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2018 (6) TMI 98 - HC - Income TaxPresumption to service of notice u/s 148 - notice sent through speed post and not having been received back - Whether the notice u/s 148 is correctly send where the address on such notice is completely different? - Held that - The legal requirement of service of notice upon the Assessee u/s 148 is a jurisdictional pre-condition to finalizing the reassessment - the onus is on the Revenue to show that proper service of notice has been effected u/s 148 on the Assessee or an agent duly empowered by assessee - here revenue failed to discharge the onus - also notice which u/s 148 was sent on 22nd March 2010 on the address where the assessee was not residing - thus reassessment proceedings without effecting proper service of notice on the Assessee are invalid and liable to be quashed - Decided in favor of assessee.
Issues Involved:
1. Validity of notice under Section 148 of the Income Tax Act. 2. Validity of reasons recorded for initiating proceedings under Section 148 of the Income Tax Act. Issue-wise Detailed Analysis: 1. Validity of Notice under Section 148: The primary issue revolves around whether the notice under Section 148 dated 22.03.2010, sent through speed post, was validly served on the assessee. The appellant argued that the notice was sent to an incorrect address, which was a completely different location from the one registered in the PAN of the assessee. The correct address was F-58(B) Kalidas Marg, Bani Park, Jaipur, while the notice was sent to E-5, Kailas Marg, Bani Park. The Tribunal had earlier presumed valid service because the notice was not received back undelivered. However, the appellant contended that the address discrepancy invalidated the presumption of service. The Tribunal's observation was that the notice under Section 148 and subsequent notices under Section 142(1) were served on the assessee, and the assessee's authorized representative attended hearings without raising objections about non-service until late in the assessment process. The Tribunal cited the case of CIT vs. Yamu Industries Ltd., which held that if the assessee appeared and did not object within 30 days, it is presumed that the notice was served. The appellant relied on several judicial precedents, including: - Commissioner of Income Tax vs. Rajesh Kumar Sharma: The Delhi High Court held that service of notice is a condition precedent for valid reassessment proceedings. If the notice is not served correctly, the proceedings are invalid. - Y. Narayana Chetty and Anr. vs. The Income Tax Officer, Nellore and Ors.: The Supreme Court emphasized that service of notice is not merely procedural but a condition precedent for valid reassessment. - R.K. Upadhyaya vs. Shanabhai P. Patel: The Supreme Court clarified that while the issue of notice within the limitation period confers jurisdiction, reassessment cannot proceed without service of notice. - Harcharan Singh vs. Smt. Shivrani and Ors.: The Supreme Court discussed the presumption of service under Section 27 of the General Clauses Act and Section 114 of the Indian Evidence Act, which can be rebutted by contrary proof. - CIT vs. Chetan Gupta: The Delhi High Court reiterated that service of notice under Section 148 is a jurisdictional requirement, and the onus is on the Revenue to prove proper service. The appellant's counsel argued that the notice was sent to an incorrect address and hence could not be presumed to have been served. The Tribunal's reliance on the fact that the notice was not returned undelivered was insufficient to establish valid service. 2. Validity of Reasons Recorded for Initiating Proceedings under Section 148: The second issue concerned the validity of the reasons recorded for initiating proceedings under Section 148. The appellant challenged the reasons recorded by the Assessing Officer (AO) for reopening the assessment, arguing that they were vague and lacked material evidence. The reasons cited an entry of ?5,01,000 received by the assessee on 18.12.2002 as a bogus entry, leading to the belief of income escapement. The Tribunal upheld the AO's reasons, citing the Supreme Court's decision in Phool Chand Bajrang Lal And Another vs. ITO, which held that the sufficiency of reasons for forming the belief of income escapement is not for the court to judge at the initial stage of assessment. The appellant contended that the reasons recorded were based on mere suspicion without concrete evidence. The Tribunal, however, found that the AO had valid information in possession, justifying the reopening of the assessment. Conclusion: The High Court concluded that the notice under Section 148 was not validly served as it was sent to an incorrect address. The presumption of service could not be drawn, and the service made at the incorrect address was not valid. Consequently, the issue was decided in favor of the assessee and against the department. The appeal was allowed, and the reassessment proceedings were deemed invalid due to improper service of notice.
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