2024 (8) TMI 806 - AT - Income Tax

Validity of assessment - Non service of the prescribed notice u/s 143(2) - Revenue department is claiming that notice has been served through affixture - whether a curable defect u/s 292BB - HELD THAT - The notice u/s 143(2) is mandatory. Admittedly, the Revenue department failed to produce / prove the sending of the notice through ordinary post or through RPAD, etc. and also failed to bring on record any order passed for substituted service by affixing the notice and even otherwise the report of the Inspector on the basis of which the Revenue department is claiming that notice has been served through affixture. Service through affixture remained un-proved/un- substantiated, as no efforts were made to serve the notice u/s 143(2) of the Act through ordinary process and there is no specific order for substituted service by the AO and even otherwise the affixture as appears in report of Inspector (supra), is also not as per the procedure established by law. Hence we don t have hesitation to hold that in the instant case, in fact no service of notice 143(2) of the Act has been made and/or attributed. We also observe that Hon ble Apex Court in the case of CIT Vs Laxman Das Khandelwal 2019 (8) TMI 660 - SUPREME COURT has clearly held that absence of service of notice, cannot be cured by invoking the provisions of section 292BB of the Act. We are also of the considered view, that the service of the prescribed notice such u/s 143(2) of the Act on the Assessee is a sine qua non or condition precedent for the validity of the assessment proceedings. If no notice is issued or if the notice issued is shown to be invalid, then proceedings initiated and carried out by the Assessing officer without a notice or in pursuance of invalid notice, would be void-ab-intio and shall vitiate the entire proceedings and invalidates the Assessment Order as well, hence the Assessment order being passed sans serving notice u/s 143(2) of the Act, is liable to be quashed - Decided in favour of assessee.

Summary

Issues:
1. Condonation of delay in filing appeal due to oversight.
2. Treatment of long term capital gain income as unexplained cash credit.
3. Alleged non-service of notice under section 143(2) of the Income-tax Act, 1961.

Analysis:
1. The Assessee filed an appeal against an order passed by the Commissioner of Income-tax for A.Y. 2014-15, citing a delay of 59 days in filing the appeal. The delay was attributed to oversight by the tax consultant due to various compliance obligations. The Appellate Tribunal, after considering the Assessee's explanation as genuine and bonafide, condoned the delay and allowed the appeal to proceed.

2. The Assessing Officer treated the long term capital gain income earned from the sale of shares as unexplained cash credit based on a report from the Kolkata Investigation Wing. The Commissioner affirmed this addition, leading to the Assessee's appeal. The Tribunal examined the legal aspects raised by the Assessee, focusing on the alleged non-service of notice under section 143(2) of the Act. The Assessee contended that the notice was served through affixture without proper evidence or procedure, challenging the validity of the assessment order.

3. The Tribunal analyzed the legal requirements for serving notices under section 143(2) of the Act, emphasizing the necessity of proper service as a condition precedent for valid assessment proceedings. Despite the Revenue department's reliance on section 292BB of the Act to cover any notice irregularities, the Tribunal found the service through affixture in this case unproven and inconsistent with legal procedures. Citing precedents, the Tribunal concluded that absence of valid notice service renders assessment proceedings void-ab-intio, leading to the quashing of the Assessment Order in this case.

In conclusion, the Tribunal allowed the Assessee's appeal, emphasizing the critical importance of valid notice service in assessment proceedings and ruling that the Assessment Order was quashed due to the lack of proper service of notice under section 143(2) of the Act.