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Issues:
1. Failure to prove service of notice under section 148 of the Income-tax Act. 2. Validity of penalty imposed for delay in filing return. 3. Binding nature of findings recorded by Revenue on the trial court. 4. Interpretation of section 276CC of the Income-tax Act regarding wilful failure to furnish return. 5. Authority to accept notice on behalf of the assessee by the accountant. 1. Failure to prove service of notice under section 148 of the Income-tax Act: The Income-tax Officer filed a complaint against the respondent under section 276CC of the Income-tax Act, alleging failure to prove service of a notice under section 148. The Chief Judicial Magistrate acquitted the assessee due to lack of evidence of notice service. The Revenue appealed, arguing that the court should not question the notice service due to a prior penalty for delay in filing the return. However, the court emphasized the necessity of proving notice service before penalizing the assessee under section 276CC. The trial court found no clear evidence of notice service on the assessee, noting that serving the accountant did not constitute valid service on the assessee. The court upheld the trial court's decision, dismissing the appeal. 2. Validity of penalty imposed for delay in filing return: The Revenue contended that the penalty imposed for delay in filing the return should preclude questioning the notice service. However, the court clarified that penalizing under section 276CC requires proving wilful failure to furnish the return after notice service. The court emphasized that the findings of Revenue are not binding on the trial court and penalties do not automatically validate notice service. The trial court's decision to acquit the assessee based on lack of evidence of notice service was deemed reasonable and not against the evidence on record. 3. Binding nature of findings recorded by Revenue on the trial court: The court highlighted that the findings of Revenue are not conclusive on the trial court and cannot restrict its examination of notice service. The court emphasized that the trial court must independently verify the service of notice under section 148 before penalizing the assessee under section 276CC. The trial court's decision to acquit the assessee based on insufficient evidence of notice service was considered valid and not arbitrary. 4. Interpretation of section 276CC of the Income-tax Act regarding wilful failure to furnish return: The court interpreted section 276CC, stating that penal consequences can only follow if the wilful failure to furnish the return after notice service is proven. The court stressed that notice service is a prerequisite for penalizing the assessee under section 276CC. The court clarified that the trial court is not bound by previous penalties or Revenue findings and must independently assess the evidence of notice service before making a decision. 5. Authority to accept notice on behalf of the assessee by the accountant: The court addressed the issue of whether an accountant receiving notice constitutes valid service on the assessee. It was determined that serving the accountant does not fulfill the requirement of serving the assessee directly. The court emphasized that notice service must be clearly and categorically established by the complainant, and serving the accountant cannot be equated with serving the assessee. The court upheld the trial court's decision, emphasizing the importance of direct notice service on the assessee for legal validity.
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