2016 (10) TMI 1034 - AT - Income Tax

Non service of valid notice u/s 143(2) - notice sent by speed post - time for delivery - Held that - Hon ble Delhi High Court in the case of Nulon India Ltd. vs. ITO (2008 (3) TMI 425 - DELHI HIGH COURT) narrated that there is no presumption under the law that any notice sent by speed post must be delivered to the assessee within 24 hours and hence, in the absence of any material on record it could not be said to have served within limitation. Similarly, Hon ble Delhi High Court in the case of CIT vs Inderpal Malhotra (2007 (10) TMI 672 - Delhi High Court ) has held that where a notice u/s.143(2) was issued by registered post on the last day of period of limitation, there is no way that the notice could have been received by the assessee on the same day unless the notice was sent by hand, which is not so in the present case. The Court has further stated that in CIT vs. Vardhman Estate (P.) Ltd. (2006 (9) TMI 128 - DELHI High Court ), a notice was sent by speed post one day before the period of limitation was to expire that is, on 30/10/2002 and the contention urged by the revenue in that case was that the notice sent should be deemed to have been served on the assessee. This argument was rejected by this Court and it was made clear that what is required by the statute is not merely the dispatch or issuance of the notice but its actual service. Thus we are of the considered opinion and hold that notice u/s.143(2) was not served upon the assessee legally and therefore appeal of the Department is not tenable and the same is dismissed. - Decided in favour of assessee

Summary

Issues involved:
Appeal against the order of Commissioner of Income Tax (Appeals) declaring the assessment as "invalid" - Validity of notice served u/s.143(2) of the Income Tax Act, 1961.

Analysis:

Issue 1: Appeal against the order of Commissioner of Income Tax (Appeals) declaring the assessment as "invalid"

The appeal by the Revenue was directed against the order of the Commissioner of Income Tax (Appeals)-III for the Assessment Year 2008-09. The Revenue contended that the Commissioner of Income Tax (Appeals) erred in law and on facts by declaring the entire assessment as "invalid." The Revenue argued that the Commissioner of Income Tax (Appeals) exceeded his authority by not following the provisions of section 251 of the Income Tax Act, which allows for confirmation, reduction, enhancement, or annulment of the assessment but does not grant the power to declare the assessment as "invalid."

Issue 2: Validity of notice served u/s.143(2) of the Income Tax Act, 1961

The case involved an assessment of a company engaged in the purchase and sale of shares. The Assessing Officer determined the total income of the company based on various cash transactions during a specific period. The company contested the assessment before the Commissioner of Income Tax (Appeals), who allowed the appeal. The Revenue challenged this decision, arguing that the notice u/s.143(2) was legally served on the company. However, the Tribunal disagreed with the Revenue's contention. The Tribunal referred to legal precedents where the courts held that mere dispatch or issuance of a notice is not sufficient; actual service of the notice is required by law. As the notice u/s.143(2) was not served upon the company legally, the Tribunal dismissed the appeal of the Revenue.

In conclusion, the Tribunal upheld the decision of the Commissioner of Income Tax (Appeals) regarding the invalidity of the assessment. The Tribunal determined that the notice u/s.143(2) was not legally served on the company, leading to the dismissal of the Revenue's appeal. The judgment was pronounced on 18/10/2016 by the Appellate Tribunal ITAT Ahmedabad.