Commissioner of Income Tax vs Madhwan Bashyam

The Revenue is aggrieved by an order dt. 22nd Sept., 2006 passed by the Tribunal, Delhi Bench ''E'' in ITA No. 4618/Del/2003 relevant for the asst. yr. 1996-97.

M/s Marubeni Corporation had filed a return purportedly as the agent of the assessed. The return was filed on 24th June, 1996. A notice was issued to the assessed u/s 148 of the IT Act, 1961 (for short the Act) on 14th Jan., 2000 and it was served on the assessed on 31st Jan., 2000. According to the assessed, the notice was time-barred in view of the provisions of Section 149(3) of the Act and the notice should have been served upon the assessed on or before 31st March, 1999.

It appears that this contention was not urged by the assessed before the AO or before the CIT(A) but it was urged as an additional ground before the Tribunal. The Tribunal examined the application filed by the assessed for urging the additional ground and that application was allowed by an order dt 28th Aug., 2006. Against that order, the Revenue had preferred an appeal u/s 260A of the Act in this Court being IT Appeal No. 310 of 2007 but it was withdrawn by an order dt. 1st Oct., 2007.

The Tribunal, by the order under challenge, accepted the additional ground raised by the assessed and came to the conclusion that the notice issued to the assessed u/s 148 of the Act was barred by time. Learned Counsel for the Revenue has drawn our attention to Section 163 of the Act to contend that no order was passed to the effect that M/s Marubeni Corporation was the agent of the assessed. In particular, she has referred to Section 163(2) of the Act and that reads as follows:

Who may be regarded as agent.--(1) ...

(2) No person shall be treated as the agent of a non-resident unless he has had an opportunity of being heard by the AO as to his liability to be treated as such.

On a plain reading of Section 163(2) of the Act, it appears to us that when an order adverse to the assessed/agent is passed by the AO, then a written order is required to be made. However, if there is no objection to the agent continuing the proceedings on behalf of the assessed, no specific order needs to be passed by the AO.

Learned Counsel for the Revenue has referred to COMMISSIONER OF INCOME TAX, MADRAS (CENTRAL) Vs. EXPRESS NEWSPAPERS (P.) LTD., . On a reading of the decision, it appears to us that the High Court has not taken a conclusive decision on the question whether an order is required to be passed treating a person as an agent of the assessed. But it appears that only an adverse order, which is appealable, is required to be made in writing so that the right of the assessed or his agent is not frustrated. In other words, if an order is passed in favor of the assessed or the proceedings continue on the basis that the assessed is represented by an agent, no specific order needs to be passed. In our opinion, this is also apparent from the language of Section 163(2) of the Act which does not provide for a specific or written order to be passed by the AO.

In our opinion, if a person filing a return as an agent of the assessed is not accepted as an agent for further proceedings, then the AO must pass an order so that the agent or assessed can file an appeal. But, as in the present case, if the proceedings have gone on as if there is no objection to the person filing a return being treated as an agent of the assessed, no specific order needs to be passed in this regard.

Under the circumstances, we do not find any error in the view taken by the Tribunal in coming to the conclusion that the notice was issued to the assessed beyond the period prescribed by law.

No substantial question of law arises. The appeal is dismissed.