2013 (10) TMI 14 - HC - Income Tax

Reassessment - Issue of Notice u/s 148 to the wrong address Held that - provisions of Section 292BB would also not help the department. - The invalidity of the notice issued under Section 148 renders the entire reaassessment proceedings as null and void whereas non service of a notice issued u/s 148 renders the assessment framed as bad in law. in this case there is no doubt that notice u/s 148 was served on an incorrect address and against which the explanation of the department is that the address of the assessee is well known and the Inspector of the department had gone to a correct address to serve this notice, is not tenable in the eyes of the law when the record reveals that the notice was never served upon the assessee - A notice issued u/s 142 (1) was sent back by Shri Alik Farsaiya, the legal consultant on the reasoning that the notice did not belong to any of his clients. Another notice, allegedly, sent and received by Shri Mahesh, the alleged employee of Dr. Ajay Prakash, when it is found that he was not an employee of the assessee, cannot be said to be duly served Decided against the Revenue.

Summary

Issues:
Validity of notice u/s 148 for assessment year 1998-99.

Analysis:
The appellant raised substantial questions of law challenging the validity of the notice issued under Section 148 of the Income Tax Act 1961. The primary contention was regarding the proper service of the notice and the correctness of the address on which the notice was sent. The appellant argued that the notice was issued within the prescribed time as required by law and was served by the Income Tax Inspector and through speed post. However, the Tribunal found that the notice was sent to the wrong address, which was a minor mistake but significant enough to render the notice invalid. The Tribunal emphasized the importance of valid service of notice u/s 148, stating that any invalidity in the notice renders the reassessment proceedings null and void.

The appellant further argued that the person on whom the notice was served was a well-known doctor and that a small error in the address should not invalidate the notice. They contended that Section 292 BB of the IT Act should apply in this case. However, the Tribunal and CIT (A) found that the notice was indeed sent to the wrong address, and the person who received it was not authorized to accept notices on behalf of the assessee. The Tribunal highlighted the rule of consistency in the assessee's case and emphasized that a valid notice must be served directly on the assessee or an authorized agent to be binding. The Tribunal rejected the argument that direction or instruction can be given orally or in writing, emphasizing the importance of proper service of notice.

Ultimately, the High Court upheld the findings of the CIT (A) and the Tribunal, concluding that the notice was indeed sent to the wrong address and there was no valid evidence of proper service. The High Court emphasized that unless a valid notice is served upon the assessee, any reassessment framed must be quashed. Citing relevant legal precedents, the High Court dismissed the Income Tax Appeal, affirming the decision to quash the impugned assessment order due to the invalid notice issued u/s 148.

In summary, the judgment focused on the crucial issue of the validity of the notice u/s 148 for the assessment year 1998-99. The court emphasized the importance of proper service of notice and the correctness of the address to ensure the validity of the notice. The appellant's arguments regarding minor errors in the address and the alleged authority of the person receiving the notice were rejected, and the court upheld the decision to dismiss the Income Tax Appeal based on the findings of the CIT (A) and the Tribunal regarding the improper service of the notice.