2008 (3) TMI 19 - HC - Income Tax

Notice u/s 143(2) dated 23-10-02 dispatched on 25-10-02 by speed post was undelivered or received back - normally it is presumed that this notice has reached the Assessee within 2/3 days - this presumption has not been rebutted by the Assessee - no affidavite filed - notice held to be valid

Summary

Issues:
1. Whether the Income Tax Appellate Tribunal was correct in quashing the assessment due to the notice under Section 143(2) not being served within the prescribed period?

Analysis:
The case involved a dispute regarding the service of a notice under Section 143(2) of the Income Tax Act, 1961. The Assessee had filed a return declaring a loss, and the Assessing Officer issued notices for assessment. The Assessing Officer framed an assessment under Section 144 disallowing certain claims of the Assessee due to lack of evidence. The Assessee challenged the assessment order on the grounds of the notice not being served within the prescribed period. The Commissioner of Income Tax (Appeals) upheld the assessment order, but the Income Tax Appellate Tribunal (Tribunal) quashed the assessment and demand raised, citing the notice not being served within the prescribed time limit.

The main contention was whether the notice under Section 143(2) was served within the prescribed period as required by law. The Revenue argued that since the notice was dispatched and not returned undelivered, there is a legal presumption that the notice reached the Assessee. On the other hand, the Respondent contended that no notice was served within the prescribed period, relying on the Tribunal's order.

The Court referred to Section 282(1) of the Act, which specifies the methods for serving notices, including by post. It was noted that the notice in question was sent via speed post on 25th October 2002, and there was no evidence to suggest it was undelivered or returned. The Court cited Section 27 of the General Clauses Act, 1897, which deems service by post as effective if properly addressed and posted. In the absence of evidence to the contrary, there is a presumption of proper service. As the notice was not returned to the Income Tax Department, it was presumed to have reached the Assessee within a few days.

Ultimately, the Court held that the notice under Section 143(2) was served within the prescribed period, overturning the Tribunal's decision. The substantial question of law was decided in favor of the Revenue, and the appeal was allowed.

In conclusion, the judgment clarified the legal requirements for serving notices under the Income Tax Act and emphasized the importance of proper addressing and delivery to establish effective service. The decision highlighted the significance of timely and proper notice delivery in tax assessments and upheld the presumption of service in the absence of evidence to the contrary.