Reopening Notice u/s 147 issued within Limitation Period but served after Limitation Period is valid
Case Law Details
ITO Vs. Lal Chand Agarwal (ITAT Agra Third Member)
It may be mentioned that Section 34(1) of the 1922 Act specifically provides time limit for service of notice for reassessment proceedings within which the reassessment notice had to be served in order that the initiation would be valid. In that state of law, if a reassessment notice was not served within the period prescribed, the proceedings were invalid. The mere issue of such notice within such period was not enough. It was so held by the Hon’ble Allahabad High Court in the case of Sri Niwas Vs. ITO – (1956) 30 ITR 381, CIT Vs. D.V.Ghurye – (1957) 31 ITR 683 (Bom), and CIT Vs. Jokhiram Bal Mukand – (1966) 60 ITR 357 (Punj.). The Hon’ble Supreme Court in the case of R.K.Upadhyaya (supra) has set at rest all the controversies that existed in this regard. Again, the Full Bench of the Hon’ble Punjab & Haryana High Court in the case of Jai Hanuman Trading Co.Pvt.Ltd. Vs. CIT – 110 ITR 36, has held that in the scheme of 1961 Act, a time limit under Section 149 has been prescribed with reference to the issuance of the notice and not with reference to its service. In taking that view, the Punjab Full Bench overruled its own decision of the Division Bench in Tikka Khushwant Singh Vs. CIT – 101 ITR 106 (Punj.). Thus, a notice issued within the period prescribed under Section 149, even though served thereafter, gives a perfectly valid initiation. Reference may be made to the decision of Hon’ble Delhi High Court in New Bank of India Ltd. Vs. ITO – 136 ITR 679. The Punjab decision in 101 ITR 106 (Punj.) was taken up in appeal before the Hon’ble Supreme Court in CIT Vs. Major Tikka Khushwant Singh – 212 ITR 650 where the Hon’ble Supreme Court held that the point of law involved for decision in this appeal is already settled by the decision of Hon’ble Supreme Court in R.K.Upadhyaya (supra). Therefore, now, there should be no controversy after the decision of the Hon’ble Supreme Court in the case of R.K.Upadhyaya (supra) wherein it has been held that the scheme of the Income-tax Act, 1961, so far as notice for reassessment is concerned, is quite different from that of the 1922 Act. A clear distinction has been made out between issuance of notice and service of notice under the 1961 Act. Section 149 of the 1961 Act, which provides the period limitation, categorically provides that no notice under Section 148 shall be issued after the period prescribed has lapsed. Once a notice is issued within the period of limitation, jurisdiction becomes vested in the Assessing Officer to proceed to reassess. The decision of the Hon’ble Supreme Court in Shanabhai P.Patel Vs. R.K.Upadhyaya – 96 ITR 141 has impliedly approved the view taken in Jai Hanuman Trading Co.Pvt.Ltd. (supra), New Bank of India Ltd. Vs. ITO – 136 ITR 679 and Patna Full Bench decision in CIT Vs. Sheo Kumari Debi – 157 ITR 13.
As rightly analyzed by the learned AM, there has been a valid issue of the notice dated 28.3.2005. This notice was sent through speed post and the AO in remand proceedings has specifically pleaded that the entire reassessment was based on the issue of notice dated 28.3.2005. In my view, there has been proper issue of notice within the limitation period of six years and I fully agree with the reasoning and discussion given by the learned AM in this regard to uphold the validity of assessment framed. In fact, that is the only view possible in the light of the authoritative pronouncement of the Hon’ble Supreme Court in the case of R.K.Upadhyaya (supra). Since there is a valid issue of notice, the reassessment is perfectly valid in accordance with law as held by the learned Accountant Member. I entirely agree with him on this issue.
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ITO vs. Lal Chand Agarwal (ITAT Agra Third Member)
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Unless the notice reaches the assessee within the period of limitation, how can the same be taken as proper service of notice? This decision will lead to more troubles to the assessees.