COMMISSIONER OF INCOME TAX vs. KC TAPEDAR
What did the High Court hold?
The High Court held that Shri Sanjay Chaudhary was duly authorized to receive the notice under Section 143(2) on behalf of the assessee. The judgment noted that Sanjay Chaudhary had represented the assessee in earlier years and attended proceedings in response to the notice. Crucially, no objection regarding the validity of the notice was raised by the assessee during the assessment proceedings, and no evidence was produced to show that Sanjay Chaudhary was no longer the authorized representative. The Court found that the provisions of Section 292-B of the Act would protect the assessment order from being declared void for want of proper service in these circumstances. Therefore, the CIT(A) and the Tribunal were not justified in holding the assessment order to be vitiated. The substantial questions of law were answered in favor of the revenue. The orders of the CIT(A) and the Tribunal were set aside, and the matter was remanded to the CIT(A) for decision on merits.
What were the facts?
The assessee, Sh. K.C. Tapedar, filed an income tax return for assessment year 1998-99, declaring an income of Rs. 14,51,028. The return was processed under Section 143(1)(a), and the case was selected for scrutiny. A notice under Section 143(2) was issued on 29.9.1999 and served on Sh. Sanjay Chaudhary on behalf of the assessee. The Assessing Officer completed the assessment under Section 143(3) on 16.2.2001, making additions and assessing income at Rs. 21,27,100. The CIT(A) allowed the assessee's appeal on the technical ground that the notice under Section 143(2) was served on an unauthorized representative. The Tribunal upheld the CIT(A)'s order. The revenue appealed to the High Court.
What were the issues?
1. Whether on the facts and in the circumstances of the case, the assessment can be annulled on the ground that notice u/s 143(2) was not served upon the assessee personally but upon one of his subordinates? (Question of law and fact, concerning Section 143(2) of the Income Tax Act, 1961). 2. Whether the defect in effecting service of notice u/s 143(2) is not curable u/s 292-B of the Income Tax Act, 1961? (Question of law, concerning Section 292-B of the Income Tax Act, 1961). 3. Whether on the facts and in the circumstances of the case, the Hon'ble ITAT was right in law in confirming the order of the CIT(A) quashing the assessment order on the basis of service of notice u/s 143(2) of the Act on the person available at the office premises of the company in which the assessee was a Managing Director? (Question of law and fact, concerning Section 143(2) of the Income Tax Act, 1961). Assessee's contentions: Not recorded. Revenue's contentions: Shri Sanjay Chaudhary was a duly authorized representative who had appeared on behalf of the assessee in earlier years. A letter from the assessee's representative indicated that Sanjay Chaudhary was authorized and had attended proceedings. The defect in service, if any, was curable under Section 292-B of the Act. The CIT(A) and Tribunal were not justified in quashing the assessment order.
Which sections of the Income-tax Act were involved?
Section 260A,Section 143(1)(a),Section 143(2),Section 143(3),Section 292-B
AI-generated summary — verify with the full judgment below
of 2006
-1- *** IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH Income-tax Appeal No.417 of 2006 Date of decision: 28.3.2011 Commissioner of Income-Tax, Faridabad ...Appellant Versus Sh. K.C.Tapedar ...Respondent CORAM: HON'BLE MR.JUSTICE ADARSH KUMAR GOEL HON'BLE MR.JUSTICE AJAY KUMAR MITTAL Present: Ms. Urvashi Dhugga, Senior Standing Counsel for the appellant. None for the respondent.
**** AJAY KUMAR MITTAL, J.
As per office report service is complete. No one appears on behalf of the respondent to oppose the prayer made in the appeal.
This appeal has been preferred by the revenue under Section 260A of the Income Tax Act, 1961 (hereinafter referred to as “the Act”) against order dated 5.8.2005 passed by the Income Tax Appellate Tribunal, Delhi Bench 'E', Delhi (for short, “the Tribunal”) in ITA No.3503/DEL/2001, relating to the assessment year 1998-99. 3. The appeal was admitted on 20.7.2007 for determination of the following substantial questions of law by this Court:- “i) Whether on the facts and in the circumstances of the case, the assessment can be annulled on the ground that notice u/s 143(2) was not served upon the assessee personally but upon one of his subordinates? ii) Whether the defect in effecting service of notice u/s 143 (2) is not curable u/s 292-B of the Income Tax Act, 1961?
of 2006
-2- *** iii) Whether on the facts and in the circumstances of the case, the Hon'ble ITAT was right in law in confirming the order of the CIT(A) quashing the assessment order on the basis of service of notice u/s 143(2) of the Act on the person available at the office premises of the company in which the assessee was a Managing Director?”
The facts as stated in the appeal necessary for adjudication for the present appeal may be noticed. The assessee declared an income of Rs.14,51,028/- in his return filed on 29.9.1998. The return was processed under Section 143(1)(a) of the Act on 31.5.1999. The case of the assessee was selected for scrutiny and notice under Section 143(2) of the Act was issued on 29.9.1999. The said notice was received by Sh. Sanjay Chaudhary on behalf of the assessee. The assessing officer completed the assessment under Section 143(3) of the Act at an income of Rs.21,27,100/- on 16.2.2001 after making certain additions. The assessee feeling aggrieved against the additions made by the Assessing Officer had filed an appeal before the Commissioner of Income-Tax (Appeals) (for short “the CIT(A)”) which was allowed on 1.6.2001 on a technical ground that the notice under Section 143(2) of the Act was served on Shri Sanjay Chaudhary on behalf of the assessee who was not authorised representative of the assessee. The appeal of the Revenue against the said order was dismissed by the Tribunal vide order dated 5.8.2005.
Hence this appeal.
We have heard the learned counsel for the revenue and have perused the records.
Learned counsel for the Revenue submits that Shri Sanjay Chaudhary was duly authorised representative of the assessee and had been appearing on his behalf in the proceeding relating to the earlier years of 2006
-3- *** as well. She drew the attention of this Court to the letter No.438 dated 31.5.2001 which was addressed by the representative of the assessee which reads as under:- “Sh.K.C.Tapedar, the assessee is residing at C-4/42, Safdarganj, Delhi but filing the return of income-tax and wealth-tax at Faridabad being the director of the company M/s Porritts & Spencer (A) Ltd., Faridabad. Return of income was filed on 29.09.1998. Notice u/s 143(2) was served through notice serve which was received by Sh. Sanjay Chaudhary on behalf of the assessee on dated 30.9. 99. In response to this notice Mr. Sanjay Chaudhary attended the proceedings on dated 8.10. 99. The records show in the earlier years also notices were received and proceedings were attended by the Sh. Sanjay Chaudhary, duly authorised by the assessee. Therefore, notice was served within time and was valid one. The CIT(A) may kindly decide the issue.”
Learned counsel for the Revenue further submits that in view of Section 292-B of the Act such technical defect, if any, could not be fatal to the proceedings.
We have given our thoughtful consideration to the submissions of learned counsel for the revenue and find weight therein.
In the present case, admittedly the notice issued under Section 143(2) of the Act in the name of the assessee was served upon Sh. Sanjay Chaudhary on 30.9. 99. The proceedings on 8.10.99 were attended by Sh. Sanjay Chaudhary on behalf of the assessee. It has been specifically stated in letter dated 31.5.2001 addressed by the representative of the assessee that Shri Sanjay Chaudhary was served on behalf of the assessee on 30.9.99 and had appeared on 8.10. 99. On earlier occasions of 2006
-4- *** and in earlier years, Sh. Sanjay Chaudhary had been representing the assessee before the Department. During the assessment proceedings, no objection regarding validity of the notice under Section 143(2) of the Act was raised. Nothing had been produced by the assessee to establish that Sh. Sanjay Chaudhary was no longer his authorised representative. Moreover, the provisions of Section 292B of the Act would protect the assessment order from being declared null and void for want of service in the present fact situation. The CIT(A) and the Tribunal were, thus, not justified in holding the assessment order to be vitiated.
In view of the above, the substantial questions of law are answered in favour of the revenue. The orders of the CIT(A) as well as the Tribunal are set aside. The matter is remanded to the CIT(A) to decide the same on merits in accordance with law.
( Ajay Kumar Mittal) Judge March 28, 2011
(Adarsh Kumar Goel) Pka
Judge
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