Sub-section (2) of section 143 of the Income-tax Act provides that the notice under this sub-section shall be served on the assessee within a period of twelve months from the end of the month in which the return is furnished. Further, the service of such notice must be affected in a manner laid down in sections 282, 283 and 284 of the Income-tax Act, read with General Clauses Act.
Instances have come to the notice of the department, where notices under subsection (2) of section 143, though issued by registered post within twelve months from the end of the month in which the return was furnished, have been held ‘invalid’ on the ground that the notice was actually received by the assessee after the limitation date and there was no ‘service’ as postulated under the section. This is notwithstanding the fact that the assessee has attended the assessment proceedings in response to the notice served on him. Instances have also come to notice where the orders of the assessing officer is being quashed on the consideration that there is no evidence of issue or service of notice, even though the assessee and his authorized representative have attended the hearing before the Assessing Officer during the assessment proceedings. Further, the design of the limitation period with reference to the end of the month leads to administrative inconvenience in as much as the last day of every month becomes a time barring date.
In order to address these issues and to reduce litigation, a new section 292BB in the Income-tax Act has been inserted and the provision of sub-section (2) of section 143 has been amended.
New Section 292BB provides that where an assessee has appeared in any proceeding or cooperated in any inquiry related to an assessment or reassessment, it shall be deemed that any notice under any provision of this Act has been duly served upon him in time in accordance with the relevant provision of the Act. Further, such assessee shall be precluded from taking any objection in any proceeding or inquiry under this Act that the notice was, –
(a) not served upon him; or
(b) not served upon him in time; or
(c) served upon him in an improper manner.
However, the provision of this section shall not apply where the assessee has raised such objection before the completion of the assessment or reassessment.
Similar amendment has also been carried out in the Wealth-tax Act.
Further, clause (ii) of sub-section (2) of section 143 of Income-tax Act has been amended to provide that the notice under sub-section (2) of section 143 shall be served on the assessee within a period of six months from the end of the financial year in which the return is furnished.
Applicability: This amendment has been made applicable with effect from 1st April, 2008. This means that the provision of new section 292BB shall apply in all proceedings which are pending on 1st April, 2008.
Similarly the amended provision of sub-section (2) of section 143 shall apply to all such returns ( irrespective of the assessment year to which the returns pertain) where notice under sub-section (2) of section 143 can still be issued on 1st April 2008 under the pre-amended provision.
For example, assessee “A” files his tax return on 31st March 2007, Assessee “B” files his tax return on 15th April 2007 and assessee “C” files his tax return on 16th October 2007. As on 1st April, 2008 notice under the pre-amended provision of subsection (2) of section 143 could not have been issued in case of “A” and could have been issued in cases of “B” and “C”. Hence, the new provision shall apply for returns filed by “B” and “C” but not for return filed by “A”. In cases of returns filed by “B” and “C”, the notice under sub-section (2) of section 143 can be served on the Assessee on or before 31st September 2008. Any notice served on assessee in these two cases, after this date, will not be valid.
Note: Above is the Analysis of Amendment made by The Finance Act, 2008.