2018 (8) TMI 927 - HC - Income Tax

Validity of notice issued u/s 148 - reopening of an assessment - notice was served at a wrong address - presumption related to address - address collected by the department from the bank whereas known address was available with the department on Saral Form-5 of the petitioner - The assessee took the specific plea that he had filed his return of income for the year under consideration i. e. 1999-2000 on the changed address i.e. 2 Rishi Marg Shahganj Agra. In support thereof the assessee filed a photocopy of the return filed in Saral form on 31st March 2000 before Ward 2(2) Agra. He further said that no change of the address was made in the bank account as no correspondence was required to be made with the bank as the assessee was holding a Saving Account. Held that - when the Department had correct address of the assessee sending notice at incorrect address and then presumption drawn of service of notice is wholly erroneous. We find that the presumption drawn by the Tribunal on the ground that since notice was not received back unserved it would be deemed to be service of notice cannot be sustained. - Decided in favor of assessee.

Summary

Issues:
1. Validity of service of notice under Section 148 of the Income Tax Act, 1961.
2. Assessment proceedings based on service of notice under Section 148.

Issue 1: Validity of service of notice under Section 148:
The appeal was filed against the order passed by the Income Tax Appellate Tribunal, Agra Bench, regarding the service of a notice dated 28th March, 2006 under Section 148 of the Income Tax Act. The notice was sent to the assessee at an address available on the assessee's bank account in Canara Bank, Agra. The notice was issued based on the allegation that the assessee had received amounts from a company involved in bogus share transactions. The assessee challenged the service of the notice, claiming that the address used was not the correct one. The Assessing Officer (A.O.) completed the assessment, making additions to the income of the assessee based on the alleged undisclosed income. The first appellate authority declared the assessment order invalid due to the notice under Section 148 not being served upon the assessee.

Issue 2: Assessment proceedings based on service of notice under Section 148:
The A.O. issued a notice under Section 142(1) and completed the assessment by adding the alleged undisclosed income to the assessee's total income. The assessee contended that the notice under Section 148 was never served on him and challenged the additions made to his income. The Department argued that the notice was sent by speed post to the correct address and was not returned undelivered. The CIT (A) held that the notice was not served at the correct address, rendering the assessment proceedings invalid. The Department appealed to the Tribunal, which held that the notice sent by speed post to the address available with the bank was validly served. The Tribunal set aside the order of the CIT (A) and directed a fresh adjudication on merit.

In conclusion, the High Court set aside the Tribunal's decision, emphasizing that sending the notice to an incorrect address when the correct address was known was erroneous. The Court ruled in favor of the assessee, highlighting the importance of correct service of notice under Section 148 for the validity of assessment proceedings.