2024 (5) TMI 774 - AT - Income Tax

Validity of Reopening of assessment - invalid service of notice u/s 148 of the Act as per procedure laid down as per Rule 17 of CPC Code of Civil Procedure, 1908 - Notice served on the assessee by way of affixture through inspector without either presence or even signature of two independent witnesses of the neighborhood as per the procedure referred HELD THAT - It is admitted fact on record that the notice u/s 148 was dated 27.03.2017, however, the AO has stated that the notice was issued on 15.03.2017 and served upon the assessee on 20.03.2017. In our view, it is beyond human probabilities to issue and serve notice a week before a date mentioned in the alleged notice issued u/s 148. Such factual mistakes and errors in the dates mentioned on the notice, and that of date of issue and date of service discussed in the assessment order rendered the basic foundation of the assessment erroneous and void ab-initio. There was gross violation of procedure in service of notice by way of affixture as laid down u/s 282 read with Rule 12, 17 and 19 or Order (v) of Civil Procedure Code, 1908 as the notice u/s 148 was served through affixture has been witnessed by Sh. Joginder Lal, TA and Paras Ram, Inspector of the office and not by two independent witnesses as required under the law. As per rule 17 of order V of CPC mandates, an independent local person be the witness for service through affixture and for the purpose of having been associated with the identification of the place - There was no evidence of any local person having been associated with identifying the place of business of the assessee-respondent and the report was not witnessed by any person at all. In our view, it has been clearly flagrant violation of rule 17 of Order (v) of the Code 1908 which lays down a procedure to serve notice by affixture. Accordingly, as per the aforesaid report of the Inspector/notice server, the requirements of the code of Civil Procedure have not been fulfilled. Reopening assessment completed in pursuance to the alleged notice u/s 148 of the Act is held to be not valid and as such, the assessment order is quashed as void ab initio.

Summary

Issues involved:
The appeal challenges the validity of an assessment order passed by the Income Tax Officer u/s 144/47 as bad in law due to the invalid service of notice u/s 148 of the Income Tax Act, 1961.

Validity of Notice u/s 148:
The notice u/s 148 dated 27.03.2017 was issued and served through affixture without the presence or signature of two independent witnesses, as required by law. The appellant argued that such service is invalid as per the procedure laid down in section 282 of the CPC, 1908. The appellant contended that the non-service of notice u/s 148 renders the assessment orders invalid, citing a judgment by the Hon'ble Apex Court. The ld. DR could not refute the contention raised regarding the invalid service of notice.

Procedural Violations:
The notice issued u/s 148 contained factual mistakes in dates, rendering the assessment erroneous and void ab-initio. The service of notice through affixture did not comply with the requirements of section 282 read with Rule 12, 17, and 19 of the CPC, 1908, as it was not witnessed by two independent individuals as mandated by law. The affixture report lacked evidence of an independent local person as a witness, violating Rule 17 of Order V of CPC.

Legal Precedents and Decisions:
The Tribunal referred to a judgment by the jurisdictional High Court and a decision by the Coordinate Amritsar Bench in similar cases, emphasizing the importance of following the prescribed procedures for serving notices. These cases highlighted that the failure to follow the procedures laid down in the CPC, specifically Rule 17, rendered the service of notice through affixture invalid.

Judgment:
Considering the procedural violations and legal precedents, the Tribunal held that the reopening assessment completed based on the alleged notice u/s 148 was not valid. Consequently, the assessment order was quashed as void ab initio, and the appeal filed by the assessee was allowed.

Separate Judgment by Judges:
No separate judgment was delivered by the judges in this case.