2021 (6) TMI 243 - AT - Income Tax

Validity of assessment - Non service of notice u/s 143(2) - HELD THAT - Taking into consideration of the entire aspect of the matter we are of the considered view that unless there is service of notice in accordance with provision under Section 282 of the Act separately specifying mode of service of notice, it cannot be treated as valid service of notice. In the case in hand the Revenue has failed to show, that service of notice under Section 143(2) of the Act effected within the stipulated time under the provisions of Section 143(2) of the Act on the assessee or on any of their employees/ relatives or any authorized representatives particularly in adherence to provision under Section 282 of the Act either by post or as if it were a summons issued by a Court under the Code of Civil Procedure, 1908 (5 of 908). In that view of the matter the service of notice under Section 143(2) of the Act, in our considered opinion is no service. Since the initiation of the proceeding is not in adherence to the prescribed rules, the entire proceeding is vitiated and hence quashed. Consequently, all action taken there under is bad. The impugned addition, made by the Revenue is, thus, hereby deleted. Appeal of the assessee is allowed.

Summary

Issues:
1. Validity of notice served under section 143(2) of the Income Tax Act.
2. Challenge against addition of amounts under section 68 and Rule 8D on exempted income.

Issue 1: Validity of Notice under Section 143(2):
The appeal challenged the assessment order due to a preliminary objection regarding the notice served under section 143(2) of the Income Tax Act. The assessee contended that the notice was not served in accordance with the prescribed procedure, as it was received after the stipulated time frame. The Revenue argued that the notice was duly served through speed post and by notice servers. However, the assessee raised objections regarding the authenticity of the service, pointing out discrepancies in the delivery process. The Tribunal examined the evidence presented by both parties and referred to relevant legal precedents. It was observed that the notice was not served within the specified period as mandated by the Act. The Tribunal concluded that the service of notice under section 143(2) was not valid, as it did not comply with the provisions of Section 282 of the Act. Consequently, the entire proceeding was deemed vitiated, leading to the quashing of the assessment order and deletion of the impugned addition made by the Revenue.

Issue 2: Challenge against Additions under Section 68 and Rule 8D:
The appeal also contested the addition of amounts under section 68 and Rule 8D on exempted income. However, before addressing the merits of this challenge, the Tribunal first dealt with the issue of the validity of the notice served under section 143(2). Once the Tribunal found the notice to be invalid, it proceeded to quash the assessment order and subsequently deleted the impugned addition made by the Revenue. Therefore, the challenge against the addition of amounts under section 68 and Rule 8D became moot in light of the primary issue of the validity of the notice.

In conclusion, the Appellate Tribunal at Indore, comprising Hon'ble Manish Borad and Hon'ble Madhumita Roy, ruled in favor of the assessee, allowing the appeal due to the invalidity of the notice served under section 143(2) of the Income Tax Act. The Tribunal emphasized the importance of complying with the prescribed procedures for serving notices and highlighted the necessity of adhering to the provisions of Section 282 of the Act for valid service. As a result, the assessment order was quashed, and the impugned addition made by the Revenue was deleted.