In DCIT v. K.M Nagaraj, the ITAT Bengaluru held that quoting of wrong section would not result in invalidating the whole re-assessment proceedings under Income Tax Act if the assessee had co-operated with the assessment.
In the instant case, incriminating material relevant to assessee was found as a result of search and seizure operation in the case of M/s.Corporate Leisure & Property Development (P) Ltd. AO had mentioned section 153A of the Income Tax Act in the notice issued calling upon the respondent-assessee to file return of income as well as in the orders of assessment. Notice for assuming jurisdiction for framing assessment order was issued under wrong section i.e. 153A instead of 153C. Assessee vehemently contended that wrong mention of section viz. 153A goes to the very root of the matter and it is jurisdictional error which cannot be cured by the provisions of section 292B of the Act.
On appeal, the first appellate authority quashed the proceedings. Against the order, the department preferred an appeal.
The bench noted that the issue requires to be adjudicated in the light of the provisions of section 292B of the Act which provides that return of income or notice or summons shall not be invalidated on certain grounds.
Analyzing the provisions of s. 292B of the Act, the bench said that notices or summons shall not be invalided by mere reason of any mistake merely by reason of any mistake, defect or omission in such return of income, assessment, notice, summons or other proceeding if such return of income, assessment, notice, summons or other proceeding is in substance and effect in conformity with or according to the intent and purpose of the Act.
Reversing the order of the first appellate authority, the bench observed that in the present case, undisputedly no search warrant was issued in the name of the assessee but the assessee had responded to the notice issued u/s 153A by filing return of income, participated in the proceedings till the matter resulted in framing of the assessment order. “During the course of assessment proceedings, the respondent-assessee was given due opportunity of meeting the case made against him and in the result there was no prejudice caused to the respondent-assessee. Furthermore, it is not the case of the respondent-assessee his case even does not fall within the scope and ambit of the provisions of section 153C of the Act. The only mistake on the part of the AO is in mentioning section 153A instead of 153C. In the facts of the preset case, the provisions of section 292B clearly come into play. Under the provisions of section 292B, certain acts are not to be treated as invalid by reason of mistake or defect or omission either in the return of income, assessment, notice, summons or other proceedings. In other words, notice cannot be invalidated by reason of any mistake such as one occurred in the present case i.e. mentioning section 153A instead of 153C. If this mistake is not allowed to be cured, the very purpose and object of enacting the provisions of section 292B is defeated. This notice, in substance and effect, is in conformity with or according to the intent and purpose of the Act. The purpose of issuing notice is to call upon the assessee to file return of income disclosing income found in the incriminating material found as a result of search and seizure in the case of M/s.Corporate Leisure & Property Development (P) Ltd. This being the intent and purpose of the provisions contained in section 153A and 153C, stands satisfied if the notice is responded and the assessee has participated in the assessment proceedings. The fact that wrong section was mentioned in the notice does not invalid the proceedings.”
Read the full text of the Order below.
