1982 (11) TMI 79 - AT - Income Tax

Summary

Issues:
Validity of assessment made under section 144 without valid service of notice under sections 139(2) or 148 or return filed by the assessee.

Analysis:
The appeal was filed by the assessee against the order of the AAC of Income-tax, C-Range, Jabalpur. The assessee, an unregistered firm, did not file a return of income despite a notice under section 139(2) being issued. The ITO proceeded to make an ex-parte assessment under section 144, determining the total income at Rs. 30,000. The AAC set aside the assessment, directing the ITO to reframe it with relevant material and after giving the assessee an opportunity to be heard. The assessee argued that no valid notice under section 139(2) was served, rendering the assessment void. The departmental representative contended that there was a valid presumption of notice reaching the assessee when sent by ordinary post and that the ex-parte assessment under section 144 was justified due to defaults in notices under sections 139(2) and 142(1).

Upon careful consideration, the Tribunal noted that the notice under section 139(2) was sent under certificate of posting, but there was no evidence of valid service. The Tribunal emphasized that for the assessment year in question, the notice should have been served on the assessee as per the provisions of the Income Tax Act and the General Clauses Act. Since there was no valid service of notice under section 139(2) or 148, and no return of income was filed, the Tribunal concluded that the assessment was void ab initio. The Tribunal agreed with the assessee's counsel that the assessment should have been canceled rather than merely set aside by the AAC. Consequently, the Tribunal canceled the assessment, allowing the appeal filed by the assessee.