2015 (11) TMI 919 - AT - Income Tax

Non-service of notice under section 143(2) - Held that - Undisputedly notice of hearing under section 143(2) of the Act was issued on the last day of limitation/prescribed period for issuance of notice under section 143(2) of the Act i.e. on September 30 2011 at 15.19 hours by speed post. Therefore the learned Commissioner of Income-tax (Appeals) has rightly held that probability of service of the said notice by midnight on the same day is very remote. However onus is upon the Revenue to place evidence on record with regard to the service of notice under section 143(2) of the Act within the period of limitation. By issuing a notice by affixture the assessment cannot be made to be valid on account of issuance of notice under section 143(2) of the Act in time. Undisputedly there is no evidence on record with regard to the service of notice under section 143(2) of the Act on the assessee within the prescribed period. As apparent the notice was issued by speed post on the last day of limitation i.e. September 30 2011 at 15.19 hours as such there is no possibility of its service on the same day. We accordingly find ourselves in agreement with the order of the learned Commissioner of Income-tax (Appeals) who has rightly held the assessment to be illegal and void ab initio. - Decided in favour of assessee.

Summary

Issues:
1. Deletion of addition due to non-service of notice under section 143(2) of the Income-tax Act, 1961.
2. Deletion of penalty under section 271(1)(c) of the Act on account of non-sustenance of the assessment order.

Analysis:

Issue 1: Deletion of addition due to non-service of notice under section 143(2) of the Income-tax Act, 1961:
The Revenue filed an appeal against the deletion of an addition of Rs. 19,07,379 due to the assessment being considered null and void because of non-service of notice under section 143(2) of the Act. The Commissioner of Income-tax (Appeals) found that the notice was issued on the last day of the limitation period and the probability of service on the same day was remote. The notice was served by affixture without proper grounds, as the conditions for such service were not met. The Tribunal agreed that the notice was not served within the prescribed period, making the assessment order invalid.

Issue 2: Deletion of penalty under section 271(1)(c) of the Act on account of non-sustenance of the assessment order:
The Revenue also appealed against the deletion of penalty under section 271(1)(c) of the Act due to the annulment of the assessment order. Since the assessment was deemed illegal and void ab initio, the penalty was not sustainable in the eyes of the law. The Tribunal concurred with the Commissioner of Income-tax (Appeals) and upheld the deletion of the penalty.

In conclusion, the Tribunal dismissed the appeals of the Revenue, as the assessment was found to be invalid due to the non-service of the notice under section 143(2) of the Act within the prescribed period. Consequently, the penalty under section 271(1)(c) was also deemed unsustainable. The judgment emphasized the importance of proper service of notices and highlighted the need for officers to adhere to prescribed timelines to ensure the integrity of tax assessments.