2011 (11) TMI 234 - HC - Income Tax

Validity of 143(2) - Once the assessment was done and appeal was filed but no specific ground regarding service of notice under Section 143(2) was taken, the said ground was belatedly taken by way of additional ground - Held That - Tribunal was not justified in granting relief to assessee. Manner of Service of Notice 143(2) - Held That - the tax assistant went to the property which was mentioned in the notice but as the respondent-assessee could not be found at the said address, they took steps and went to the new address which was made available. Notice shall be deemed to be proper.

Summary

Issues:
1. Validity of notice under Section 143(2) of the Income Tax Act, 1961 for assessment year 2000-01.

Analysis:
The High Court addressed the issue of whether the notice under Section 143(2) was validly served within the statutory period. The court noted that the notice was required to be served within 12 months from the date of filing the return, which in this case was on or before 31st October 2002. The term "served" was interpreted to mean actual service, not just the issue of notice, as established in previous cases like CIT Vs. Lunar Diamonds Ltd. and CIT Vs. Pawan Gupta.

The tribunal had decided in favor of the respondent, ruling that there was no valid service of notice under Section 143(2) within the statutory time limit. The tribunal highlighted discrepancies in the service process, such as the change in the respondent's address and doubts regarding the accuracy of the service report. Despite the respondent's participation in the assessment proceedings, the tribunal annulled the assessment order.

The court examined the details of the service process, where the process server attempted service at the address mentioned by the respondent in the return but found the respondent had shifted. The server then went to the new address and affixed the notice there. The court emphasized that the process server made reasonable efforts to serve the respondent, who did not dispute residing at the new address at the time.

The respondent's counsel argued that service by affixture at the new address should be considered valid, citing relevant case laws. The court discussed precedents like Yakub Abdul Razak Memon Vs. Competent Authority and Ravi Datt Vs. Chuni Lal to evaluate the validity of service by affixture in different contexts.

The court also considered the timing of the notice issuance and the respondent's delayed challenge regarding the service of notice. It was noted that the notice date discrepancy was a clerical error, and the department should have been more cautious in issuing the notice before the statutory deadline.

Ultimately, the court ruled in favor of the Revenue, concluding that the notice was validly served within the statutory period. The matter was remitted back to the tribunal for further consideration, emphasizing the importance of timely and accurate notice issuance to avoid such disputes.

This detailed analysis of the judgment showcases the legal intricacies involved in determining the validity of a notice under the Income Tax Act and the significance of procedural compliance in tax assessments.