Calcutta High Court
Commissioner Of Income-Tax vs Aparna Agency Pvt. Ltd. on 8 March, 2004
Equivalent citations: (2004)189CTR(CAL)355, [2004]267ITR50(CAL)
Author: Soumitra Pal
Bench: Soumitra Pal
JUDGMENT
1. This is a reference at the instance of the Revenue and the following two questions have been referred by the Tribunal for the opinion of this court arising out of the order of the Tribunal in I. T.A. No. 581 (Cal) of 1992 :
"1. On the facts and in the circumstances of the case, whether the learned Tribunal was justified in law in setting aside the penalty order dated April 17, 1989, for an amount of Rs. 1 lakh imposed under Section 271B, on the ground that the show cause notice served on the assessee was invalid ?
2. Whether, on the facts and in the circumstances of the case, the learned Tribunal was justified in law in holding the view that the deficiencies in the show cause notice are not curable by the provisions of Section 292B of the Income-tax Act, 1961, and thereby holding the order of penalty invalid ?"
2. The facts giving rise to the aforesaid two questions are that for the assessment year 1985-86, the Assessing Officer formed his opinion which is reflected in his order of assessment that tax audit report under the provisions of Section 44AB have not been filed within the prescribed time and directed that penalty proceedings under Section 271B of the Income-tax Act, 1961, be initiated. The Assessing Officer after affording the petitioner an opportunity of hearing passed an order imposing penalty of Rs. 1 lakh under Section 271B. The asses-see preferred an appeal before the Commissioner of Income-tax (Appeals) which was dismissed. Thereupon an appeal was filed by the assessee before the Tribunal which vide its order dated April 24, 1996, allowed the appeal and cancelled the penalty on the ground that the penalty notice issued to the assessee was not signed by the Assessing Officer and so being invalid the same invalidated the imposition of penalty as well. In coming to the aforesaid conclusion reliance was placed by the Tribunal upon a Division Bench judgment in Umashankar Mishra v. CIT . It has been noticed in the order of the Tribunal that the said ground pertaining to the show cause notice being not valid was ground No. 1 of appeal before the learned Commissioner of Income-tax (Appeals) and the same had been incorporated as ground No. 2 before the Tribunal with the allegation that the same has not been considered by the learned Commissioner of Income-tax (Appeals). The Tribunal thereupon considered the said ground and after finding that the show cause notice dated March 7, 1988, issued to the assessee does not bear the signature of the Assessing Officer and the space meant for his signature was left blank, though office copy of the notice placed in the file bears the signature of the Assessing Officer allowed the assessee's appeal and set aside the order of penalty.
3. Mr. Prabir Bhowmick, learned counsel for the Revenue, contended that there is an admitted default on the part of the assessee in complying with the requirements mentioned under Section 44AB and, therefore, Section 271B is clearly attracted. The procedure for imposing penalty is prescribed under Section 274 whereby hearing has to be afforded to the petitioner and the same has been complied with. Defect in the show cause notice as alleged by the assessee being a mere irregularity, the same is curable under Section 292B and, therefore, the show cause notice could not have been invalidated. No such objection has been raised before the Assessing Officer nor was the same pleaded before the Commissioner of Income-tax (Appeals). The Tribunal erred in setting aside the penalty proceedings on that ground. It was further contended as held in CIT v. Anand and Co. that reply was filed by the assessee pursuant to the show cause notice and there being no apprehension in the assessee's mind as to the nature of the notice or dubiousness of the identity of the officer issuing the same, the notice could not be invalidated by the Tribunal in view of the provisions contained in Section 292B. It was further contended that instead of dealing with the substance of the matter, the Tribunal has been unduly influenced by procedural technicalities.
4. On the other hand, Mr. A.K. Roy Chowdhury, the learned senior advocate appearing with Ms. Sutapa Roy Chowdhury for the respondent-assessee, submitted that the judgment of the Calcutta High Court in Anand and Co. is distinguishable on the facts of the case on hand as in that case the judgment in B.K. Gooyee v. CIT [1966] 62 ITR 109 (Cal) was distinguished on the ground that it was not the case of the Revenue that the notice in that case contained no signature. The case made out in that case against the Revenue was that the signature contained in the notice is of doubtful authenticity. Mr. Roy Chowdhury submitted that the judgment of the Madhya Pradesh High Court in Umashankar Mishra v. CIT is based upon the judgment of this High Court in B.K. Gooyee's case [1966] 62 ITR 109 and is directly on the issue arising in the case herein dealing with the question of the validity of a show cause notice issued under Section 271(1)(a) which was unsigned. It was further submitted that the Madhya Pradesh High Court has dealt with the question with respect to the provisions of Section 292B having been introduced after the decision in B.K. Gooyee's case [1966] 62 ITR 109 (Cal) and held that the signing of a notice under Section 271(1)(a) of the Act is not merely an inconsequential technicality. It was held as under (page 332) :
"It is a requirement of the provisions of Order 5, Rule 1(3) of the Civil Procedure Code, which are applicable by virtue of Section 282 of the Act. Under the circumstances, the provisions of Section 292B of the Act would not be attracted in the instant case and the Tribunal, in our opinion, was not right in holding that the notice issued under Section 271(1)(a) of the Act was a valid notice in the eye of law."
It was further submitted by Mr. Roy Chowdhury, learned senior counsel for the assessee, that the Madhya Pradesh High Court in CIT v. Sattandas Mohandas Sidhi followed its earlier decision in Umashankar Mishra's case [1982] 136 ITR 330 and in the case of B.K. Gooyee [1966] 62 ITR 109 (Cal) in a matter arising under Section 263 where the notice was issued by telegram.
5. True, as contended by Mr. Bhowmick, learned counsel for the Revenue, that in so far as this court is concerned the judgments of the Madhya Pradesh High Court are persuasive in nature but that is hardly a ground to distinguish the said judgment more particularly when their Lordships of the Madhya Pradesh High Court have relied upon the Division Bench judgment of this High Court in B.K. Gooyee's case [1966] 62 ITR 109.
6. A close scrutiny of B.K. Gooyee's case [1966] 62 ITR 109 (Cal) could show that the question for consideration was regarding the irregularity in the issuing of a notice under Section 34 of the Indian Income-tax Act, 1922. The notice did not contain the signature of the Income-tax Officer who issued it. It was held that service of a valid notice is a condition precedent to the assumption of jurisdiction by the Income-tax Officer to take further proceedings and that all proceedings taken in pursuance of a notice which does not contain the signature of the Income-tax Officer are invalid. It was further held that such irregularity cannot be waived and the question of its validity can be taken at any stage of the proceedings. Their Lordships of the Madhya Pradesh High Court have taken notice of the provisions contained in Section 292B which provision was incorporated subsequent to the judgment in B.K. Gooyee's case [1966] 62 ITR 109 (Cal) and have specifically dealt with this question in the light of the provisions in Section 292B. We are in respectful agreement with the view of their Lordships in Umashankar Mishra's case based on which the Tribunal in the case on hand reversed the order of the Commissioner of Income-tax (Appeals).
7. The observations in B.K. Gooyee's case [1966] 62 ITR 109 (Cal), which, in our view, have material bearing on the questions raised before us are extracted hereunder (page 119) :
"In the present case, there was more than a mere irregularity or a clerical mistake, for, in my view, a notice without the signature lacks an essential and/or an integral and/or an inseparable vital part or requirement of a notice under Section 34, a notice in terms of which is a condition precedent to the assumption of jurisdiction by the Income-tax Officer. It is notice with a body but without a soul. Hence, it is an invalid notice and consequently, equivalent to no notice."
8. The service of a valid notice, as already noticed, is a condition precedent to the assumption of jurisdiction by the Assessing Officer. The existence of a valid notice is, therefore, a jurisdictional fact. The question, therefore, is not to be looked at from the perspective that the decision to issue notice was by an authority competent in that behalf under the Act and, therefore, submitting to his jurisdiction without objection, the inference of waiver arises. The question being one of jurisdiction, to be more specific the condition precedent to the assumption of jurisdiction what has to be seen is that the person that purported to exercise the jurisdiction vested in him had in fact exercised that jurisdiction and signed the said notice. The said test has not been satisfied in the case on hand. Unlike the judgment of this court in Anand and Co. [1994] 207 ITR 418 relied upon by the Revenue the case on hand is not one where the authenticity of the show cause notice is in question. In the case on hand as held by the fact-finding authority the show cause notice has not been signed by any person and the place intended for signature was kept blank.
9. We therefore find no reason to differ with the view of the Tribunal.
10. We accordingly answer both the aforesaid questions in the affirmative against the Revenue and in favour of the assessee. The reference is accordingly answered.