Amarjit Singh Tut. vs Union of India (UOI)

This order will dispose of C.W.P. Nos. 19294, 19295 19302 and 19314 of 2009, as all the said petitions involve common questions of law.

In C.W.P. No. 19314 of 2009, the Petitioner sought quashing of notice dated 17.9.2008, Annexure P-4, u/s 143(2) of the Income Tax Act, 1961 (for short, "the Act") on the ground that the same was barred by limitation.

Prayer has also been made for further consequential orders.

Case of the Petitioner is that he is an NRI and filed return for the assessment year 2007-08 on 31-7-2007 at Jalandhar, which was processed on 7-2-2008. The Petitioner filed an application dated 2-4-2008 u/s 154 of the Act, which is said to be still pending. Notice dated 17.9.2008 was issued u/s 143(2) of the Act by the Assistant Commissioner of Income Tax, Jalandhar, to which the Petitioner filed his objection on 20-10-2008 on the ground that the same was barred by limitation. Thereafter, he was served with a notice alongwith a questionnaire calling for further information, which was followed by notice dated 24-11-2009 by the Director of Income Tax (International Taxation), Chandigarh.

Contention raised in the writ petition is that vide notification dated 28-9-2007 u/s 120 of the Act, the Central Board of Direct Taxes authorized the officers specified therein to exercise powers of Assessing Officers and other authorities. Inspite of said notification, power has been exercised by Respondent No. 2 i.e. Joint Commissioner of Income Tax (International Taxation). It is submitted that notice u/s 143(2) of the Act issued by Respondent No. 2 was barred by limitation and that the authority at Jalandhar had no jurisdiction to issue notice u/s 143(2) of the Act after issuance of notification dated 28-9-2007.

In the reply filed, stand of the revenue is that Notice dated 30-9-2008 was within limitation in view of amended provision of Section 143(2)(ii) of the Act. The limitation was available upto a period of six months from the end of financial year in which return was filed i.e. upto 30-9-2008, whereas notice was in fact issued on 17-9-2008. As regards notification, transferring jurisdiction from Jalandhar to Chandigarh u/s 120 of the Act, stand taken is that notwithstanding the said notification, the files were actually transferred to Chandigarh only on 29-10-2009. Thereafter, notice dated 5-11-2009 was issued by the Joint Director of Income Tax (International Taxation), Chandigarh u/s 143(2) of the Act.

We have heard learned Counsel for the parties and perused the record.

Questions for consideration are:

(i) Whether Notice, Annexure P-4, dated 17-9-2008 is barred by limitation and its effect?

(ii) Whether Notice, Annexure P-4, dated 17-9-2008 is without jurisdiction?

(iii) What is the effect of notification dated 28-9-2007, Annexure P-14, u/s 120 of the Act, transferring jurisdiction from Jalandhar to Chandigarh?

Re: (i)

Learned Counsel for the Petitioner submitted that limitation had to be seen on the date of filing of return and not thereafter, for which reliance was placed on following judgments:

(i) Deputy Commissioner of Income Tax Vs. Mahi Valley Hotels and Resorts, ;

(ii) The Commissioner of Income Tax Vs. M. Chellappan and P.L. Gandhi, ;

(iii) Brij Mohan v. CIT (1979) 120 ITR 11 (SC);

(iv) S.S. Gadgil, Income Tax Officer, Bombay Vs. Lal and Company, ;

(v) K. M. Sharma v. ITO (2002) 254 ITR 7722 (SC);

(vi) Virtual Soft Systems Ltd. Vs. Commissioner of Income Tax, Delhi-I, ;

(vii) Ajantha Industries and Others Vs. Central Board of Direct Taxes, New Delhi and Others, ;

(viii) Rajesh Mahajan v. CIT (2002) 257 ITR 5774 (P&H) and (ix) CIT v. Greenworld Corpn. (2009) 28 (I) ITCL 325 (SC): (2009) 7 SCC 695.

The submission cannot be accepted. u/s 143(2) of the Act, limitation for issuing notice was 12 months from the end of the month in which the return was filed. In the present case, return was filed on 31-7-2007 and limitation for issuance of notice u/s 143(2) of the Act was upto 31-7-2008. However, by virtue of amendment by Finance Act, 2008, w.e.f. 1-4-2008, limitation stood extended upto six months from the end of the financial year in which the return was furnished i.e. upto 30-9-2008.

It is well settled that a statute of limitation is a procedural statute and is applicable to pending proceedings. However, limitation law is prospective as it does not revive an action which may have become time barred on the date of enforcement of the changed law nor the changed law extinguishes a subsequent cause of action. Position of law has been summed up in Principles of Statutory Interpretation by Justice G.P. Singh, Tenth Edition:

Statutes of Limitation are thus retrospective in so far as they apply to all legal proceedings brought after their operation for enforcing causes of action accrued earlier, but they are prospective in the sense that they neither have the effect of reviving a right of action which is already barred on the date of their coming into operation, nor do they have the effect of extinguishing a right of action subsisting on that date. But a statute may, expressly or impliedly by retrospectively extending limitation, revive a barred claim�.

The judgments relied upon do not take any contrary view and are not to the effect that limitation law will not apply to pending proceedings. In Mahi Valley Hotels, case (supra) notice issued after limitation was held to be void. Similar is the position in M. Chellapan. Brij Mohans case (supra) is not a case dealing with amendment to law of limitation and does not hold that the changed limitation law does not apply to pending proceedings. S.S. Gadgils case (supra) deals with the principle that an amendment has to be prospective and does not have the effect of reviving proceedings which may have become time barred. There is no dispute with this proposition. In the present case, proceedings had not become time barred before the amendment came into force. In K.M. Sharmas case (supra) it was observed that principle of strict interpretation of the taxing statute applies also to law regulating limitation. Virtual Soft Systems Ltd.s case (supra) deals with the general principle of an amendment being prospective in absence of express or implied intention to the contrary. Judgments in Ajantha Industries case (supra) and Rajesh Mahajans case (supra) do not deal with the issue of limitation. Greenworld Corpn.s case (supra) only holds that reassessment has to be within limitation and that the assessment order could not be passed at the instance of a higher authority. It has been further held that effect of jurisdiction in the context of transfer u/s 120 of the Act would be governed by the principle akin to Section 21 Code of CPC and in absence of any prejudice, objection of lack of jurisdiction at a belated stage could not be entertained.

This aspect will be considered under Question (ii).

In view of above, the plea on behalf of the Petitioner cannot be accepted and the notice Annexure P.4 could not be held.