Friday, November 7, 2014

Failure to issue notice in time couldn't be cured by sec. 292BB

Failure to issue a notice under section 143(2) within prescribed period cannot be cured by taking recourse to section 292BB.


a)The Assessing Officer issued a notice under section 143(2) to assessee. Thereafter assessment proceedings were completed and an order of assessment was passed under section 143(3).

b)On appeal, the CIT(A), held that the notice under section 143(2) was not issued within the period stipulated in that provision. Hence, section 292BB would not save a situation where the notice itself had not been issued before the expiry of the period of limitation since it could only cure a defect of service within the stipulated period.

c)Further, the Tribunal held that since no notice under Section 143(2) was issued within the prescribed period, the assessment was not valid. The aggrieved revenue filed the instant appeal.

The High Court held in favour of assessee as under:

1)In the present case, the notice under Section 143(2) was issued much beyond the period of six months. Section 292BB provides a deeming fiction that once the assessee has appeared in any proceedings or cooperated in any enquiry relating to an assessment or reassessment, it shall be deemed that notice has been duly served upon assessee in time in accordance with the provisions of the Act.

2)Once the deeming fiction came into operation, the assessee was precluded from raising a challenge about the service of a notice, service within time or service in an improper manner. However, Section 292BB could not obviate the requirement of complying with a jurisdictional condition. Where the Assessing Officer failed to issue a notice under Section 143(2) within the period of six months as spelt out in the proviso to clause (ii) of section 143(2), the assumption of jurisdiction under section 143(3) would be invalid.

3)The deeming fiction in section 292BB overcomes a procedural defect in regard to the non-service of a notice on the assessee, and obviates a challenge that the notice was either not served or that it was not served in time or that it was served in an improper manner.

4)Section 292BB could not come to the aid of the revenue in a situation where the issuance of a notice itself was not within the prescribed period, in which event the question of whether it was served correctly or otherwise, would be of no relevance whatsoever. Thus, failure to issue a notice under section 143(2) within prescribed period could not be cured by taking recourse to section 292BB. – CIT V. SALARPUR COLD STORAGE (P.) LTD [2014] 50 105 (Allahabad)