2020 (2) TMI 109 - AT - Income Tax

Reopening of assessment u/s 147 - notice issued u/s 148 of the IT Act was not served upon the assessee - HELD THAT - There are certain undisputed facts in this case i.e. the AO has not admittedly sent any notice issued u/s 148 to the registered office address of the assessee company either through registered post or speed post and further the AO has made no efforts to serve notice through Affixture at the above registered office address. Although the assessee has categorically raised the objection about non service of notice under section 148 of the Act but still no copy of notice issued under section 148 of the Act was served upon the assessee at any subsequent point of time but before completing the order of assessment on 24.03.2015. From the record, we also notice that there is no power of attorney of Shri Anand Sharma, CA given by the assessee, therefore, in such circumstances even if any notice was served on Shri Anand Sharma under section 148 but the same is of no consequence in the absence of any valid authority/authorization given by the assessee company to the said Shri Anand Sharma, CA. The ld. CIT (A) has also pointed out that in the completed order sheet there no indication of the fact that any point of time any Power of Attorney or Authorization was filed by the assessee company in favour of Shri Anand Sharma on or before 14.03.2014 for the year under consideration. D/R submission before us that the service of notice was effected on Shri chandan but the fact remains that the said Shri Chandan was neither the employee of the assessee nor was authorized to received such notice and, therefore, in such a situation we cannot treat the said alleged service on Shri Chandan to be a valid service in view of the provisions of section 282 of the Act read with Order 5 of the Code of Civil Procedure 1908. Service of notice issued under section 148 of the Act is a mandatory as well as jurisdictional requirement and thus without valid service of notice, the reassessment order passed is liable to be quashed. Even in the order passed by Hon ble Delhi High Court in case of CIT vs. Chetan Gupta 2015 (9) TMI 756 - DELHI HIGH COURT it has been held that section 292BB is prospective in nature and the main part of section 292BB was not applicable and thus participation by the assessee or some other person on his behalf not duly authorized in the reassessment proceedings, will not constitute a waiver of the requirement of effecting proper service of notice on the assessee under section 148 of the Act. - Decided in favour of assessee.

Summary

Issues Involved:
1. Validity of the notice issued under Section 148 of the Income Tax Act.
2. Application of Section 292BB of the Income Tax Act.
3. Service of notice on authorized personnel.
4. Jurisdiction and procedural compliance by the Assessing Officer (AO).
5. Admissibility of additional evidence.
6. Violation of principles of natural justice.

Issue-wise Detailed Analysis:

1. Validity of the Notice Issued Under Section 148:
The primary issue revolved around whether the notice issued under Section 148 was validly served. The assessee contended that the notice was not served at the registered office address and was instead served on unauthorized personnel, namely Shri Chandan and Shri Anand Sharma, CA. The Tribunal upheld the CIT (A)'s finding that the notice was not validly served, emphasizing that the notice must be served in accordance with Section 282 of the Income Tax Act and Order V of the Code of Civil Procedure, 1908. It was noted that the AO did not attempt to serve the notice at the registered office address of the assessee company.

2. Application of Section 292BB:
The revenue argued that the provisions of Section 292BB should validate the notice since the assessee participated in the proceedings. However, the Tribunal highlighted that Section 292BB, which was inserted with effect from 01.04.2008, is prospective in nature. Since the assessment year in question was 2007-08, the provisions of Section 292BB were not applicable. Furthermore, the Tribunal noted that the assessee had raised objections regarding the service of notice during the assessment proceedings, thus nullifying the applicability of Section 292BB.

3. Service of Notice on Authorized Personnel:
The Tribunal scrutinized whether the notice was served on authorized personnel. It was found that Shri Chandan was neither an employee nor authorized to receive notices on behalf of the assessee company. Similarly, there was no power of attorney or authorization for Shri Anand Sharma, CA, to receive such notices. The Tribunal concluded that the service of notice on these individuals was invalid.

4. Jurisdiction and Procedural Compliance by the AO:
The Tribunal examined the procedural compliance by the AO and found that the AO failed to serve the notice at the registered office address of the assessee company. The AO also did not attempt to serve the notice through affixture at the registered address. The Tribunal emphasized that proper service of notice is a jurisdictional requirement, and failure to do so renders the assessment proceedings invalid.

5. Admissibility of Additional Evidence:
The assessee had submitted additional evidence during the appellate proceedings, which was admitted by the CIT (A). The Tribunal supported this decision, noting that the additional evidence was crucial for determining the validity of the notice and jurisdictional issues. The Tribunal cited several case laws to affirm that additional evidence can be admitted if it goes to the root of the matter and helps in delivering justice.

6. Violation of Principles of Natural Justice:
The Tribunal addressed the assessee's contention that the assessment was completed in violation of the principles of natural justice. The AO did not provide adequate opportunity to the assessee to defend itself, did not supply copies of crucial documents, and did not allow cross-examination of witnesses. The Tribunal found these procedural lapses significant enough to vitiate the assessment proceedings.

Conclusion:
The Tribunal upheld the CIT (A)'s decision to quash the assessment order, concluding that the notice issued under Section 148 was not validly served, the provisions of Section 292BB were not applicable, and the AO did not comply with jurisdictional and procedural requirements. The appeal of the revenue was dismissed, and the assessment order was deemed invalid and without jurisdiction.