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2021 (7) TMI 446 - AT - Income TaxReopening of assessment u/s 147 - Non service of notice - HELD THAT - Admittedly, in the present case since AO had not mentioned the father's name of the assessee in the notice dated 31.03.2016 issued u/s. 148 of the Act, the same was received back unserved. So far as the contention of the AO that the notice was served under Order V Rule 20 of the CPC is concerned, the satisfaction recorded by the AO on 31.03.2016 (copy of which is available in paper book) does not establish that the notice was served upon the assessee in terms of Order V Rule 20 of the CPC because the AO has not mentioned the complete address of the assessee including father's name House No. and the premises where the notice was to be affixed. The Hon'ble Supreme Court in the case of R.K. Upadhyay vs. Shanabhai P. Patel 1987 (4) TMI 5 - SUPREME COURT has held that the A.O. cannot initiate proceedings under section 147 of the Act, without service of notice under section 148. In the present case the documentary evidence on record establishes that the notice u/s. 148 was neither served to the assessee personally or by post nor served by affixing the copy thereof in terms of order V Rule 20 of CPC. On the other hand, there is no merit in the contention of the department that the AO had passed the reassessment order after serving notice to the assessee u/s. 148 of the Act. Hence, in our considered view, since the AO had passed the assessment order u/s. 147 of the Act, in violation of the mandatory provision under section 148 of the Act, the Ld. CIT(A) has wrongly affirmed the order passed by the AO, therefore the impugned order is not sustainable in law. - Decided in favour of assessee.
Issues Involved:
1. Validity of service of notice under section 148 of the Income Tax Act. 2. Validity of reassessment proceedings under section 147 without proper service of notice. 3. Confirmation of addition under section 69A of the Income Tax Act. 4. Applicability of section 68 for the addition made. Detailed Analysis: 1. Validity of Service of Notice under Section 148: The assessee contended that the assessment order under section 144 was invalid as no notice under section 148 was served. The AO issued a notice under section 148, but it was not served due to the absence of the assessee's father's name. The AO attempted service under Order V Rule 20 of the CPC by affixture, but the affixture did not specify the premises. The Tribunal noted that proper service of notice under section 148 is mandatory, as upheld by the Supreme Court in R.K. Upadhyay vs. Shanabhai P. Patel. The Tribunal found that the notice was neither served personally nor by post, nor properly affixed, thus invalidating the reassessment proceedings. 2. Validity of Reassessment Proceedings under Section 147: The Tribunal observed that the AO initiated reassessment proceedings without proper service of notice under section 148. The Tribunal referenced a similar case for the assessment year 2011-12, where reassessment was invalidated due to improper service of notice. The Tribunal held that the AO's action was contrary to the mandatory provisions of section 148 and the principles laid down by the Supreme Court. Therefore, the reassessment order was set aside. 3. Confirmation of Addition under Section 69A: The assessee challenged the addition of ?23,52,000 under section 69A, arguing that the Ld. CIT(A) did not consider the assessee's reply. However, since the Tribunal set aside the reassessment proceedings on legal grounds, this issue became academic and was not adjudicated further. 4. Applicability of Section 68 for the Addition Made: The assessee argued that no addition under section 68 could be made as the amount was not credited in the books of accounts. This issue was also rendered academic due to the setting aside of the reassessment order on legal grounds. Conclusion: The Tribunal allowed the appeal, setting aside the order passed by the Ld. CIT(A) and the reassessment proceedings initiated by the AO due to the improper service of notice under section 148. The Tribunal emphasized the necessity of proper service of notice for valid reassessment proceedings, aligning with the Supreme Court's mandate. The remaining grounds of appeal were deemed academic and were not adjudicated. The appeal was pronounced on 29th June 2021.
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