The amendment proposed in the Union Budget for 2008-09 (through insertion of a new section 292BB) to address the problems pertaining to service of notice and the time limit for issuance of notice to an assessee under section 143 (2) of the Income-Tax Act has raised the hackles of tax experts and direct tax practitioners.
As per this new provision, scheduled to come into effect from April 1, 2008, where an assessee has appeared in any proceeding or cooperated with the department in any assessment or reassessment, it shall be deemed that a notice has been duly served on him in accordance with the relevant provisions of the I-T Act.
The new section now precludes the assessee from taking any objection to any proceeding or enquiry under the plea that a proper notice, in time, has not been served on him.
Describing the proposed amendment as smacking of a “typically bureaucratic approach”, Mr Narayan Jain, Vice President of All India Federation of Tax Practitioners, said it went against the established law on principles of natural justice. Describing issuance of a proper notice by the tax authority, as in the Act, as the first limb of principles of natural justice, he said it must be precise and unambiguous, and apprise the taxpayer of the case he has to meet.
According to the tax expert, who is also guest faculty at the National University of Juridical Sciences, Kolkata, as per section 282 of the Act, notice has to be generally served on the person therein named either by post or “as if it were a summon issued by a court under Code of Civil Procedure”.
Experts of Direct Taxes Professionals Association (DTPA) said it is quite clear that as per Article 265 of Constitution of India, taxes cannot be levied or collected save by the authority of law. Urging the finance minister to reconsider the amendment, Mr Jain said this was nothing but a premium for promoting inefficiency within the department.
Explaining further, he observed that as per existing provisions of I-T Act for assessment or reassessment, notice is required to be served on assessees. “In some instances, orders of Assessing Officer are being quashed on the ground that there is no evidence of issue or service of notice, even though the assessee or the authorised representative have attended hearings before the AO during proceedings.”
Quoting the constitutional interpretation under Article 265, he said it has been made amply clear that “a tax law may be invalidated when it violates the fundamental right to equality guaranteed by Article 14. “Equally, a taxing measure may be challenged if it violates the rights of a citizen under Article 19 of the Constitution.”