2021 (11) TMI 212 - AT - Income Tax

Validity of the assessment framed u/s 147 - Proof of service of notice - addition made on account of cash found deposited in the bank account of the assessee - HELD THAT - Notice u/s 148 of the Act served by Speed Post was returned back unserved, there is no evidence of service of notice by affixture and the notice server had only carried a letter addressed to the assessee which he had refused to take and no notice u/s 148 of the Act was served by the notice server. There was no valid service of notice u/s 148 of the Act in the present case. The finding of the Ld.CIT(A) that the notices served through Speed Post and affixture were at the address as per PAN Database and, therefore, tantamounted to valid service, is of no assistance to the Revenue since admittedly the PAN Database also contains the residential address of the assessee and no attempt at all was made by the Revenue to service the notice at the residential address when the notice could not be served at the office address. The facts on record demonstrate that there was no valid service of notice in the present case on the assessee even at the PAN Database available. Notice u/s 148 of the Act being a jurisdictional notice essential for assuming jurisdiction to frame assessment u/s 147 of the Act, in the absence of service of the same, the assessment framed, we hold, is without jurisdiction and, hence void abinitio. - Decided in favour of assessee.

Summary

Issues Involved:
Validity of assessment framed under section 147 of the Income Tax Act due to lack of notice service under section 148 and the addition made on protective basis in the case of the assessee.

Detailed Analysis:

Issue 1: Validity of Assessment under Section 147
The appeal was filed against the order of the Learned Commissioner of Income Tax(Appeals) relating to the assessment year 2010-11, challenging the addition made on a protective basis by the Assessing Officer. The main contention was the lack of proper service of notice under section 148 of the Act. The assessee argued that the notice was not served through speed post, affixture, or by a notice server as claimed by the Revenue. The CIT(A) upheld the validity of the notice, stating it was served through speed post and affixture at the address mentioned in the PAN database. However, upon reviewing the assessment records, it was found that the notice sent by speed post was returned unserved, and there was no evidence of service by affixture or notice server. The Tribunal concluded that there was no valid service of notice under section 148, rendering the assessment void ab initio.

Issue 2: Addition Made on Protective Basis
The Assessing Officer made an addition of a significant amount on a protective basis in the assessee's case, treating the deposits in the bank account as income from unexplained sources. However, it was noted that the substantive addition had been made in the hands of another individual, Shri Atam Parkash, and no appeal had been filed by him against the assessment. Therefore, since the addition in Shri Atam Parkash's case was confirmed, the addition made on a protective basis in the assessee's case was deemed unnecessary and did not hold. Consequently, the Tribunal allowed the appeal of the assessee.

In conclusion, the Tribunal held that the assessment was void due to the lack of valid notice service under section 148 and that the addition made on a protective basis was unwarranted in light of the confirmation of the substantive addition in another individual's case. The appeal of the assessee was allowed, setting aside the assessment order.