2015 (10) TMI 323 - HC - Income Tax

Mode of service of notice - scrutiny assessment - nothing has been brought on record that the notice under Section 143(2) was served - Held that - As on the event of clause 9.1 of the manual, which has been made applicable on satisfaction of the Assessing Officer that the addressee is keeping out of the way for the purpose of avoiding service, the notice cannot be served in the ordinary way for any other reason. Once it has been found that the assessee had sold out the house and went away, definitely the Assessing Officer could have adopted the mode of service by way of publication in news paper circulating in the locality in which the addressee is last known to have resided or carried on business. Therefore, keeping in view the contrary stand of notice server as well as inspector with regard to the service of notice we are of the view that the Assessing Officer was under statutory obligation to adopt another mode of service by way of publication as is provided under the Act, but he has failed to do so. Thus, the learned Tribunal has rightly observed that the Assessing Officer has failed to adopt the proper mode of service of notice to the assessee which do not require interference of this Court. - Decided against revenue.

Issues:
1. Appeal against dismissal of revenue appeal due to want of service of notice under Section 143(2).
2. Validity of assessment under Section 143(3) for assessment year 2006-07.
3. Modes of service of notice under Section 131 and Manual of Office Procedure.
4. Provision of substituted service under Para 9.1.
5. Modes of service of notice under Section 282 of the Income Tax Act.

Analysis:
The High Court addressed the first issue of the appeal against the dismissal of the revenue appeal due to the want of service of notice under Section 143(2). The Tribunal found that the notice under Section 143(2) was not served on the assessee, leading to the assessment under Section 143(3) being deemed void ab initio. The Court noted that even if the assessee had left the last address, alternative modes of service such as publication were available, which the assessing officer failed to adopt, rendering the assessment void.

Moving on to the second issue of the validity of the assessment under Section 143(3) for the assessment year 2006-07, the appellant argued that the notice was sent through registered post and subsequently through an Inspector of the Income Tax. However, the Court emphasized that once the notice server reported that the assessee had sold the house and left, there was no justification for affixing the notice on the same house, especially when other modes of service were available as per the Manual of Office Procedure.

Regarding the third issue of modes of service of notice under Section 131 and the Manual of Office Procedure, the Court highlighted the provisions for service by affixture on the door or premises in cases of difficulty, emphasizing the importance of following the prescribed procedures for effective service of notice.

The Court then delved into the fourth issue of substituted service under Para 9.1, which allows for service by affixture or publication under specific circumstances, such as when the addressee is avoiding service or when ordinary service is not feasible. The Court stressed the importance of resorting to substituted service when necessary to ensure effective communication with the assessee.

Lastly, the Court examined the fifth issue of modes of service of notice under Section 282 of the Income Tax Act, which provides various methods of service, including post, courier services, electronic records, and other means of transmission. The Court emphasized the statutory obligation of the Assessing Officer to adopt alternative modes of service, such as publication in a newspaper, when faced with difficulties in serving the notice through conventional means.

In conclusion, the High Court upheld the Tribunal's decision, stating that the Assessing Officer failed to adopt the proper mode of service of notice, leading to the dismissal of the appeal.

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