Case Law Details
Infineon Technologies AG AM Campeon Vs DCIT (International Taxation) (Karnataka High Court)
The Karnataka High Court examined the validity of reassessment proceedings initiated against the petitioner for Assessment Year 2010–11 under the Income-tax Act, 1961. The petitioner challenged the reopening on the ground that it was barred by limitation under Section 149, which required issuance of a valid notice within six years from the end of the relevant assessment year.
The Revenue relied on a notice dated 31 March 2017 issued under Section 148, followed by a corrigendum dated 11 April 2017 correcting the assessment year from 2015–16 to 2010–11. The petitioner contended that the notice was actually issued on 4 April 2017, as evidenced by postal records, and therefore fell beyond the limitation period ending on 31 March 2017. The petitioner further argued that the corrigendum was not a mere procedural correction but a substantive change, and hence amounted to a fresh notice issued beyond limitation.
The Court noted that the Revenue failed to establish that the original notice was issued on 31 March 2017. It accepted the petitioner’s evidence showing that the notice was dispatched on 4 April 2017 and delivered on 12 April 2017, rendering it time barred. The Court also examined the contents of the original notice and found that it pertained to Assessment Year 2015–16, not 2010–11. It held that jurisdiction to reopen an assessment arises only upon issuance of a valid notice under Section 148, and the original notice invoked jurisdiction for a different assessment year.
The Court further held that the corrigendum dated 11 April 2017 could not be treated as a mere rectification under Section 292B, as it involved a material change in the assessment year. Consequently, the corrigendum was treated as a fresh notice attempting to invoke jurisdiction for Assessment Year 2010–11, which was issued beyond the prescribed limitation period.
On these grounds, the Court concluded that the reopening proceedings were time barred. It set aside the original notice dated 31 March 2017, the corrigendum dated 11 April 2017, and the subsequent order rejecting the petitioner’s objections. The Court held that the proposed reassessment for Assessment Year 2010–11 was invalid and disposed of the writ petition accordingly.
FULL TEXT OF THE JUDGMENT/ORDER OF KARNATAKA HIGH COURT
The respondent authorities have sought to reopen the assessment of the petitioner for the year 2010-2011. Aggrieved by the same, the petitioner has preferred this writ petition on the ground that the proposed reopening of the assessment is time barred.
2. The respondents contend that the same is not time barred and it has been initiated in accordance with law and prays for dismissal of the writ petition.
3. Given the facts and circumstances of the case, as per the provisions of Section 149 of the Income Tax Act, 1961 as it stood then, the respondents were required to reopen the assessment by issuing a valid notice within a period of six years from the end of relevant assessment year. The said proposition of law is not disputed by either of the parties.
4. In the instant case, the authorities have issued a notice dated 31.03.2017, which reads as under:-
“Whereas I have reason to believe that your income chargeable to tax for the assessment year 2015-16 has escaped assessment within the meaning of section 147 of the Income-tax Act.
I, therefore, propose to assess the income under section for the said assessment year and hereby required you to deliver to me a return in the prescribed form of your income for the said assessment year within 30 days from the date of service of this notice.
This notice is being issued after obtaining the necessary approval of the Commissioner of Income-tax (International Taxation), Bangalore.”
5. Thereafter on 11.04.2017, the authorities have issued a corrigendum which reads as under:-
“This is with reference to the notice issued under section 148 of the Income Tax Act, 1961 dated 31.03.2017. It is to be informed that there has been a typographical error in the notice issued to you wherein the assessment year hasbeen mentioned as 2015-16 instead of 2010-11. Hence, the Assessment Year 2015-16 as mentioned in Line – 2 of the said notice should be read as “Assessment Year 2010-11”.”
6. The case of the petitioner is that though the initial notice is dated 31.03.2017 it was in fact issued on 04.04.2017 and has produced a copy of the track consignment of the relevant post office, which shows that the notice in this case was booked on 04.04.2017 and was delivered on 12.04.2017. Given the period of limitation, the notice was required to be issued on or before 31.03.2017 and the notice issued on 04.04.2017 does not confer the jurisdiction upon the authorities as it becomes time barred.
7. The respondents have not been able to substantiate their contention that it was issued on 31.03.2017 and not on 04.04.2017.
8. Further, the notice states that the income that has escaped assessment within the meaning of Section 147 of the Income Tax Act, 1961 pertains to the assessment year 2015-2016.
9. By way of corrigendum dated 11.04.2017, the authorities have sought to correct the mistake in the original notice and have stated that the same has been issued for the assessment year 2010-2011 and not 20152016.
10. It is contended by the petitioner that the corrigendum dated 11.04.2017 has to be considered as a fresh notice and it cannot be a corrigendum to the earlier notice. What is sought to be corrected is not a mere procedural irregularity as contemplated under Section 292B of the Income Tax Act, 1961 but a material mistake. On the said ground, it is contended that even presuming the date of issuance of first notice is dated 31.03.2017, issuance of the second notice in the style of corrigendum which is admittedly done on 11.04.2017 is time barred.
11. The first notice categorically states that the authorities intend to reopen the assessment to determine to escaped income for the assessment year 2015-2016. The authorities get the jurisdiction to reopen the assessment upon issuance of a notice as contemplated under Section 148 of the Income Tax Act, 1961 and by the first notice, the authorities have invoked their jurisdiction to reopen the assessment for the assessment year 2015-2016 and not 2010-2011. With regard to the assessment year 20102011, it can be said that the authorities have sought to invoke their jurisdiction by issuance of notice dated 11.04.2017 which is styled as corrigendum. By the said corrigendum, it cannot be said that it has sought to cure a procedural irregularity as contemplated under Section 292B of the Income Tax Act, 1961 and it has to be held that they have invoked the jurisdiction to reopen the assessment for the year 2010-2011 only after issuance of the said corrigendum on 11.04.2017 which is clearly time barred.
12. Even otherwise as mentioned above, the petitioner has been able to demonstrate that though first notice is dated 31.03.2017, the same has been issued only on 04.04.2017, which is time barred.
13. For the said reasons, the writ petition succeeds. Hence, the following:-
ORDER
(i) The notice dated 31.03.2017 bearing F.No.148/DCIT-C-2(1)/Intl.Taxn./2016-17 vide Annexure – A to the writ petition passed by the respondent No.1 is hereby set aside.
(ii) A corrigendum bearing F.No.148/DCIT-C-2(1)/Intl Taxn/2017-18 dated 11.04.2017 vide Annexure – C to the writ petition passed by the respondent No.1 is hereby set aside.
(iii) Consequently, the order dated 29.08.2018 bearing F.No.DCIT-IT/C-2(1)/Infineon/10-11 vide Annexure – J to the writ petition wherein the objection of the petitioner has been over ruled by the respondent No.1 is also set aside.
(iv) It is held that the proposed reopening of the assessment of the petitioner for the year 2010-2011 is time barred.
(v) The writ petition is disposed of accordingly.
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