Pr. Commissioner of Income-tax, Vadodara 2 v. Nexus Software Ltd
[Citation -2017-LL-0411-28]

Citation 2017-LL-0411-28
Appellant Name Pr. Commissioner of Income-tax, Vadodara 2
Respondent Name Nexus Software Ltd.
Court HIGH COURT OF GUJARAT AT AHMEDABAD
Relevant Act Income-tax
Date of Order 11/04/2017
Assessment Year 2008-09
Judgment View Judgment
Keyword Tags period of limitation • postal authority
Bot Summary: The Assessing Officer did not accept the same and treated the assessee having been served with the notice under Section 143(2) of the Act before the due date provided under Section 143(2) of the Act i.e. on or before 30/09/2009 and thereafter the Assessing Officer passed the scrutiny assessment order under Section 143(3) of the Act determining the return of income at Rs.11,88,35,320/-. The learned CIT(A) allowed the said Appeal preferred by the assessee and set aside the scrutiny assessment order under Section 143(3) of the Act solely on the ground that the notice under Section 143(2) of the Act was not served upon the assessee within the prescribed period of limitation provided under Section 143(2) of the Act i.e. within the period of six months, and therefore, the assessment order is bad in law. Under the circumstances, notice under Section 143(2) of the Act was not served upon the assessee within the prescribed period of limitation provided under Section 143(2) of the Act i.e. on or before 30/09/2009. Under the circumstances, as such, the learned tribunal has rightly confirmed the order passed by the learned CIT(A) setting aside the assessment order under Section 143(3) of the Act on the ground that the notice under Section 143(2) of the Act has not been served upon the assessee within the prescribed period of limitation provided under Section 143(2) of the Act. 4.1 Now so far as the submission on behalf of the revenue that the learned tribunal has not properly appreciated the fact that the premises of the assessee was sealed by the High Court since 25/02/2009 and /or that the assessee was frequently changing its address and did not intimate the Department regarding the change of address is concerned, at the outset it is required to be noted that as such and so stated even in the assessment order that after the notice under Section 143(2) of the Act was issued on 29/09/2009, first notice under Section 142(1) of the Act was issued on 17/02/2010 and the same was served upon the assessee Company through speed post. 4.2 Now so far as the submission on behalf of the revenue that as the notice under Section 143(2) of the Act was issued on 29/09/2009 and was sent to the postal authority to serve the notice upon the assessee on 30/09/2009, and therefore, it can be said to have been served upon the assessee within the prescribed period of limitation provided under Section 143(2) of the Act and reliance placed upon Section 27 of the General Clauses Act is concerned, it is required to be noted that in the facts and circumstances of the case, Section 27 of the General Clauses Act shall not be applicable and /or the same shall not be of any assistance to the revenue. 5.0 In view of the aforesaid facts and circumstances of the case, it cannot be said that the learned tribunal has Page 11 of 12 HC-NIC Page 11 of 12 Created On Tue Apr 18 10:10:16 IST 2017 O/TAXAP/240/2017 JUDGMENT committed any error in confirming the order passed by the learned CIT(A) quashing and setting aside the assessment order under Section 143(3) of the Act on the ground that the notice under Section 143(2) of the Act was not served upon the assessee and /or was not served upon the assessee within the prescribed period of limitation provided under Section 143(2) of the Act.


O/TAXAP/240/2017 JUDGMENT IN HIGH COURT OF GUJARAT AT AHMEDABAD TAX APPEAL NO. 240 of 2017 FOR APPROVAL AND SIGNATURE: HONOURABLE MR.JUSTICE M.R. SHAH and HONOURABLE MR.JUSTICE B.N. KARIA 1 Whether Reporters of Local Papers may be YES allowed to see judgment ? 2 To be referred to Reporter or not ? YES 3 Whether their Lordships wish to see fair NO copy of judgment ? 4 Whether this case involves substantial NO question of law as to interpretation of Constitution of India or any order made thereunder? PR. COMMISSIONER OF INCOME TAX VADODARA 2,....Appellant(s) Versus NEXUS SOFTWARE LTD....Opponent(s) Appearance: MR KM PARIKH, ADVOCATE for Appellant(s) No. 1 CORAM: HONOURABLE MR.JUSTICE M.R. SHAH and HONOURABLE MR.JUSTICE B.N. KARIA Date : 11/04/2017 ORAL JUDGMENT (PER : HONOURABLE MR.JUSTICE M.R. SHAH) Page 1 of 12 HC-NIC Page 1 of 12 Created On Tue Apr 18 10:10:16 IST 2017 O/TAXAP/240/2017 JUDGMENT [1.0] Feeling aggrieved and dissatisfied with impugned judgment and order passed by learned Income Tax Appellate Tribunal C Bench, Ahmedabad (hereinafter referred to as learned tribunal ) dated 18/10/2016 in ITA No.1258/Ahd/2012 for Assessment Year 2008-09 by which learned tribunal has dismissed said Appeal preferred by revenue and has confirmed order passed by learned CIT(A) quashing and setting aside assessment order under Section 143(3) of Income Tax Act (hereinafter referred to as Act ) on ground that within period of limitation provided under Section 143 of Act no notice under Section 143(2) of Act was served upon assessee within time prescribed under Section 143 of Act, revenue has preferred present Tax Appeal. [2.0] facts leading to present Tax Appeal in nutshell are as under; [2.1] assessee filed return of income on 30/09/2008 declaring total income at Rs.31,879/-. case of assessee was selected for scrutiny with prior approval of CCIT, Baroda and accordingly notice under Section 143(2) of Act was issued on 29/09/2009. However, it appears that notice dated 29/09/2009 was dispatched to postal authority for speed post on 30/09/2009. Nothing is on record and even otherwise it is not case on behalf of revenue that notice issued on 29/09/2009, which was given to postal authority on 30/09/2009, was served upon assessee on or before 30/09/2009. Even said notice was served upon assessee or not is also not on record as Page 2 of 12 HC-NIC Page 2 of 12 Created On Tue Apr 18 10:10:16 IST 2017 O/TAXAP/240/2017 JUDGMENT acknowledgment of notice under Section 143(2) of Act is not available. It appears that thereafter notice under Section 142(1) of Act dated 17/02/2010 was served upon assessee and at that time it came to knowledge of assessee that case of assessee was selected for scrutiny. assessee Company raised objection before Assessing Officer that notice under Section 143(2) was not validly served within statutory limits, and therefore, it was requested not to proceed further with notice under Section 143(2) of Act. However, Assessing Officer did not accept same and treated assessee having been served with notice under Section 143(2) of Act before due date provided under Section 143(2) of Act i.e. on or before 30/09/2009 and thereafter Assessing Officer passed scrutiny assessment order under Section 143(3) of Act determining return of income at Rs.11,88,35,320/-. [2.2] Feeling aggrieved and dissatisfied with scrutiny assessment order under Section 143(3) of Act, assessee preferred Appeal before learned CIT(A). learned CIT(A) allowed said Appeal preferred by assessee and set aside scrutiny assessment order under Section 143(3) of Act solely on ground that notice under Section 143(2) of Act was not served upon assessee within prescribed period of limitation provided under Section 143(2) of Act i.e. within period of six months, and therefore, assessment order is bad in law. [2.3] Feeling aggrieved and dissatisfied with order passed by learned CIT(A), revenue preferred Appeal before learned tribunal and by impugned judgment and order Page 3 of 12 HC-NIC Page 3 of 12 Created On Tue Apr 18 10:10:16 IST 2017 O/TAXAP/240/2017 JUDGMENT learned tribunal has dismissed said Appeal preferred by revenue and has confirmed order passed by learned CIT(A). [2.4] Feeling aggrieved and dissatisfied with impugned judgment and order passed by learned tribunal, revenue has preferred present Tax Appeal with following proposed questions of law; (A) Whether learned tribunal was right in law and on facts and circumstances of case that notice under Section 143(2) of Act was not served upon assessee legally without appreciating fact that notice under Section 143(2) of Act was issued on 29/09/2009 well within time limit and sent through speed post on 30/09/2009 on address given by assessee in its return of income for Assessment Year 2008-09? (B) Whether learned tribunal was right in law and on facts and circumstances of case that notice under Section 143(2) of Act was not served upon assessee legally without appreciating fact that notice under Section 143(2) of Act was issued on 29/09/2009 well within time limit and address of assessee s premises was sealed by Hon ble Gujarat High Court since 25/02/2009? (C) Whether learned tribunal was right in law Page 4 of 12 HC-NIC Page 4 of 12 Created On Tue Apr 18 10:10:16 IST 2017 O/TAXAP/240/2017 JUDGMENT and on facts and circumstances of case that notice under Section 143(2) of Act was not served upon assesee legally without appreciating fact that assessee was frequently changing its addresses and it did not intimate Department regarding its change in addresses? (D) Whether learned tribunal was right in law and on facts and circumstances of case that notice under Section 143(2) of Act was not served upon assessee legally without appreciating fact that assessee had given such address on its return for year under consideration which was sealed by Hon ble Gujarat High Court on 25/02/2009? (E) Whether learned tribunal was right in law and on facts and circumstances of case that notice under Section 143(2) of Act was not served upon assessee legally without appreciating fact that assessee did not prove fact that notice under Section 143(2) of Act dated 29/09/2009 was issued beyond time limit? [3.0] Shri K.M. Parikh, learned advocate has appeared on behalf of revenue. It is submitted by Shri K.M. Parikh, learned advocate appearing on behalf of revenue that in facts and circumstances of case, learned tribunal has materially erred in confirming order passed by Page 5 of 12 HC-NIC Page 5 of 12 Created On Tue Apr 18 10:10:16 IST 2017 O/TAXAP/240/2017 JUDGMENT learned CIT(A) and in holding that notice under Section 143(2) was not served upon assessee on or before 30/09/2009. [3.1] It is further submitted by Shri K.M. Parikh, learned advocate appearing on behalf of revenue that learned tribunal has not properly appreciated fact that as such notice under Section 143(2) of Act was issued on 29/09/2009 at address mentioned in return of income, and therefore, it is ought to have been presumed that assessee has been served with notice under Section 143(2) of Act within prescribed limit of limitation under Section 143(2) of Act. It is further submitted by Shri K.M. Parikh, learned advocate appearing on behalf of revenue that learned tribunal has not properly appreciated fact that as such notice under Section 143(2) of Act was issued on 29/09/2009 well within prescribed time limit and was sent through speed post on 30/09/2009 at address given by assessee in its return of income for Assessment Year 2008-09. [3.2] It is further submitted by Shri K.M. Parikh, learned advocate appearing on behalf of revenue that learned tribunal has not properly appreciated fact that notice under Section 143(2) of Act was in fact issued on 29/09/2009 well within prescribed time limit and in fact premises of assessee was sealed by High Court since 25/02/2009. It is further submitted by Shri K.M. Parikh, learned advocate appearing on behalf of revenue that learned tribunal has not appreciated fact that assessee was frequently changing his address and did not intimate its Page 6 of 12 HC-NIC Page 6 of 12 Created On Tue Apr 18 10:10:16 IST 2017 O/TAXAP/240/2017 JUDGMENT change in address. [3.3] It is further submitted that therefore in facts and circumstances of case learned tribunal ought not to have confirmed order passed by learned CIT(A) setting aside scrutiny assessment order on ground that notice under Section 143(2) of Act was not served upon assessee on or before 30/09/2009 i.e. within period of limitation prescribed under Section 143(2) of Act. For aforesaid, Shri K.M. Parikh, learned advocate appearing on behalf of revenue has relied upon Section 27 of General Clauses Act as well as decision of Hon ble Supreme Court in case of Banarsi Debi Vs. Income-tax Officer, District IV, Calcutta reported in AIR 1964 SC 1742 and decision of Punjab & Haryana High Court dated 27/09/2011 passed in V.R.A. Cotton Mills (P) Ltd. Vs. Union of India and Others. Making above submissions and relying upon above decisions, it is requested to admit /allow present Tax Appeal. [4.0] We have heard Shri K.M. Parikh, learned advocate appearing on behalf of revenue at length. It is not in dispute that as per Section 143(2) of Act, for Assessment Year 2008-09, notice under Section 143(2) of Act was required to be served within period of six months i.e. on or before 30/09/2009. It is not in dispute that for first time notice under Section 143(2) of Act was issued on 29/09/2009 and in fact dispatched to postal authority to serve service upon assessee on 30/09/2009. Nothing is on record and /or there is no acknowledgment received on Page 7 of 12 HC-NIC Page 7 of 12 Created On Tue Apr 18 10:10:16 IST 2017 O/TAXAP/240/2017 JUDGMENT record to show and /or suggest that in fact notice under Section 143(2) dated 29/09/2009 was served upon assessee. Under circumstances, notice under Section 143(2) of Act was not served upon assessee within prescribed period of limitation provided under Section 143(2) of Act i.e. on or before 30/09/2009. Under circumstances, as such, learned tribunal has rightly confirmed order passed by learned CIT(A) setting aside assessment order under Section 143(3) of Act on ground that notice under Section 143(2) of Act has not been served upon assessee within prescribed period of limitation provided under Section 143(2) of Act. [4.1] Now so far as submission on behalf of revenue that learned tribunal has not properly appreciated fact that premises of assessee was sealed by High Court since 25/02/2009 and /or that assessee was frequently changing its address and did not intimate Department regarding change of address is concerned, at outset it is required to be noted that as such and so stated even in assessment order that after notice under Section 143(2) of Act was issued on 29/09/2009 (which has not been served on or before 30/09/2009 and naturally could not have been served as same was dispatched to postal authority on 30/09/2009), first notice under Section 142(1) of Act was issued on 17/02/2010 and same was served upon assessee Company through speed post. In assessment order it has been observed by Assessing Officer that subsequently due to change of Assessing Officer and also due to change of address of assessee, notices under Section 142(1) of Act were issued on 19/07/2010, 23/07/2010, 10/08/2010, 02/11/2010 and Page 8 of 12 HC-NIC Page 8 of 12 Created On Tue Apr 18 10:10:16 IST 2017 O/TAXAP/240/2017 JUDGMENT 15/12/2010 respectively. Till Assessing Officer issued notice under Section 143(2) of Act dated 29/09/2009 Assessing Officer was not even aware and /or had no knowledge that premises of assessee has been sealed by High Court since 25/02/2009, and therefore, aforesaid factum shall not help Assessing Officer /revenue. [4.2] Now so far as submission on behalf of revenue that as notice under Section 143(2) of Act was issued on 29/09/2009 and was sent to postal authority to serve notice upon assessee on 30/09/2009, and therefore, it can be said to have been served upon assessee within prescribed period of limitation provided under Section 143(2) of Act and reliance placed upon Section 27 of General Clauses Act is concerned, it is required to be noted that in facts and circumstances of case, Section 27 of General Clauses Act shall not be applicable and /or same shall not be of any assistance to revenue. There is no question of presumption of having been served notice upon assessee, when notice itself was given /dispatched by Assessing Officer on 30/09/2009 only. It is not believable that assessee would have been served and /or presumed to have been served on 30/09/2009 itself. Identical question came to be considered by Delhi High Court in case of Nulon India Ltd. Vs. Income-tax Officer reported in [2010] 323 ITR 681 (Delhi). In case before Delhi High Court notice for assessment was sent by speed post on 30/10/2002 for Assessment Year 2001-02 to address mentioned in return of income. notice was redirected and was served at redirected address on 06/11/2002. learned tribunal held Page 9 of 12 HC-NIC Page 9 of 12 Created On Tue Apr 18 10:10:16 IST 2017 O/TAXAP/240/2017 JUDGMENT that notice had been served within prescribed period of limitation and assessment made pursuant to search was valid assessment. matter was carried to Delhi High Court. Before High Court it was contented on behalf of revenue that notice under Section 143(2) of Act was issued on 29/10/2002 and was sent by speed post on 30/10/2002, and therefore, it ought to have been treated as having been served with notice. Even revenue contended that it ought to have been presumed under law that any notice sent by speed post must have been delivered to assessee. However, Delhi High Court did not accept same and allowed Appeal preferred by assessee on ground that there is no presumption under law that any notice sent by speed post must have been delivered to assessee within 24 hours. In present case also there cannot be any presumption that notice which was dispatched to postal authority for delivering it to assessee on 30/09/2009 must have been delivered to assessee on same day i.e. 30/09/2009. Under circumstances, even in facts and circumstances of case, Section 27 of General Clauses Act shall not be of any assistance to revenue. [4.3] Now so far as reliance placed upon decision of Hon ble Supreme Court in case of Banarsi Debi (Supra) is concerned, on facts same shall not be applicable to facts of case on hand. In case of Banarsi Debi (Supra) Hon ble Supreme Court was considering Section 34(1) of Indian Income Tax Act, 1922 as well as subsequent amendment i.e. Section 4 of Amending Act (Act 1 of 1959), where word used were Page 10 of 12 HC-NIC Page 10 of 12 Created On Tue Apr 18 10:10:16 IST 2017 O/TAXAP/240/2017 JUDGMENT notice issued within period of limitation but served upon assessee subsequently. Under circumstances, aforesaid decision shall not be applicable to facts of case on hand. [4.4] Now so far as reliance upon decision of Punjab & Haryana High Court in case of V.R.A. Cotton Mills (P) Ltd. (Supra) is concerned, as such, in case before Punjab & Haryana High Court notice was served upon assessee by affixation at 11:20 p.m. on 30/09/2010. It was found to be valid service in terms of Code of Civil Procedure, and therefore, as such on facts said decision shall not be applicable to facts of case on hand. However, we are not in agreement with view taken by Punjab & Haryana High Court that expressions serve and issue would have same meaning. word served used in Section 143(2) of Act is very significant and very clear. However in appropriate case being made out within four corners of General Clauses Act, if notices are issued before reasonable time of prescribed period of limitation and it has been dispatched /sent for delivery within reasonable time, in that case, there can be presumption under Section 27 of General Clauses Act. However, in facts and circumstances of case, as notice dated 29/09/2009 was given to postal authority for speed post delivery on 30/09/2009, as observed hereinabove, there is no question of any presumption that same must have been delivered to assessee on very day i.e. 30/09/2009. [5.0] In view of aforesaid facts and circumstances of case, it cannot be said that learned tribunal has Page 11 of 12 HC-NIC Page 11 of 12 Created On Tue Apr 18 10:10:16 IST 2017 O/TAXAP/240/2017 JUDGMENT committed any error in confirming order passed by learned CIT(A) quashing and setting aside assessment order under Section 143(3) of Act on ground that notice under Section 143(2) of Act was not served upon assessee and /or was not served upon assessee within prescribed period of limitation provided under Section 143(2) of Act. We are in complete agreement with view taken by learned tribunal. No substantial questions of law arise as suggested on behalf of revenue. [6.0] In view of above and for reasons stated hereinabove, present Tax Appeal fails and same deserves to be dismissed and is accordingly dismissed. (M.R. SHAH, J.) (B.N. KARIA, J.) Siji Page 12 of 12 HC-NIC Page 12 of 12 Created On Tue Apr 18 10:10:16 IST 2017 Pr. Commissioner of Income-tax, Vadodara 2 v. Nexus Software Ltd
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