2007 (5) TMI 237 - HC - Income Tax

Service of notice - provisions of Section 282 of the Act with regard to the service of notice has been dully complied with by the Revenue. Since the notice under Section 143(2) of the Act sent by the registered post had not been received back unserved within thirty days of its issuance so there would be presumption under the law that notice has been duly served upon the Assessee subsequently assessment order was also justified

Summary

Issues:
Validity of notice served under Section 143(2) of the Income Tax Act, 1961.

Detailed Analysis:

Issue 1: Validity of notice served under Section 143(2) of the Income Tax Act, 1961
- The appellant, an assessee-company, filed its income tax return on 30th November, 1996, declaring a total income of Rs.1,710.
- The first notice under Section 143(2) was issued on 7th October, 1997, and subsequently, on 9th February, 1998, a notice was served by affixation at the company's address. Several notices were issued thereafter, but they remained uncomplied with.
- The Commissioner of Income Tax (Appeals) observed that the first notice's service date was not proven by the Assessing Officer, leading to a challenge of the assessment's validity based on the notice's late service.
- The Commissioner canceled the assessment under Section 144 and directed the Assessing Officer to accept the total income of Rs.3,471 as determined under Section 143(1)(a).
- The Revenue appealed to the Income Tax Appellate Tribunal, which upheld the Commissioner's decision, stating that the Assessing Officer failed to prove proper addressing, prepayment, and sending through registered post, acknowledgment due, for the notice.
- The Revenue contended that the notice was correctly addressed and sent by registered post, supported by a photocopy of the postal receipt, implying proper receipt by the assessee.
- The Assessee's counsel argued that per Section 282 of the Act, the notice should have been properly addressed and acknowledged, which was not done in this case.
- The Tribunal's decision was based on the failure to meet the requirements for raising a presumption of notice service.
- The High Court held that the notice under Section 143(2) was properly served within the limitation period as it was sent by registered post to the correct address and not returned unserved within thirty days.
- Consequently, the High Court set aside the Tribunal's decision, accepted the Revenue's appeal, and reinstated the assessment for the relevant period.
- The substantial question of law was answered in favor of the Revenue and against the Assessee.

This detailed analysis covers the issues involved in the legal judgment comprehensively, outlining the arguments presented by both parties and the court's reasoning leading to the final decision.