े&षत/Copy of the Order forwarded to :
1. अपीलाथ% / The Appellant
2. &'यथ% / The Respondent
3. आयकर आयु त(अपील) / The CIT(A)
4. आयकर आयु त / CIT - concerned
5. 8वभागीय & त न;ध, आयकर अपील-य अ;धकरण, मुंबई / DR, ITAT, Mumbai
6. गाड> फाईल / Guard File आदे शानस ु ार/ BY ORDER,
उप/सहायक पंजीकार (Dy./Asstt. Registrar) आयकर अपील य अ धकरण, मुंबई / ITAT, Mumbai
This page reproduces a public judgment and a summary of it. It is research material, not legal advice, and it is no substitute for advice from an advocate on your own facts.
Research this judgment with Miss Lucy
Ask what it holds, what has followed it, and what it means for your matter — in plain English, with the citations.
Try Miss Lucy free