2003 (5) TMI 27 - HC - Income Tax

Best judgment assessments in respect of all the four assessment years were framed under section 144 of the Act, on the basis of the material available on record - Tribunal has come to the conclusion that no notice under section 142(1) was served on the assessee and, therefore, the assessment order passed under section 144 was unsustainable. While holding so, the Tribunal has observed that the service of first notice by affixture was bad inasmuch as the procedure prescribed for effecting service by affixture was not followed by the Assessing Officer and as regards the second notice, nothing was brought on record to show that it was served on the assessee - finding recorded by the Tribunal cannot be faulted said finding is essentially a finding of fact giving rise to no question of law

Summary

Issues:
1. Delay in re-filing appeals
2. Validity of assessment orders under section 144 of the Income-tax Act
3. Service of notice under section 142(1) of the Act

Analysis:
1. Delay in re-filing appeals:
The court condoned the delay in re-filing the appeals, as per applications C.M. Nos. 45, 47, 49, and 50 of 2003. The applications were disposed of upon the court's decision to allow the condonation of the delay.

2. Validity of assessment orders under section 144 of the Income-tax Act:
The appeals by the Revenue under section 260A of the Income-tax Act, 1961, were directed against a common order passed by the Income-tax Appellate Tribunal. The Tribunal concluded that the assessment orders under section 144 were unsustainable as no notice under section 142(1) of the Act was served on the assessee. The Tribunal found fault with the service of the first notice by affixture and noted the absence of evidence regarding the service of the second notice. The Tribunal's decision was based on factual findings and not a question of law.

3. Service of notice under section 142(1) of the Act:
The court heard arguments from the Revenue's counsel regarding the service of notices. The counsel acknowledged discrepancies in the service of the first notice but claimed the second notice was served by a process server. However, the counsel failed to provide evidence of the notice being served on the assessee. Consequently, the court upheld the Tribunal's finding that there was no proper service of notice before completing the assessments. The court declined to address the issue of limitation in issuing notices under section 142(1) of the Act, as it found no grounds to interfere with the Tribunal's decision on the service of notice issue.

In conclusion, the court dismissed the appeals, citing the lack of a substantial question of law arising from the Tribunal's factual findings on the service of notice issue. The decision highlighted the importance of proper service of notices in assessment proceedings under the Income-tax Act.