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2013 (12) TMI 16 - AT - Income TaxValidity of assessment proceedings u/s 147 Held that - A notice u/s 148 of the Act was issued on 22-03-2005 and as per the AO, the notice was served on the assessee on 24.03.2005 - Service of notice is the sine qua non for a proceedings u/s 147 of the Act to get underway - , Section 282 of the Act is the governing Section in respect of the procedure for service of such notice - Such a notice may be served either by post, or as if it was a summons issued by a court under the Code of Civil Procedure, 1908 - In the present case, the service was as a summons and not by post. Therefore, the service is governed by the relevant provisions of the CPC, i.e., Order V - The servicee of the notice has nowhere been identified in spite of repeated requests made by the assessee to the Assessing Officer to do so - The Ld. CIT (A) has noted that even after instructions from the CIT (A), the Assessing Officer was not able to name the person on whom the notice was served - In the absence of identification of the servicee, it is, obviously, well impossible to contend that the servicee was an agent of the assessee company - Not only has the alleged servicee not been identified, the person identifying such servicee has also not been even named, thereby violating the provisions of Order V, Rule 18, CPC, as has correctly been taken into consideration by the Ld. CIT (A) The service of notice u/s 148 of the IT Act was invalid and cannot be said to be merely a procedural defect and it cannot be cured by the participation of the assessee in the re-assessment proceedings Decided in favour of assessee.
Issues Involved
1. Validity of re-assessment proceedings under Section 147 of the Income Tax Act, 1961. 2. Validity of service of notice under Section 148 of the Income Tax Act, 1961. Detailed Analysis Issue 1: Validity of Re-assessment Proceedings Under Section 147 The department's appeals for the assessment years 1998-99, 1999-2000, and 2003-04 challenged the orders of the CIT (A)-VII, New Delhi, which held the re-assessment proceedings under Section 147 as void ab-initio. The primary ground was that there was no valid service of notice under Section 148 of the Income Tax Act, 1961. The original income tax return for A.Y. 2003-04 was filed on 02.12.2003, and processed under Section 143(1) on 19.12.2003. Subsequently, a notice under Section 148 was issued on 22.03.2005, which as per the AO, was served on 24.03.2005. The assessee contended that the notice was not received, making the re-assessment invalid. Issue 2: Validity of Service of Notice Under Section 148 The CIT (A) observed that there was no valid service of notice under Section 148 on the assessee, rendering the re-assessment proceedings void ab-initio. The CIT (A) noted that the notice was not served on the assessee or its authorized persons, and there was no record to suggest otherwise. The CIT (A) cited several case laws emphasizing that proper service of notice is mandatory, and mere participation in proceedings does not validate them. The CIT (A) referred to Section 148(1), which mandates that notice should be served on the assessee. Section 282 prescribes the specific mode of service, either by post or as a summons under the Code of Civil Procedure, 1908. The CIT (A) highlighted that service through a process server must follow procedures under Order V of the CPC, which was not adhered to in this case. The CIT (A) concluded that the notice was not served on a person authorized to receive it, and the identity of the servicee was not established. The CIT (A) relied on various judgments to assert that proper service is a jurisdictional requirement, and its absence cannot be cured by the assessee's participation in the proceedings. Tribunal's Findings The tribunal upheld the CIT (A)'s order, noting that the service of notice is a sine qua non for initiating re-assessment proceedings under Section 147. The tribunal observed that the requirements of Order V, Rule 18 of the CPC were not met, as the servicee was not identified, and the person identifying the servicee was not named. The tribunal agreed with the CIT (A) that the invalid service of notice could not be treated as a procedural defect and could not be cured by the assessee's participation in the re-assessment proceedings. The tribunal dismissed the department's appeals, affirming that the re-assessment proceedings were void ab-initio due to the invalid service of notice under Section 148. Conclusion The tribunal upheld the CIT (A)'s decision, holding that the re-assessment proceedings under Section 147 were void ab-initio due to the invalid service of notice under Section 148. The appeals filed by the department were dismissed, reinforcing the necessity of proper service of notice as a jurisdictional requirement.
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