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2015 (3) TMI 562 - AT - Income TaxReopening of assessment - validity of notice - non serving on notice challenged - Held that - It is clear from the records that there is no evidence for the notice u/s. 148 of the Act dated 19.9.05 having been dispatched. There is no evidence, admittedly, for the said notice having been served on the assessee as well. It is also clear from the notice dated 19.9.05 that the AO originally started writing the address given in the return of income, but for the reasons best known to him, had struck off the said address and has addressed the notice to '310, Raheja Arcade, 1/1, Koramangala Industrial Layout, Bangalore'. These circumstances throw suspicion on whether notice u/s. 148 was issued at all to the assessee. From the evidence available on the record, we are of the view that revenue has failed to establish the issue of notice u/s. 148 of the Act as well as its service on the assessee. - Decided in favour of assessee.
Issues Involved:
1. Validity of the notice issued under Section 148 of the Income Tax Act. 2. Service of notice under Section 148 to the correct address. 3. Impact of Section 292BB on the validity of the assessment proceedings. 4. Depreciation claim on technical know-how. 5. Eligibility of interest income for deduction under Section 80IA of the Income Tax Act. Issue-wise Detailed Analysis: 1. Validity of the Notice Issued Under Section 148 of the Income Tax Act: The primary issue was whether the notice under Section 148 was validly issued and served. The Tribunal found that the notice dated 19.09.2005, which was supposed to be sent by RPAD, lacked evidence of dispatch and service. The address on the notice was altered from the registered office to another address, raising doubts about its issuance. The Tribunal concluded that the Revenue failed to establish the issuance and service of the notice, rendering the reassessment proceedings and the order of reassessment a nullity. 2. Service of Notice Under Section 148 to the Correct Address: The Tribunal emphasized that service of notice under Section 148 is mandatory for making an order of reassessment. The notice was sent to an address different from the one mentioned in the return of income. The Tribunal noted that all other notices were sent to the registered address, and the sudden change for the Section 148 notice was suspicious. The Tribunal cited the Supreme Court's decision in R.K. Upadhyaya v. Shanabhai P. Patel, which mandates service of notice under Section 148 as a condition precedent for reassessment. 3. Impact of Section 292BB on the Validity of the Assessment Proceedings: The Revenue argued that the provisions of Section 292BB, which preclude the assessee from challenging the notice's validity if they have participated in the proceedings, should apply. However, the Tribunal held that Section 292BB, effective from 1st April 2008, does not apply retrospectively to the assessment year 2000-01. The Tribunal referenced the Special Bench decision in Kuber Tobacco Products Pvt. Ltd. v. DCIT, which clarified that Section 292BB could not be applied retrospectively and that the assessee retains the right to challenge the validity of the notice before this date. 4. Depreciation Claim on Technical Know-How: Although the primary focus was on the validity of the notice, the Tribunal noted that the Assessing Officer disallowed the depreciation on technical know-how because the assessee did not deduct tax at source under Section 195 for the payment made to a non-resident. However, this issue was not further analyzed due to the annulment of the reassessment order on preliminary grounds. 5. Eligibility of Interest Income for Deduction Under Section 80IA: The Assessing Officer also held that the interest income from deposits could not be considered profits eligible for deduction under Section 80IA. The Tribunal did not delve into this issue in detail, as the reassessment order was annulled based on the preliminary issue of the invalid notice. Conclusion: The Tribunal annulled the reassessment proceedings and the order of reassessment due to the failure of the Revenue to establish the issuance and service of the notice under Section 148. The Tribunal emphasized that service of notice is a mandatory requirement and that Section 292BB does not apply retrospectively to the assessment year in question. Consequently, the other issues raised by the assessee on merits were not addressed. The appeal by the assessee was allowed.
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