2010 (3) TMI 22 - HC - Income Tax

Notice u/s 148 issued but not served - petitioner submitted that the petitioner has not been served with the notice as contemplated u/s.148 of the Income Tax Act, 1961 - It is contended that without serving such notice u/s.148 of the Act, the 1st respondent porceeded to issue a letter dated 16.10.2000 calling for the return of Income for the assessment year 1994-1995 from the petitioner herein. The learned counsel would submit that only after serving the notice u/s.148, the other procedures should be followed by the respondents as per section 143 2 of the Act. - In respect of such question, it is categorically stated by the petitioner in the affidavit and also contended by the learned counsel for the petitioner that the notice contemplated u/s.148 of the Act was not served on the petitioner. On the other hand, it is stated in the counter filed by the respondents and also contended by the learned Standing Counsel that the notice contemplated u/s.148 was issued on 17.09.1999 and duly despatched on 22.09.1999 as per the Despatch Register. It is also further stated in the counter that subsequently on 16.10.2000, a reminder letter was issued calling for the return of income for the assessment year 1994-1995 in response to notice u/s.148 held that - The above said statement made in counter makes it crystal clear that though notice said to have been issued u/s.148 of the Act, the fact remains that the said notice was not served on the petitioner. Therefore, this court has no hesitation to hold that the respondents have not complied with the requirements contemplated u/s.148 by serving a notice on the assessee, viz., the petitioner herein. It is also pertinent to point out that though it is claimed by the respondents that subsequently a reminder letter dated 16.10.2000 was issued to the petitioner and the same was also duly served on the petitioner on 20.10.2000, the said reminder letter is only for calling the petitioner to submit the return of income and by no stretch of imagination the said letter could be construed to be a notice u/s.148 of the Act.

Summary

Issues:
1. Validity of notice u/s.148 of the Income Tax Act, 1961.
2. Compliance with procedural requirements for assessment.
3. Alternative remedy of filing an appeal versus seeking revision.

Issue 1: Validity of notice u/s.148 of the Income Tax Act, 1961:
The petitioner sought to quash an order and direct the issuance of a valid notice u/s.148. The petitioner argued that without serving such notice, subsequent procedures would be illegal. The respondent claimed to have issued the notice, but the court found it was not served, rendering the proceedings invalid. Citing precedents, the court emphasized the necessity of serving a valid notice u/s.148 for assessment proceedings to be lawful.

Issue 2: Compliance with procedural requirements for assessment:
The petitioner contended that the impugned order lacked legal basis due to non-compliance with notice u/s.148. The court found that while a reminder letter was issued, it did not fulfill the requirements of a notice u/s.148. The court reiterated that serving a valid notice is a fundamental procedural requirement for initiating assessment proceedings, as established by legal precedents.

Issue 3: Alternative remedy of filing an appeal versus seeking revision:
The respondent argued that the petitioner should have pursued the alternative remedy of filing an appeal before seeking a writ petition. However, the court noted that the petitioner had the right to waive the appeal and opt for revision under section 264. The court upheld the petitioner's choice of seeking revision and dismissed the respondent's argument regarding the necessity of exhausting the appeal remedy before resorting to a writ petition.

In conclusion, the court set aside the impugned order and remanded the matter for proper assessment by directing the first respondent to issue a valid notice u/s.148. The court emphasized the importance of adhering to procedural requirements, particularly the service of a valid notice for initiating assessment proceedings. The judgment highlighted the petitioner's right to opt for revision as an alternative remedy, affirming the legality of the petitioner's approach in seeking redress through a writ petition.