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2015 (8) TMI 416 - AT - Income TaxValidity of assessment - non serving with mandatory notice u/s 143(2) - CIT(A) held that as considering the difficulties of tax administration by the department and distribution of jurisdiction of the cases to salaries ITO, it is not possible to monitor service of notice 142(1)/143(2) on each case exclusively, thus non service of notice 143(2) is dismissed - Held that - If what is concluded by the Ld. CIT(A) is correct then there is no legal mandate for the Revenue to vary the returned income, re-open the concluded assessments etc. It would lay the Revenue open to the unfounded criticism of the tax payers that the fate of the tax payer is open to the arbitrary exercise of power by the tax Department to the detriment of the rights and safety of the tax payer in the face of the perceived authority of the tax department to selectively and mischievously abuse the power under the shelter of the argument that sheer numbers defeat the mandatory exercise. Even if the view expressed is only an opinion based on the personal misreading of the procedure by the Ld. CIT(A) under a mistaken belief that issuance of notice u/s 143(2) is an empty formality inspite of the legal position on this statutory mandate, then it throws a very public glare on the serious malaise which the tax administration can be said to be infected with and in such a situation also we are confident that the Competent Authority in the Department would be equally concerned to address the situation and send out correct signals at the earliest point of time. Having expressed our anguished dissatisfaction with the reasoning arrived at in the impugned order, the impugned order is set aside and the issue is restored back to the file of the CIT(A) with the direction to decide the same after giving the assessee a reasonable opportunity of being heard by way of a speaking order in accordance with law. The finding on merits is also set aside as first as per settled legal principles the CIT(A) shall decide the Jurisdictional issue and then proceed to decide the appeal on merits if so warranted on facts. - Decided in favour of assessee for statistical purposes.
Issues Involved:
1. Non-receipt of mandatory notice under section 143(2) of the Income Tax Act, 1961. Issue-wise Detailed Analysis: 1. Non-receipt of Mandatory Notice under Section 143(2): The primary issue in the appeal is the non-receipt of the mandatory notice under section 143(2) of the Income Tax Act, 1961, which the assessee argued rendered the assessment void-ab-initio. Background: The assessee declared an income of Rs. 36,13,863, which was processed under section 143(1) and subsequently selected for scrutiny. The dispute centers on the issuance of notice under section 143(2). The assessment order states that the notice was sent on 12.08.2009 by registered speed post to the address available with the department. However, the assessee contended that the notice was not received, raising the objection on 24.11.2010. The Assessing Officer (AO) rejected this objection, noting that the notice was sent to the correct address and was not returned unserved, citing precedents like Capital Gem Overseas (P.) Ltd. vs ITO and others to support the rejection. CIT(A) Findings: The Commissioner of Income Tax (Appeals) [CIT(A)] dismissed the assessee's appeal, reasoning that it was not feasible for the tax department to monitor the service of notices in each case due to administrative difficulties. The CIT(A) concluded that the ground of appeal regarding non-service of notice under section 143(2) was not valid. Assessee's Arguments: The assessee's Authorized Representative (AR) argued that the CIT(A) did not provide a positive finding that the notice under section 143(2) was issued. The AR referred to the decision of the Jurisdictional High Court in CIT vs Lunar Diamonds Ltd., asserting that the assessment should be quashed due to non-receipt of the notice. The AR also claimed that objections regarding the non-receipt of the notice were raised orally before the AO on multiple occasions before being formally submitted in writing. Department's Arguments: The Department's Representative (DR) argued that the notice was indeed issued on 12.08.2009 and was not returned unserved. The DR contended that the objection raised by the assessee was an afterthought and requested the Tribunal to remand the issue back to the CIT(A) for a positive finding on whether the notice under section 143(2) was served. Tribunal's Observations: The Tribunal noted that the issue of whether the notice under section 143(2) was served is a simple question of fact with significant legal consequences. The Tribunal emphasized the mandatory nature of the notice under section 143(2) as per settled legal jurisprudence, which ensures that the assessee is given an opportunity to be heard, adhering to the principle of natural justice "Audi alteram partem." The Tribunal criticized the CIT(A) for expressing personal opinions on the administrative challenges faced by the tax department instead of providing a clear finding on the service of the notice. The Tribunal highlighted that the legal mandate requires the AO to ensure the service of the notice, and failure to do so necessitates quashing the assessment proceedings. Conclusion: The Tribunal set aside the impugned order and remanded the issue back to the CIT(A) with directions to decide the matter afresh, providing the assessee a reasonable opportunity of being heard and issuing a speaking order in accordance with the law. The Tribunal also set aside the findings on merits, directing the CIT(A) to first decide the jurisdictional issue before addressing the appeal on merits if necessary. Result: The appeal of the assessee was allowed for statistical purposes, and the order was pronounced in the open court on 07th August 2015.
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