2018 (10) TMI 588 - AT - Income Tax

Validity of scrutiny assessment - Non-service of the notice on the assessee - notice served through affixture - non adherence to mandatory condition for assessment - Held that - It is really surprising that the notice sent through speed post remained undelivered upto 29th Sep., 2010 and thereafter the same must have been received by the Assessing Officer after 2 and 3 days, may be on 1st October, however, the A.O. passed the affixture order on 28.09.2010. We have failed to understand as to how the A.O. has perceived on 28.09.2010 about the non-service of the notice on the assessee that apparently seems to be mere formality without any basis ,which creates many doubts and shrouds in the genuineness of the assessment proceeding, hence, we do not any hesitation to hold that the notice dated 20.09.2010 as well as 28.09.2010 by way of affixture never been served upon the assessee and in the absence of statutory notices, the Assessment order can not be held valid and therefore on the aforesaid reasons is liable to be set aside and pursuant thereto the appellant order which is impugned herein also liable to be set aside. Assessing Officer failed to serve the notice to the assessee at his last known address and therefore not in confirmatory with the provisions of the Order-5, Rule -17 & Rule-20 of the C.P.C .- Decided in favour of assessee

Summary

Issues:
Validity of notice u/s 143(2) for assessment year 2009-10.
Proper service of notice through ordinary means.
Legality of affixture order and its affixing.
Last known address of the assessee.
Compliance with Order-5, Rule -17 & Rule-20 of the C.P.C.
Proper service of notice u/s 148 and 142(1) of the Act.
Effect of non-service/invalid notice on assessment proceedings.

Analysis:
1. The appeal was filed by the Assessee against the order passed by the Ld. CIT(A)-2, Jalandhar u/s. 250(6) of the I.T. Act, 1961, challenging the notice u/s 143(2) for assessment year 2009-10. The notice was sent through speed post but returned un-served, leading to an affixture order by the Assessing Officer.

2. The Assessing Officer's decision to affix the notice at the last known address of the assessee raised concerns regarding the legality of the notice service. The appellant contended that the affixture order lacked a basis, as the notice was returned on 29.09.2010, yet the order was passed on 28.09.2010, casting doubts on the assessment proceedings' genuineness.

3. The Tribunal observed discrepancies in the service of notice and the affixture order, highlighting the failure to serve the notice at the last known address of the assessee. The non-compliance with statutory provisions Order-5, Rule -17 & Rule-20 of the C.P.C. further weakened the validity of the assessment order.

4. Referring to a similar case, the Tribunal emphasized the importance of proper service of notices u/s 148 and 142(1) of the Act. It was noted that the Assessing Officer did not attempt to serve the notices in the ordinary way before resorting to substituted service, raising doubts about the validity of the assessment proceedings.

5. The Tribunal reiterated the significance of serving prescribed notices on the assessee as a condition precedent to the validity of assessment proceedings. It was established that the absence of proper notice service rendered the assessment order and the appellate order invalid, leading to the allowance of the appeal filed by the assessee.

6. Ultimately, the Tribunal set aside the impugned orders due to the lack of proper notice service, emphasizing that invalid notices vitiate the entire proceedings. The judgment underscored the necessity of complying with legal requirements for notice service to uphold the validity of assessment proceedings.