2006 (11) TMI 182 - HC - Income Tax

Notice under section 143(2) service of notice - period of limitation - Assessee had failed to discharge the burden which shifted to him immediately on his assertion that he had received the notice on a particular date therefore notice is not barred by limitation order of tribunal that AO had not proved that the notice had been served within the time is set aside

Issues Involved:
1. Whether the ITAT was correct in holding that the Assessing Officer had not satisfactorily discharged the burden of proof regarding the service of Notice under Section 143(2) of the Income-Tax Act, 1961 within the statutory period.

Issue-wise Detailed Analysis:

1. Service of Notice under Section 143(2) within Statutory Period:
The primary issue in this judgment revolves around whether the Assessing Officer (AO) discharged the burden of proof concerning the service of Notice under Section 143(2) of the Income-Tax Act, 1961 within the statutory period. The provision mandates that no Notice shall be served on the Assessee after twelve months from the end of the month in which the Return is filed. In this case, the Assessee filed the Return on 29.8.1997, and the Notice was sent by Registered Post on 25.8.1998. The Assessee claimed to have received the Notice on 1.9.1998, beyond the statutory period. The Commissioner of Income-Tax (Appeals) had remanded the matter to verify the actual date of service, but the Postal Authorities stated that records for August 1998 had been "weeded out."

2. Reliance on Previous Judgments:
The Assessee relied on the judgment in Commissioner of Income-Tax vs. Lunar Diamonds Ltd., where the ITAT had set aside the Assessment Order due to the Notice being served beyond the prescribed period. The Court in that case doubted whether the Notice was sent to the correct address. However, the present case differed as the Notice was dispatched correctly and in time.

3. Presumption under Section 27 of the General Clauses Act:
Section 27 of the General Clauses Act stipulates that service by post is deemed proper if a correctly addressed and stamped envelope is dispatched by Registered Post. The Court noted that this presumption applies universally and that the Notice dispatched on 25.8.1998 would be presumed delivered in the ordinary course of post, typically within three days.

4. Assessee's Conduct and Burden of Proof:
The Court scrutinized the Assessee's conduct, noting that no immediate action was taken to inform the AO that the Notice was received late. The Assessee's claim that the envelope was "foolishly destroyed" was also not convincing. The burden of proving the date of receipt shifted to the Assessee, who failed to provide sufficient evidence.

5. Affidavit Filed by the Assessee:
The Assessee's Affidavit stated that the Notice was served on 1.9.1998 but did not mention any attempt to tender the Notice before that date. The Court distinguished this case from Lunar Diamond, where the Assessee claimed not to have received the Notice at all. The Court found the Assessee's evidence insufficient to rebut the presumption of service.

6. Directions to Income-Tax Officers:
To avoid similar issues in the future, the Court directed that Notices should be dispatched at least a fortnight before the expiry of the limitation period. Officers must also obtain certification from the Postal Authorities regarding the date of delivery and reasons for any delay.

Conclusion:
The Court concluded that the Department had satisfactorily proved the service of Notice before 31.8.1998, and the Assessee failed to prove otherwise. The question of law was answered in the negative, the ITAT's judgment was set aside, and the Appeal was allowed. The Court also issued directions to ensure better compliance in the future.

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