2019 (12) TMI 372 - AT - Income Tax

Notice u/s 143(2) never been served upon the assessee company in time - Notice issued on non-existant address - HELD THAT - First notice was issued on 04.09.2014 on non-existant address of the assessee and then Revenue Officer rushed to serve the notice by way of affixation without recording any satisfaction, the entire assessment proceedings are null and void. Moreover in the instant case when the revenue knew correct address of the assessee since 2008, there is no question of issuing the notice dated 04.09.2014 at the wrong address and suddenly resorted to served the notice by way of affixation at the correct address. It appears that the entire exercise has been completed in haste to meet with the statutory requirement of limitation to serve the notice up till 03.09.2014, which cannot be treated as a valid service by any stretch of imagination even. In the instant case, notice was never issued on the correct address and as such there is no question of drawing presumption of service of the same on the assessee as the revenue department itself has acknowledged its mistake by abruptly rushing to substitute service of notice by way of affixation by mentioning the correct address which cannot be taken into account as there was no effort whatsoever on the part of revenue department to get the service effected through ordinary course. Question framed is answered in affirmative and consequently assessment framed in this case u/s 143(3) is void ab initio for want of issuance of statutory notice u/s 143(2) consequently, assessment is hereby quashed without going into merit of this case. - Decided in favour of assessee

Summary

Issues Involved:
1. Validity of the assessment order due to the alleged non-service of statutory notice under Section 143(2) within the prescribed period.
2. Disallowance of ?43,96,422 on account of 'other expenses'.
3. Disallowance of ?78,89,482 under Section 36(1)(iii) on account of interest.
4. Rejection of additional evidence by CIT(A).
5. Charging of interest under Sections 234A, 234B, and 234C of the Income Tax Act, 1961.

Issue-wise Detailed Analysis:

1. Validity of the Assessment Order:
The primary issue was whether the statutory notice under Section 143(2) was served upon the assessee within the statutory period. The Tribunal noted that the notice dated 04.09.2014 was issued to an incorrect address (Shalimar Bagh) instead of the correct address (CR Park). The subsequent notice dated 29.09.2014 was served by affixation at the correct address without prior attempts to serve it through the ordinary process. The Tribunal found that the Assessing Officer (AO) did not follow the proper procedure for substitute service by affixation, as there was no evidence of efforts to serve the notice through ordinary means nor any satisfaction recorded by the AO that ordinary service was not possible. The Tribunal concluded that the mandatory notice under Section 143(2) was not served within the prescribed period, making the assessment order void ab initio.

2. Disallowance of ?43,96,422 on Account of 'Other Expenses':
The Tribunal did not delve into the merits of the disallowance of ?43,96,422 on account of 'other expenses' due to the primary issue of non-service of the statutory notice rendering the assessment order void ab initio.

3. Disallowance of ?78,89,482 under Section 36(1)(iii) on Account of Interest:
Similarly, the Tribunal did not address the merits of the disallowance of ?78,89,482 under Section 36(1)(iii) due to the invalidity of the assessment order stemming from the non-service of the statutory notice.

4. Rejection of Additional Evidence by CIT(A):
The Tribunal did not specifically address the issue of the rejection of additional evidence by CIT(A) because the assessment order itself was declared void ab initio.

5. Charging of Interest under Sections 234A, 234B, and 234C:
The Tribunal did not consider the issue of charging interest under Sections 234A, 234B, and 234C, as the assessment order was quashed due to the procedural lapse in serving the statutory notice.

Conclusion:
The Tribunal allowed the appeal filed by the assessee, quashing the assessment order for being void ab initio due to the failure to serve the statutory notice under Section 143(2) within the prescribed period. The Tribunal did not address the merits of the disallowances or other issues raised by the assessee, as the primary procedural lapse rendered the assessment invalid. The order was pronounced in open court on 4th December 2019.