2007 (12) TMI 472 - HC - Income Tax

Reopening of assessment u/s 147 - Non Service of the notice u/s 148 of the act and 142(1) of the Act - HELD - There are categorical findings of fact recorded by the Tribunal that the revenue has not been able to produce any material to show that any notices u/s 148 was served upon the assessee in respect of the assessment years under consideration. Tribunal has noticed that the matter was time and again sent back to the AO by the CIT (A) and no authority could record positive and categoric finding that notice u/s 148 of the Act was served upon the assessee. It appears that there is no proof with regard to the service on the assessee u/s 148 of the Act. The Tribunal has further noticed that proceedings in respect of assessment year under consideration were dropped on 31-9-2002 with specific findings by the AO that notice u/s 148 could not be served. These are pure findings of fact which would not give rise to any question of law much less a substantive question of law. It is well-settled that issuance of a notice u/s 148 of the Act is a condition precedent for framing assessment order u/s 147 of the Act. It is equally well-settled that if no such notice is issued or notice issued is invalid and not in accordance with law or notice is not served on the proper person then assessment framed would be illegal and without jurisdiction. Therefore, we find that the Tribunal has taken correct view in these appeals. Accordingly, the appeals are dismissed.

Summary

Issues:
Validity of notice under section 148 for assessment years under consideration.

Analysis:
The High Court dealt with the issue of whether the notice under section 148 of the Income-tax Act was validly issued and served on the assessee before framing assessment, which is considered a condition precedent. The Court noted that non-service of such a notice on the proper person is crucial and cannot be condoned. It was highlighted that there were categorical findings by the Tribunal indicating that the revenue failed to provide any evidence of serving notices under section 148 of the Act on the assessee for the assessment years in question. Despite repeated referrals back to the Assessing Officer by the CIT (Appeals), no concrete evidence was produced to confirm the service of the notice. The Tribunal observed that the proceedings for the assessment year were dropped due to the inability to serve the notice under section 148. These factual findings were deemed conclusive, and the absence of proof regarding the service of the notice was a critical factor. The Court emphasized that the issuance of a notice under section 148 is a prerequisite for framing an assessment order under section 147, and the absence of a valid or properly served notice renders the assessment illegal and without jurisdiction. Consequently, the High Court upheld the Tribunal's decision, dismissing the appeals as the Tribunal's view was deemed correct based on the facts and legal principles involved.

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