Home Case Index All Cases Income Tax Income Tax + AT Income Tax - 2019 (6) TMI AT This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2019 (6) TMI 913 - AT - Income TaxReopening of assessment u/s 147 - no valid service of the notice u/s 148 - service of the notice u/s 148 by way of affixture at place where the assessee is known to have last resided or carried on his business or personally worked for gain - HELD THAT - A perusal of the affixture order reveals that Shri Swaran Singh, ITO, Ward-III, Khanna directed Shri Pamam Vir Singh Duggal, Income Tax Inspector to effect the service of the notice u/s 148 of the Act by way of affixture under Order V Rule 20 of CPC, 1908 on the conspicuous part of place where the assessee is known to have last resided or carried on his business or personally worked for gain. No address of such place has been mentioned in the said affixture order. It is not clear from where the Income Tax Inspector would come to know about the last known address of the assessee either of his residence or of his working place. Even in the report of the Inspector of the same date i.e. 26.3.2013, he has simply written affixed by me . Even he has not mentioned as to where he had gone to affix the notice, to say whether it was affixed at the last known residential address of the assessee or at the last known work place of the assessee. Though the signature of one Shri Mangat Ram have also been appended but who that Mangat Ram is/was, has not been mentioned; whether he was an independent witness available at the place where the affixation was done or was an employee of the income Tax office, is not coming out. Even as mentioned above, the notice by registered post as well as by way of substituted service was allegedly served on the same date. There was no reason for the satisfaction of the AO that the alleged notice cannot be served in an ordinary way. AO issued the affixture order on the same day without waiting for the outcome of the service of notice sent through ordinary way i.e. by way of registered post. Service could not be effected at the village address of the assessee, the AO thereafter served the notice u/s 142(1) at his office address which means that the Assessing officer had come to know the office address of the assessee at which service can be effected but admittedly no notice u/s 148 of the Act was served on the assessee at his office address also. Under the circumstances, it is clear that there was no valid service of notice u/s 148 on the assessee. The issue, therefore, is squarely covered by the recent decision of Sumit Balkrishna Gupta Vs. ACIT 2019 (2) TMI 1209 - BOMBAY HIGH COURT has held that the issue of a notice u/s 148 is a foundation for reopening of assessment and condition precedent for framing of the assessment u/s 147 of the Income Tax Act. Since there was no valid service of the notice u/s 148, therefore, the consequent assessment proceedings framed u/s 147are not sustainable in the eyes of law and the same are accordingly quashed. The appeal of the assessee is hereby allowed.
Issues Involved:
1. Validity of reopening the case under Section 148. 2. Legality of issuing a notice under Section 148 to a deceased person. 3. Proper service of notice under Section 148. 4. Assessment of capital gains. 5. Adoption of sale consideration based on an alleged sale agreement. 6. Admission of additional grounds of appeal. Detailed Analysis: 1. Validity of Reopening the Case Under Section 148: The appeals question the reopening of the assessment under Section 148 of the Income-tax Act, 1961. The reopening was challenged on the grounds that the notice was issued in the name of a deceased person, rendering the proceedings void. The Tribunal referred to the Hon'ble Bombay High Court's decision in ‘Sumit Balkrishna Gupta Vs. ACIT’ and the Hon'ble Delhi High Court's decision in ‘Rajender Kumar Sehgal Vs. ITO,’ which held that a notice under Section 148 must be issued to a living person or the legal heir of a deceased person to be valid. Consequently, the Tribunal found the reopening of the assessment invalid. 2. Legality of Issuing a Notice Under Section 148 to a Deceased Person: The Tribunal emphasized that issuing a notice under Section 148 to a deceased person is not a mere procedural error but a jurisdictional defect. Citing the Hon'ble Bombay High Court's decision, it was held that such a notice is invalid and cannot be protected by Sections 292B or 292BB of the Act. The Tribunal quashed the notice and the subsequent assessment proceedings, as the notice was issued to the deceased Shri Balbir Singh. 3. Proper Service of Notice Under Section 148: The Tribunal scrutinized the service of notice, which was allegedly served through affixation. The Tribunal found that the notice was not served through registered post or any regular mode of service. The affixation was not witnessed by any independent person, and the Revenue officials did not verify the death of the original assessee. The Tribunal concluded that the service of notice was not valid, aligning with the requirement that the notice must be served to a living person or the legal heir. 4. Assessment of Capital Gains: The Tribunal addressed the issue of assessing the 50% share of capital gain at ?76,12,500/-. The Tribunal did not delve deeply into this issue as the primary ground of invalid notice and improper service rendered the entire proceedings void. 5. Adoption of Sale Consideration Based on an Alleged Sale Agreement: The Tribunal noted that the Assessing Officer adopted the sale consideration based on an alleged sale agreement, which was contested by the assessee as unreliable. However, since the notice itself was invalid, the Tribunal did not need to rule on the reliability of the sale agreement. 6. Admission of Additional Grounds of Appeal: The Tribunal did not admit the additional ground of appeal, as the assessee's counsel did not press this ground. The Tribunal referenced the Supreme Court's judgment in CIT Vs. National Thermal Plant, which allows for the admission of additional grounds if they are legal and pertinent. Conclusion: The Tribunal quashed the notices issued under Section 148 and the consequent assessment proceedings due to the invalid issuance of notice to a deceased person and improper service of notice. Both appeals were allowed, and the orders of the lower authorities were set aside. The Tribunal's decision was pronounced in the open court on 13/05/2019.
|