The Delhi High Court quashed the time-barred notice issued under section 142 (1) of the Income Tax Act, 1961.
SMC Comtrade Ltd, the petitioner/assessee challenged the notice (“first notice”) issued under Section 143(2) and the notice issued under Section 142(1) of the Income-tax Act, 1961 [ “Act”] [“second notice”]. The petitioner’s/assessee’s principal submission, in support of the relief sought in the writ petition, is that the aforementioned impugned notices are barred by limitation.
The petitioner/assessee had filed its original Return of Income (ROI) on 14.10.2016. In the ROI, the petitioner/assessee declared a loss amounting to Rs. 3,85,73,772/-. On 06.02.2017, the petitioner/assessee was served with a notice under Section 139(9). This notice stated that the ROI filed by the petitioner/assessee was defective and this regard referred to section 139(9) of the Act.
The petitioner/assessee was served with another notice dated 10.07.2017, wherein, it was pointed out that the ROI filed for AY 2016-17 dated 14.10.2016 contained defects. The petitioner/assessee, thus once again, removed the defects, albeit, on 20.07.2017.
The ROI filed was processed by the Assessing Officer (AO) after, as indicated above, the defects were removed. An intimation to that effect was served on the petitioner under Section 143(1) of the Act. It was only thereafter that the petitioner/assessee was served with the first notice under Section 143(2) on 11.08.2018, and the second notice on 31.08.2018 under Section 142(1) of the Act.
The petitioner, via response dated 04.09.2018, took the stand that there was no revision of the original return filed on 14.10.2016, that the notice under Section 139(5) and compliance thereto cannot be treated on par with the provisions of Section 139(9); that the return was processed under Section 143(1) of the Act; and that the notices are invalid and illegal as they were barred by limitation.
The point concerning the expiration of the limitation was reiterated by the petitioner/assessee via communication dated 11.10.2018. Thereafter, the petitioner/assessee received communication dated 24.10.2018, which in sum, rejected the petitioner’s/assessee’s stand that the impugned notices were time-barred.
Mr Sumit Lalchandani, the counsel, who appeared on behalf of the petitioner/assessee, has submitted that the impugned notices are time-barred since they have been issued beyond the time prescribed in the first proviso appended to Section 143(2) of the Act.
It was submitted that the date for calculating limitation under the proviso to Section 143(2), would be six months (6) commencing from the last date of the FY in which the original ROI was filed i.e., 31.03.2017.
Mr Prashant Meharchandani, senior standing counsel, who appeared on behalf of the respondent/revenue, submitted that a notice under Section 143 could only have been issued after the defect was removed, and therefore, the impugned notices were within the time prescribed by the statute.
A division bench of Justice Rajiv Shakdher and Justice Girish Kathpalia observed that the financial year, in the case of the petitioner’s/assessee’s original return, would have ended on 31.03.2017. Six (6) months, as mandated by the proviso, would have ended on 30.09.2017. Undoubtedly, the notice issued under Section 143(2) of the Act is time-barred. The Court quashed the notice under Section 142(1) of the Act.
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