ITO vs. Dharam Narain (Supreme Court) - 27 Feb 2018
1- The question, therefore, that arises in the writ petition was whether in such circumstances the requirement under Section 143(2) of the Income Tax Act, 1961 was met by the Revenue. The High Court answered the question in the negative taking the view that what is required to be satisfied by the Revenue is service of notice and not mere issuance thereof,
2- The non-availability of the respondent – Assessee to receive the notice sent by registered post as many as on two occasions and service of notice on 19th October, 2006 on the authorized representative of the respondent Assessee whom the respondent Assessee now disowns, in our considered view, is sufficient to draw an inference of deemed service of notice on the respondent – Assessee and sufficient compliance of the requirement of Section 143(2) of the Income Tax Act, 1961.
3- Learned counsel for the petitioner submitted that in view of the specific provision as the notice was not served within 12 months from the end of the month in which was return was furnished, the return having been filed on 17.10.2005 i.e. after the expiry of the period of 12 months from the end of October 2005, the notice u/s 143(2) was clearly barred by limitation and therefore, the entire proceedings is barred by limitation as held by Hon'ble Supreme Court in case of CIT Vs. Sahara India Savings and Investment Corporation Ltd.(2010),
4- We have given our thoughtful consideration to the various pleas raised by the learned counsel for the parties. We find that admittedly the notice for the assessment year 2005-2006 was issued on 16.10.2006 u/s 143(2) of the Act. Though it was issued on 16.10.2006 it was served upon the petitioner on 2.11.2006. The proviso to Section 143(2)(ii) of the Act specifically provides that no notice shall be served on the assessee after the expiry of 12 months from the end of the month in which return has been furnished. The Parliament by en-acting the aforesaid proviso specifically, intended that the notice had to be served within a specified period and mere issue of a notice would not be sufficient. The notice had to be served upon the assessee within the period of 12 months from the end of the month on the day return has been filed.
5- In the present case service on the authorized representative on 19.10.2006 cannot be treated to be a valid service in the eyes of law. The service has to be upon the assessee which in the present case was served on 2.11.2006
The principle laid down by Hon'ble Supreme Court in case of Assistant Commissioner of Income Tax and another Vs. Hotel Blue Moon;(2010) 3 SCC 259 would be fully applicable to the facts of the present case. Therefore, the notice dated 16.10.2006 filed as Annexure-2 to the writ petition which has been served on the petitioner on 2.11.2006 was clearly barred by limitation. The entire proceedings is, therefore, quashed.
For reading full text of the case please refer link - http://itatonline.org/archives/ito-vs-dharam-narain-supreme-court-s-1432-service-of-notice-if-the-assessee-is-not-available-to-take-service-of-the-s-1432-notice-service-on-the-authorized-representative-is-sufficient-to-draw/dharam-narain-143-2-notice/
Some of the important areas of discussion for easy reference-
1- The question, therefore, that arises in the writ petition was whether in such circumstances the requirement under Section 143(2) of the Income Tax Act, 1961 was met by the Revenue. The High Court answered the question in the negative taking the view that what is required to be satisfied by the Revenue is service of notice and not mere issuance thereof,
2- The non-availability of the respondent – Assessee to receive the notice sent by registered post as many as on two occasions and service of notice on 19th October, 2006 on the authorized representative of the respondent Assessee whom the respondent Assessee now disowns, in our considered view, is sufficient to draw an inference of deemed service of notice on the respondent – Assessee and sufficient compliance of the requirement of Section 143(2) of the Income Tax Act, 1961.
3- Learned counsel for the petitioner submitted that in view of the specific provision as the notice was not served within 12 months from the end of the month in which was return was furnished, the return having been filed on 17.10.2005 i.e. after the expiry of the period of 12 months from the end of October 2005, the notice u/s 143(2) was clearly barred by limitation and therefore, the entire proceedings is barred by limitation as held by Hon'ble Supreme Court in case of CIT Vs. Sahara India Savings and Investment Corporation Ltd.(2010),
4- We have given our thoughtful consideration to the various pleas raised by the learned counsel for the parties. We find that admittedly the notice for the assessment year 2005-2006 was issued on 16.10.2006 u/s 143(2) of the Act. Though it was issued on 16.10.2006 it was served upon the petitioner on 2.11.2006. The proviso to Section 143(2)(ii) of the Act specifically provides that no notice shall be served on the assessee after the expiry of 12 months from the end of the month in which return has been furnished. The Parliament by en-acting the aforesaid proviso specifically, intended that the notice had to be served within a specified period and mere issue of a notice would not be sufficient. The notice had to be served upon the assessee within the period of 12 months from the end of the month on the day return has been filed.
5- In the present case service on the authorized representative on 19.10.2006 cannot be treated to be a valid service in the eyes of law. The service has to be upon the assessee which in the present case was served on 2.11.2006
The principle laid down by Hon'ble Supreme Court in case of Assistant Commissioner of Income Tax and another Vs. Hotel Blue Moon;(2010) 3 SCC 259 would be fully applicable to the facts of the present case. Therefore, the notice dated 16.10.2006 filed as Annexure-2 to the writ petition which has been served on the petitioner on 2.11.2006 was clearly barred by limitation. The entire proceedings is, therefore, quashed.
For reading full text of the case please refer link - http://itatonline.org/archives/ito-vs-dharam-narain-supreme-court-s-1432-service-of-notice-if-the-assessee-is-not-available-to-take-service-of-the-s-1432-notice-service-on-the-authorized-representative-is-sufficient-to-draw/dharam-narain-143-2-notice/
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