Atul Projects India Private Limited Vs Union of India and anr. (Bombay High Court)
Bombay High Court considered a challenge by Atul Projects India Private Limited concerning the limitation for issuance of a scrutiny assessment notice after defects in the assessee’s original income-tax return had been rectified. The petitioner had filed its return for Assessment Year 2016-17, in which the Income Tax Department pointed out certain defects. According to the petitioner, those defects were removed within the time permitted by the Department. Thereafter, the Assessing Officer issued a notice for scrutiny assessment.
The petitioner contended that the scrutiny notice had been issued beyond the prescribed limitation period if limitation was computed from the date on which the original return had been filed. The Department, however, took the position that limitation should be reckoned from the date on which the defects in the return were removed. The dispute before the Bombay High Court therefore concerned the effect of curing defects in an already-filed return upon the starting point for computing the limitation period for scrutiny proceedings.
Counsel for the petitioner argued that once the defects were removed, such removal would relate back to the date on which the original return had been filed. In support of this proposition, reliance was placed upon Commissioner of Income Tax Vs. Sohan Lal Chhajan Mal, a decision of the Punjab and Haryana High Court. That decision, in turn, referred to CIT Vs. Bharat Refineries Ltd. of the Calcutta High Court. The petitioner also relied upon Prime Securities Limited Vs. Varinder Mehta, Assistant Commissioner of Income-Tax, a decision of the Bombay High Court.
At this stage of the proceedings, counsel appearing for the respondents sought time to file a reply. The Bombay High Court granted time and directed that the matter stand over to 10th January, 2019. Importantly, the Court also granted ad-interim protection to the petitioner by preventing the Assessing Officer from proceeding further with the assessment.
The supplied order is therefore an interim procedural order and does not finally adjudicate the limitation controversy. The Court recorded the competing positions regarding whether curing defects relates back to the original return filing date, noted the authorities relied upon by the petitioner, granted the respondents time to file their reply, and protected the petitioner from further assessment proceedings pending consideration of the matter.
Cases Discussed
- Commissioner of Income Tax Vs. Sohan Lal Chhajan Mal (Punjab & Haryana High Court) — Relied upon by the petitioner in support of the contention that, upon removal of defects in the return, the rectification would relate back to the original date of filing of the return.
- CIT Vs. Bharat Refineries Ltd. (Calcutta High Court) — Referred to through the decision in Commissioner of Income Tax Vs. Sohan Lal Chhajan Mal in support of the petitioner’s contention concerning the effect of curing defects in a return.
- Prime Securities Limited Vs. Varinder Mehta, Assistant Commissioner of Income-Tax (Bombay High Court) — Relied upon by the petitioner in support of its challenge concerning the limitation for scrutiny proceedings.
FULL TEXT OF THE JUDGMENT/ORDER OF BOMBAY HIGH COURT
Case of the Petitioner is that in the return filed by the petitioner for the Assessment Year 2016-2017, the Department had pointed out certain defects. These defects were removed by the petitioner within the time permitted for such purpose. The Assessing Officer has issued notice for scrutiny assessment which is beyond the period of limitation prescribed, considered from the date of filing of the original return. The Department however contends that the period of limitation should be reckoned from the date of removal of the defects. Counsel submitted that upon removal of defects, the same would relate to the date of filing of the return. In this context, he has relied on the decision of Punjab and Haryana High Court in case of Commissioner of Income Tax Vs. Sohan Lal Chhajan Mal1 in which reference is made to the decision of Calcutta High Court in case of CIT vs. Bharat Refineries Ltd.2. Reliance was also placed on the decision of Bombay High Court in case of Prime Securities Limited Vs. Varinder Mehta, Assistant Commissioner of IncomeTax3.
2. Counsel for the respondent prayed for time to file reply.
3. Stand over to 10th January, 2019.
4. By way of adinterim relief, the Assessing Officer is prevented from proceeding further with the assessment.
