By C. N. Vaze, Chartered Accountant
Is It Fair
1. Introduction :
In recent years, ‘scrutiny assessments’ have become a
nightmare for taxpayers as well as professionals. It is also seen that many of
the officers themselves are not very comfortable with the manner in which things
are administered or thrust on them. The starting point of the ‘scrutiny’ is the
service of notice u/s.143(2) of the Income-tax Act, 1961 (the Act). After the
introduction of Fringe Benefit Tax (FBT) by Finance Act, 2005, S. 115WE(2) also
contemplates an assessment similar to S. 143(3). Because of these two
assessments, a peculiar problem is faced. The same is discussed in the
succeeding paragraphs. This is all the more relevant, particularly when there
were two separate returns i.e., one for income and the other for FBT.
Even after introduction of combined form of return of income and FBT, it is
pertinent to note that there are two separate assessments for each.
2. Nature of problem :
2.1 A few assessees received notice u/s.115WE(2) for
assessment u/s.115WE for FBT. This was received within the prescribed time for
A.Y. 2006-07.
2.2 Further, due to e-filing of returns, the assessees also
received notices u/s.142(1) requiring them to furnish hard copies of accounts,
reports, TDS certificates and so on.
2.3 It may be pertinent to note that notice u/s. 142(1) is
common for both the assessments i.e., the assessment of income as well as
of fringe benefits.
2.4 Assessees confirm having received aforementioned notices;
but are sure that the cover did not contain any notice u/s.143(2).
2.5 These assessees received fresh notice u/s. 143(2) dated
much beyond the time permissible u/s.143(2). Strictly speaking, the notice is
out of time on the face of it.
2.6 Now, the dilemma arises. The acknowledge-ment is given
for the cover (envelope). There is no clarity as to its contents. If at all the
notice was served earlier u/s.143(2) along with the notice for FBT assessment,
there is no need for fresh notice u/s.143(2).
2.7 The Finance Act, 2008 has given considerable liberty to
the AOs to commit lapses —
E.g.,
— S. 282A : Notice need not be signed and only name
and designation is printed/stamped/ otherwise written is sufficient.
— S. 292BB : Where an assessee appeared in any
proceedings/co-operated in any inquiry, it shall be deemed that the notice has
been duly served and he shall be precluded from taking any objections in this
regard, after completion of assessment.
2.8 At the same time, one cannot really afford to take a
tough stand regarding non-service of notice. Everybody is aware of the nuisance
value resulting from such an action.
3. Conclusion :
There is already abundant litigation with regard to the
service of notice e.g., Notice accepted by a neighbour or a servant or a
person other than assessee. There are also issues of service of notice by
affixture. The dilemma being created by two separate assessments will add to
this litigation. Therefore, it is high time that the CBDT issues a Circular to
clarify the position.
