ADITYA MEDISALES LIMITED vs. DEPUTY COMMISSIONER OF INCOME TAX

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TAXAP/251/2009HC GujaratGJHC24040869200921 September 2022Author: HONOURABLE THE CHIEF JUSTICE MR. JUSTICE ARAVIND KUMAR,HONOURABLE MR. JUSTICE ASHUTOSH SHASTRI3 pages
AI SummaryAllowed

What did the High Court hold?

The High Court held that in the case of a block assessment framed under Section 158BC read with Section 143(3) of the Income Tax Act, 1961, a statutory notice under Section 143(2) is required to be issued within the statutory time frame prescribed under the Act. The Court referred to the Hon'ble Apex Court's decision in Assistant Commissioner of Income Tax v. Hotel Blue Moon, which held in the affirmative on a similar issue, favoring the assessee and against the revenue. Consequently, the High Court answered the questions of law in favor of the appellant-assessee. The operative direction was to allow the appeal, implying that the assessment framed without the requisite notice under Section 143(2) would be considered invalid. No issue was expressly left undecided.

What were the facts?

The assessee, Aditya Medisales Limited, filed an appeal before the Gujarat High Court against an order of the Income Tax Appellate Tribunal (ITAT). The appeal pertains to a block assessment framed under Section 158BC read with Section 143(3) of the Income Tax Act, 1961. The core of the dispute revolves around the requirement of issuing a statutory notice under Section 143(2) within the prescribed time frame in the context of a block assessment. The High Court had admitted the appeal to consider substantial questions of law regarding the ITAT's decision on this procedural aspect.

What were the issues?

1. Whether, in the facts and circumstances of the case, the Income Tax Appellate Tribunal was right in holding that in case of a block assessment framed under Section 158BC read with Section 143(3) of the Act, a statutory notice under Section 143(2) of the Act was not required to be issued within the statutory time frame prescribed under the Act? (Question of law) 2. Whether, in the facts and circumstances of the case, the Income Tax Appellate Tribunal was right in law in holding that non-issuance of notice under Section 143(2) of the Act is a mere procedural lapse and therefore, the same can be regularized and ratified? (Question of law) Assessee's Contention: The assessee argued that a notice under Section 143(2) is mandatory even in block assessments and its non-issuance within the statutory period vitiates the assessment. The assessee relied on the Hon'ble Apex Court's decision in Assistant Commissioner of Income Tax v. Hotel Blue Moon. Revenue's Contention: The judgment does not record any specific contentions made by the revenue. However, the ITAT's decision, which is under challenge, suggests the revenue likely argued that the non-issuance of the notice was a procedural lapse that could be regularized.

Which sections of the Income-tax Act were involved?

Section 158BC,Section 143(3),Section 143(2)

AI-generated summary — verify with the full judgment below

Cause title — parties, addresses and appearances
C/TAXAP/251/2009 JUDGMENT DATED: 21/09/2022 IN THE HIGH COURT OF GUJARAT AT AHMEDABAD R/TAX APPEAL NO. 251 of 2009 FOR APPROVAL AND SIGNATURE: HONOURABLE THE CHIEF JUSTICE MR. JUSTICE ARAVIND KUMAR and HONOURABLE MR. JUSTICE ASHUTOSH J. SHASTRI ============================================= 1 Whether Reporters of Local Papers may be allowed to see the judgment ? 2 To be referred to the Reporter or not ? 3 Whether their Lordships wish to see the fair copy of the judgment ? 4 Whether this case involves a substantial question of law as to the interpretation of the Constitution of India or any order made thereunder ? ============================================= ADITYA MEDISALES LIMITED Versus DEPUTY COMMISSIONER OF INCOME TAX ============================================= Appearance: MR BANDISH SOPARKAR for MRS SWATI SOPARKAR(870) for the Appellant(s) No. 1 MR.VARUN K.PATEL(3802) for the Opponent(s) No. 1 ============================================= CORAM:HONOURABLE THE CHIEF JUSTICE MR. JUSTICE ARAVIND KUMAR and HONOURABLE MR. JUSTICE ASHUTOSH J. SHASTRI Date : 21/09/2022

ORAL JUDGMENT (PER : HONOURABLE THE CHIEF JUSTICE MR. JUSTICE ARAVIND KUMAR)

1.

This Court while issuing notice on this appeal vide order dated 12.03.2009, has admitted the same to consider the C/TAXAP/251/2009 JUDGMENT DATED: 21/09/2022 following substantial questions of law. “(i) Whether, in the fact and circumstances of the case, the Income Tax Appellate Tribunal was right in holding that in case of block assessment framed u/s. 158BC r.w.s., 143(3) of the Act, statutory notice u/s. 143(2) of the Act was not required to be issued within the statutory time frame prescribed under the Act ? (ii) Whether, in the facts and circumstances of the case, the Income Tax Appellate Tribunal was right in law in holding that non-issuance of notice u/s. 143(2) of the Act is a mere procedural lapse and therefore, the same can be regularized and ratified.”

2.

We have heard Mr. Bandish Soparkar, learned advocate appearing for the appellant and Mr. Varun K. Patel, learned counsel appearing for the respondent.

3.

The Hon’ble Apex Court in the case of Assistant Commissioner of Income Tax v. Hotel Blue Moon reported in [2010] 188 Taxman 113 (SC) = [2010] 321 ITR 362 (SC), has considered the similar issue namely, whether Assessing Officer for any reason were to repudiate the return filed by the assessee in respond to the notice under Section 158BC (a), should he necessarily issue notice under Section 143(2) within time prescribed in proviso to Section 143(2), has been held in the affirmative namely, in favour of the assessee C/TAXAP/251/2009 JUDGMENT DATED: 21/09/2022 and against the revenue.

4.

In that view of the matter, the questions of law formulated in the above appeal is answered in favour of the appellant – assessee. (ARAVIND KUMAR,CJ) (ASHUTOSH J. SHASTRI, J) phalguni

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