Reassessment Proceeding must be initiated within the Time Limit prescribed under Section 149(1)(b): Chhattisgarh HC [Read Judgment]

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The Chhattisgarh High Court in M/s. Ardent Steel Limited vs. ACIT & Anr. held that reassessment proceeding must be initiated within the time limit prescribed under Section 149(1)(b) of the Income Tax Act, 1961.

The petitioner-assessee has approached the High Court to set aside the reassessment proceedings that had initiated without proper service of Notice under Section 148(1) of the Income Tax Act, 1961. The petitioner was duly assessed for the assessment year 2009-10. However, the Assessing Officer had reasons to believe that there was escapement of income and thereby he issued a notice on 15-3-2016 under Section 148 of the Income Tax Act, 1961 to the address provided in the returns filed by the Petitioner. However, the petitioner didn’t receive the notice and a notice was served on him for the first time on 13-4-2016. The Petitioner filed objections against the reasons for reopening the completed assessment clearly stating that he was never served with notice dated 15-3-2016 and he had already changed his address duly updated in the PAN data base and the address has been clearly mentioned in the tax returns and request was made for closure of the case. But, thereafter, on 5-8-2016, the objection against reassessment proceedings initiated under Section 148 of the IT Act for the said assessment year, was rejected indicating that notice was issued on 15-3-2016 on the address shown in the tax returns and it has returned back on 28-3-2016 to the office citing the reason to be “left”. Questioning the initiation of proceeding of reassessment under Section 148 of the IT Act, the writ petition was preferred principally on the ground that no notice was issued within the period of limitation as prescribed under Section 149(1)(b) read with Section 148(1) of the IT Act.

The Counsel for the Petitioner argued that no notice within the period of limitation as required under Section 149(1)(b) of the IT Act, within a period of six years from 31-3-2010 was issued for reopening the concluded and completed assessment, as the notice dated 15-3-2016 was never issued on the correct address of the petitioner since the petitioner’s address has been changed after filing of return which is apparently in the knowledge of the assessing officer. He further contended that the same assessing officer has issued notices for reassessment for the year 2008-09 on the correct address of the petitioner, therefore, the correct address of the petitioner was well within the knowledge of the said assessing officer and as such, issuance of notice on wrong address cannot be said to be issuance of proper notice under Section 149(1)(b) of the IT Act for initiation of reassessment proceeding under Section 148(1) read with Section 147 of the IT Act.

The Bench comprising of Justice Sanjay K. Agrawal observed that the burden to establish that notice under Section 149(1)(b) read with Section 148(1) of the IT Act has been issued to the petitioner was on the Revenue and that the Revenue had failed to establish that a notice was indeed issued on or before 31-3-2016 on the assessee’s correct address. The bench found that the revenue had failed to prove that the notice was dispatched on or before 31-3-2016 and that it was put to the proper serving officer for serving in accordance with law. “I have no hesitation to hold that no notice under Section 149(1)(b) read with Section 148(1) of the IT Act was issued to the petitioner well within the period of limitation on or before 31-3-2016 on the officially notified correct address available in the official record for service of notice to the petitioner which is a jurisdictional fact and condition precedent for initiation of assessment proceeding under Section 148(1) of the IT Act.” observed the Judge.

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