2004 (6) TMI 287 - AT - Income Tax

Validity of Notice u/s 143(2) and its Service within the Prescribed Time - HELD THAT - From the observations of the Hon ble Court in the case of P. Abdulkadar Hamza v. CIT 2000 (7) TMI 25 - KERALA HIGH COURT it is clear that the notice has to be served upon the assessee and mere issuance of notice within a period of 12 months is not sufficient. It may be pointed out here that in the order sheet entry dated 22-11-1995 itself it has been mentioned that the notice u/s 143(2) was received from the assessee late and not that the assessee had received the notice before 1-11-1995. In any case from this entry it is not established that any notice was served upon the assessee on 31-10-1995 on which date 12 months expired from the date of filing return. Thus this argument of the ld. CIT DR cannot be accepted. As the department has not been able to demonstrate that the notice under section 143(2) was served within 12 months from the date of furnishing of the return the assessment made on the basis of such invalid notice cannot be treated to be a valid assessment and hence such assessment order was to be treated as null and void ab initio and was liable to be quashed and annulled. Hence we conclude that the service mode adopted by the department through affixation was neither initiated in accordance with the relevant rules nor the service by such mode was done as per the rules referred to above and hence such service cannot be accepted to be a legally valid service of notice u/s 143(2) of the Income-tax Act. We therefore hold that there was no valid service of notice by affixation. In view of our discussions we also hold that there was no service by a Registered Post before 1-11-1995. Thus in our view the notice u/s 143(2) was not served within 12 months of the filing of the return. Thus we are unable to concur with the findings recorded by the learned CIT(A) for rejecting the additional ground taken before him. Hence we set aside his finding and hold that there was no valid and proper service of notice within the period prescribed i.e. before the expiry of 12 months from the date of filing of the return and therefore the assessment made by the Assessing Officer on the basis of such invalid notice has to be declared null and void and is to be quashed accordingly. Consequently the ground taken by the assessee is allowed in its favour - In the result the appeal of the assessee is allowed.

Summary

Issues Involved:

1. Time-barred notice u/s 143(2)
2. Validity of service by affixture
3. Compliance with Civil Procedure Code (CPC) for service of notice

Summary:

1. Time-barred notice u/s 143(2):

The assessee contended that the notice u/s 143(2) served on 20-11-1995 was time-barred as it exceeded the 12-month period from the date of filing the return (28-10-1994). The learned CIT(A) rejected this claim, stating that the notice was served by affixture on 30-10-1995, within the permissible period.

2. Validity of service by affixture:

The Assessing Officer claimed that the notice was served by affixture at the last known address on 30-10-1995. The assessee argued that there was no evidence of evasion of service and that the process server did not make sufficient efforts to locate the assessee. The CIT(A) upheld the service by affixture, noting that the assessee failed to inform the department of the change of address.

3. Compliance with Civil Procedure Code (CPC) for service of notice:

The assessee argued that the procedure for service by affixture as laid down in Order 5 Rule 17 of CPC was not followed. The Tribunal found that the process server's report lacked details of efforts made to locate the assessee and the names of witnesses present during affixture. The Tribunal emphasized the need for strict compliance with the CPC provisions, including verification by affidavit and proper recording of circumstances.

The Tribunal concluded that the service by affixture was not valid as the necessary procedures under Order 5 Rules 17, 19, and 20 of CPC were not followed. Additionally, there was no evidence of service by registered post within the required period. Consequently, the notice u/s 143(2) was not served within 12 months of filing the return, rendering the assessment null and void.

Conclusion:

The Tribunal set aside the CIT(A)'s findings, holding that the notice u/s 143(2) was not validly served within the prescribed period, and thus, the assessment based on such invalid notice was null and void. The appeal of the assessee was allowed.