1980 (1) TMI 203 - AT - Income Tax

Summary

Issues: Validity of service of notice under section 148 of the IT Act, 1961

In this case, the Appellate Tribunal ITAT Amritsar addressed the issue of the validity of the service of a notice under section 148 of the IT Act, 1961. The assessee contended that the notice was not validly served, leading to the reassessment order being challenged as invalid and seeking its quashing.

The assessee was initially assessed at a certain amount, but a re-assessment was made by the Income Tax Officer (ITO) at a significantly higher amount. This re-assessment included additional income from undisclosed sources. The assessee appealed, and the Commissioner of Income Tax (Appeals) approved the ITO's actions under section 147(A) read with section 148 of the Act.

The primary argument raised by the assessee was that the notice under section 148 was not validly served. The notice was sent by registered post but returned with an endorsement that the addressee was not available. Subsequently, the ITO ordered service by affixture on the last known premises where the assessee was conducting business or residing. The Tribunal analyzed the legal provisions under Order 5 Rule 20 of the Civil Procedure Code (CPC) regarding substituted service and the conditions under which it can be ordered.

The Tribunal held that the ITO did not have sufficient grounds to believe that the assessee was avoiding service or that the notice could not be served in the ordinary way. The Tribunal emphasized that the mere absence of the assessee due to a business trip did not justify substituted service. The Tribunal distinguished the case at hand from a Supreme Court precedent where the refusal of service by the assessee was a crucial factor in ordering substituted service.

Ultimately, the Tribunal concluded that the notice under section 148 was not properly served on the assessee, rendering the reassessment order invalid. Consequently, the addition to income sustained by the Commissioner of Income Tax (Appeals) could not be upheld. As the assessee succeeded on the preliminary issue of notice validity, the Tribunal did not delve into the merits of the case, and the appeal was allowed.