M.V.JOY vs. ASST.COMMISSIONER OF INCOME TAX ,KOZHIKODE

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WP(C)/30157/2012HC KeralaKLHC01072222201218 December 2012Author: HONOURABLE MR.JUSTICE ANTONY DOMINIC6 pages
AI SummaryDismissed

What did the High Court hold?

The High Court held that Section 158BE(2)(b) of the Income Tax Act, 1961, clearly states that the period of limitation for completing block assessment in the case of another person referred to in Section 158BD is 2 years from the end of the month in which notice has been served on such other person. Therefore, the limitation period commences from the date of service of notice, not from any prior date. In this case, the notice was served on August 8, 2012, and the proceedings are thus within the prescribed time limit. Regarding the contention of inordinate delay rendering the proceedings arbitrary, the court noted that the proceedings against the petitioner's brother culminated only with the ITAT's order on June 28, 2011. As per the judgment in Ext.P9, proceedings could only be initiated against the petitioner thereafter. Consequently, the court found no unexplained or inordinate delay and upheld the order rejecting the petitioner's objection. The writ petition was dismissed.

What were the facts?

The petitioner, M.V. Joy, is challenging a notice issued under Section 158BD of the Income Tax Act, 1961. This notice was issued on August 8, 2012, following a search conducted on July 29, 1999, at the premises of the petitioner's brother. Initial assessment proceedings under Section 158BC against the brother were quashed and directed to be under Section 158BD. Subsequent orders saw the proceedings against the brother quashed and directed against the petitioner. The revenue's appeal against this direction was dismissed by the ITAT. The petitioner then received the notice under Section 158BD and objected on grounds of limitation and delay, which was rejected by the Assistant Commissioner of Income Tax, Kozhikode, by order dated November 19, 2012.

What were the issues?

1. Whether the proceedings initiated against the petitioner under Section 158BD of the Income Tax Act, 1961, by a notice dated August 8, 2012, are time-barred, considering the search was conducted on July 29, 1999. Assessee's contention: The petitioner argues that while Section 158BD may not explicitly state a time limit for issuing notice, assessment proceedings must be completed within a reasonable time of the search. The delay from July 29, 1999, to August 8, 2012, is inordinate and renders the proceedings arbitrary, as held by this court in Ext.P9 judgment. Revenue's contention: The revenue contends that Section 158BE(2)(b) provides a limitation period of 2 years from the end of the month in which notice is served on the other person, meaning the limitation starts from the service of notice, not the search date. They rely on the Division Bench judgment in Ext.P9.

Which sections of the Income-tax Act were involved?

Section 132,Section 158BC,Section 158BD,Section 158BE(2)(b)

AI-generated summary — verify with the full judgment below

Cause title — parties, addresses and appearances
IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT: THE HONOURABLE MR.JUSTICE ANTONY DOMINIC TUESDAY, THE 18TH DAY OF DECEMBER 2012/27TH AGRAHAYANA 1934 WP(C).No. 30157 of 2012 (T) --------------------------- PETITIONER(S): ------------------------- M.V.JOY, MANICKATAN HOUSE, EDAVOOR, KOOVAPPADY P.O., ERNAKULAM DISTRICT - 683 544. BY ADVS.SRI.HARISANKAR V. MENON SMT.MEERA V.MENON SRI.MAHESH V.MENON RESPONDENT(S): ---------------------------- 1. ASST.COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE, KOZHIKODE 673 001` 2. ASST.COMMISSIONER OF INCOME TAX, CIRCLE 1, 2ND FLOOR, KAP COMPLEX, RAILWAY STATION ROAD, ALUVA - 683 101. R1 & R2 BY ADV.SRI.JOSE JOSEPH, SC,INCOME TAX THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 18-12-2012, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: Kss WPC.NO.30157/2012 T APPENDIX PETITIONER'S EXHIBITS: EXT.P1 COPY OF ASSESSMENT ORDER PASSED BY THE 1ST RESPONDENT DATED 18/07/2001. EXT.P2 COPY OF APPELLATE ORDER PASSED BY THE COMMISSIONER OF INCOME TAX (APPEALS), KOCHI DATED 10/03/2003. EXT.P3 COPY OF ASSESSMENT ORDER PASSED BY THE 1ST REPSONDENT DATED 28/06/2005. EXT.P4 COPY OF APPELLATE ORDER PASSED BY THE CIOMMISSIONER OF INCOME TAX (APPEALS), KOCHI DATED 24/11/2005. EXT.P5 COPY OF ORDER PASSED BY THE INCOME TAX APPELLATE TRIBUNAL KOCHI BENCH DATED 28/06/2011. EXT.P6 COPY OF NOTICE ISSUED BY THE 2ND RESPONDENT DATED 8/8/2012. EXT.P7 COPY OF OBJECTION SUBMITTED BY THE PETITIONER BEFORE THE 2ND RESPONDENT DATED 01/10/2012. EXT.P8 COPY OF REPLY ISSUED BY THE 2ND RESPONDENT DATED 19/11/12. EXT.P9 COPY OF JUDGMENT IN ITA NO. 982 OF 2009 OF THIS HON'BLE COURT DATED 29/03/2012. RESPONDENTS' EXHIBITS: N I L /TRUE COPY/ P.S.TO JUDGE Kss ANTONY DOMINIC, J. -------------------------------------------------- W.P.(C) NO.30157 OF 2012(T) -------------------------------------------------- Dated this the 18th day of December, 2012

J U D G M E N T Heard the counsel for the petitioner and the Standing Counsel for the respondents.

2.

A search in the premises of the petitioner's brother under Section 132 of the Income Tax Act was conducted on 29.7.1999. Proceedings were initiated under Section 158 BC of the Act and finally Ext.P1 order of assessment was passed on 18.7.2001. In an appeal filed against Ext.P1 order, Ext.P2 order dated 10.3.2003 was passed cancelling Ext.P1 and holding that the steps should be taken under Section 158BD. Thereupo Ext.P3 order dated 28.6.2005 was passed against the petitioner's brother under Section 158BD.

3.

Petitioner's brother filed appeal and by Ext.P4 order, the appellate authority cancelled Ext.P3 order taking the view that the proceedings should have been initiated against the petitioner. Against that order the revenue filed an appeal before :2 : the Tribunal which was dismissed by Ext.P5 order dated 28.6.2011. 4. Thereafter Ext.P6 notice dated 8.8.2012 was issued to the petitioner under Section 158BD of the Act. Thereupon the petitioner filed Ext.P7 objection contending that the proceedings against him are time barred. That objection raised by the petitioner was rejected by Ext.P8 stating that Section 158BD did not provide for any time limit for initiating proceedings and therefore the plea of limitation is without substance. It is challenging Ext.P8 the writ petition is filed.

5.

Contention raised by the counsel for the petitioner is that although there is no limitation for issuing notice as stated in Ext.P8, assessment proceedings should be completed within a reasonable time of search. It is stated that search in this case was on 29.7.1999 and the proceedings against the petitioner are initiated by Ext.P6 notice dated 8.8.2012. This according to the counsel shows that there has been unexplained and inordinate delay which renders the proceedings against the petitioner :3 : arbitrary as held by this court in Ext.P9 judgment.

6.

Section 158 BE(2)(b), provides that the period of limitation for completion of block assessment in the case of other person referred to in Section 158BD shall be 2 years from the end of the month in which notice has been served on such other person in respect of the search conducted under Section 132 of the Act. Therefore, it is obvious from this provision that the limitation starts only from the service of notice and not from any point of time prior thereto. Admittedly, notice in this case was served on the petitioner only by Ext.P6 dated 8.8.2012 and if it is so counted, the proceedings are well within time. This view has been accepted by the Division Bench of this court in Ext.P9 judgment also.

7.

In so far as the case of the petitioner that the assessment proceedings has not been completed within a reasonable time and therefore is arbitrary, it has to be stated that proceedings against the petitioner's brother culminated only by Ext.P5 order of the Tribunal rendered on 28.6.2011. If that be :4 : so, as held in Ext.P9 judgment itself, proceedings could have been initiated against the other person, viz the petitioner, only thereafter. If that be the case, on facts I am unable to agree with the counsel that there has been any unexplained or inordinate delay in this case.

Therefore Ext.P8 order has to be upheld and I do so. Writ petition fails a and is dismissed.

(ANTONY DOMINIC) JUDGE vi/

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