2008 (6) TMI 270 - AT - Income Tax

Summary

Issues Involved:
1. Validity of assessment order under Section 144 due to alleged improper service of notice under Section 143(2).
2. Adequacy of service of notice under Section 143(2) on an unauthorized person.
3. Compliance with procedural requirements under Section 282 of the Income Tax Act and Order V of CPC.

Detailed Analysis:

1. Validity of Assessment Order under Section 144:
The primary issue is whether the assessment order under Section 144 is valid, given the alleged improper service of notice under Section 143(2). The assessee contended that the notice was not served within the mandatory 12-month period from the end of the month in which the return was filed. The return was filed on 8th October 2003, and the notice should have been served by 31st October 2004. The notice dated 3rd November 2004 was received on 27th November 2004, which was beyond the prescribed period.

2. Adequacy of Service of Notice under Section 143(2):
The assessee argued that the notice dated 21st October 2004, allegedly served on 28th October 2004, was not valid as it was served on Shri Ram Sewak Verma, who was neither an employee nor an authorized agent. The AO's examination of ITI, who served the notice, and subsequent inquiries revealed that Ram Sewak Verma was unknown to the assessee. The Tribunal found that the Revenue failed to prove the identity and authorization of Ram Sewak Verma, making the service of notice invalid.

3. Compliance with Procedural Requirements:
The Tribunal emphasized the importance of compliance with Section 282 of the Income Tax Act and Order V of CPC, which mandate that notices should be served on the assessee or their authorized agent. The Tribunal cited several judgments, including the Allahabad High Court's decision in Har Shingar Gutkha (P) Ltd. vs. CIT, which reinforced that service of notice must be on the person named or their authorized agent. The Tribunal concluded that the Revenue did not meet the burden of proof to establish that the notice was served within the stipulated period.

Conclusion:
The Tribunal held that the assessment order was invalid due to the improper service of notice under Section 143(2). The Revenue's failure to establish the identity and authorization of the person who received the notice rendered the service invalid. Consequently, the assessment order was annulled, and the assessee's appeal was allowed. The Revenue's appeal was dismissed as it became infructuous due to the annulment of the assessment order.