2007 (4) TMI 43 - HC - Income Tax

Notice u/s 143(2) was issued with in time by Registered Post but returned undelivered. Another notice issued after expiry of 12 months delivered and assessment proceedings were completed. It was held that there was fault on the part of dept. for sending notice correctly. Assessment on the basis of subsequent notice is not valid and quashed

Summary

Issues:
Validity of assessment based on service of notice under Section 143(2) of the Income Tax Act.

Analysis:
The case involved a dispute regarding the validity of an assessment made by the Income Tax Department for the assessment year 2001-02. The primary issue was whether the notice under Section 143(2) of the Income Tax Act was validly served on the Assessee within the prescribed period. The Assessee contended that no notice was served within the specified time frame, rendering the assessment invalid.

The Commissioner of Income Tax (Appeal) initially upheld the assessment, stating that the notice served on 25th October, 2002, based on the address provided in the return of income, was within the prescribed time. However, the Assessee appealed to the Tribunal, which ruled that no notice had been served on or before 31st October, 2002, thereby invalidating the assessment.

The High Court analyzed the relevant provisions of the Income Tax Act, specifically Section 143(2) and Section 282, which govern the service of notices. It was noted that the notice sent by registered post was returned undelivered with an endorsement stating "No Plot no. 226 exists." The Court highlighted an important discrepancy in the endorsement, where the alphabet 'B' was missing, indicating a possible interpolation on the address of the Assessee.

Moreover, the Court referenced Order V Rule 19A of the Code of Civil Procedure, which mandates that a notice sent by registered post must be accompanied by acknowledgment due. In this case, the registered envelope was not sent with acknowledgment due, further casting doubt on the validity of the notice served.

Based on a comprehensive review of the evidence, the High Court concluded that no notice under Section 143(2) had been validly served on the Assessee within the prescribed period. Consequently, the assessment made by the Assessing Officer was deemed invalid. The Court affirmed the Tribunal's decision, emphasizing that it was a finding of fact, and dismissed the appeal filed by the Revenue.

In summary, the judgment centered on the crucial issue of the validity of the assessment in light of the service of the notice under Section 143(2) of the Income Tax Act. The High Court's detailed analysis of the relevant legal provisions and the discrepancies in the notice's service ultimately led to the dismissal of the Revenue's appeal, upholding the Tribunal's decision in favor of the Assessee.