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2018 (9) TMI 466 - AT - Income TaxReopening of assessment - non service of notice - Held that - As case of R.K. Upadhyaya (1987 (4) TMI 5 - SUPREME COURT has held in no uncertain terms that service of notice under Section 148 of the IT Act for the purpose of initiating proceedings for reassessment is not a mere procedural requirement but it is a condition precedent for initiation of proceedings for reassessment under Section 147. However service of notice under Section 148 of the IT Act is an integral part of the cause of action arising out of initiation of proceeding under Section 147 - thus we cancel the reassessment order passed u/s.147/144 - decided in favour of assessee.
Issues Involved:
1. Delay in filing the appeal. 2. Legality of the assessment order. 3. Issuance and service of notice under Section 148 of the Income Tax Act. 4. Jurisdiction and procedural compliance by the Assessing Officer. 5. Applicability of Section 292BB of the Income Tax Act. Detailed Analysis: 1. Delay in filing the appeal: The appeal filed by the assessee was barred by a limitation of 132 days. The assessee filed a writ petition before the Hon’ble Orissa High Court to condone the delay. The High Court directed the assessee to file the appeal within 15 days from the date of the order. The assessee complied, and the delay was condoned. 2. Legality of the assessment order: The assessee contended that the assessment order passed by the Assessing Officer (AO) was illegal, arbitrary, and without jurisdiction. The AO had made the assessment without issuing a notice under Section 148 of the Income Tax Act, which was a violation of natural justice. 3. Issuance and service of notice under Section 148: The AO issued a notice under Section 148 on 30.03.2015 but failed to provide proof of service. The envelope containing the notice was returned with the remark "left." The CIT(A) upheld the assessment, stating that the notice was issued to the last known address, and the assessee had responded to a subsequent notice under Section 142(1). However, the Tribunal found that the notice under Section 148 was not served, invalidating the reassessment proceedings. 4. Jurisdiction and procedural compliance by the Assessing Officer: The AO received information about the sale of property by the assessee and issued a notice under Section 148 based on this information. The assessee argued that the AO did not follow due procedure, including transferring the case to the appropriate jurisdiction after the assessee had moved to Bhubaneswar. The Tribunal noted that the AO did not have jurisdiction as the notice under Section 148 was not served, and the reassessment order was passed without proper jurisdiction. 5. Applicability of Section 292BB of the Income Tax Act: The CIT(A) applied Section 292BB, which precludes the assessee from challenging the notice if they have participated in the proceedings. However, the Tribunal found that the assessee did not appear before the AO or file any return in response to the notice under Section 148. Therefore, Section 292BB was not applicable, and the reassessment order was held to be without jurisdiction and bad in law. Conclusion: The Tribunal concluded that the reassessment order passed under Section 147/144 of the Act was without jurisdiction due to the failure to serve the notice under Section 148. The appeal filed by the assessee was allowed, and the reassessment order was canceled.
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