2008 (7) TMI 520 - HC - Income Tax

Assessment- Notice under section 143(2) of the Income-tax Act was issued on October 29, 2002. The notice server is stated to have visited the factory premises of the assessee on October 31, 2002 and as per the report of the notice server, when he reached the premises of the assessee, the office is stated to have been closed. He approached the Assessing Officer, who directed the notice to be served by affixture. The Assessing Officer ordered that since notice under section 143(2) dated October 29, 2002, could not be served in the ordinary course as the assessee had deliberately avoided the service of notice, he directed the notice server to serve the notice by affixture at the premises of the assessee. Accordingly, the notice is stated to have been served by affixture. Apart from this, another notice dated October 30, 2002, was also issued and sent by registered post on October 30, 2002, at 4.05 p. m. The notice was served on the assessee on November 1, 2002. The assessee has taken a plea that the proviso to sub-section (2) of section 143, requires the notice to be served before the expiry of 12 months from the end of the month in which the return was furnished, since the service of the notice is not within the limitation provided, there is no valid service on him. Held that- dismissing the appeal, that there was no personal service of notice on the assessee and the notice dated October 31, 2002, was served on the assessee beyond the period of limitation prescribed. The first notice served by affixture was invalid since the assessee had neither avoided service of notice nor was there any reason to infer that the notice could not be served in an ordinary way. The Department could not resort to section 292B of the Act to validate the mandatory requirement of service as postulated under section 143(2) of the Act could not be treated as defect of the service of notice which could be cured under section 292B of the Act. The Notice served under section 143(2) of the Act was invalid.

Summary

Issues:
1. Validity of service of notice under section 143(2) of the Income-tax Act.
2. Impact of non-mentioning of time of affixture on assessment validity.
3. Failure on the part of the Assessing Officer in serving notice through various methods.
4. Treatment of defects in notice service as irregularity curable under section 292B.

Analysis:

Issue 1:
The primary issue in this case revolves around the validity of the service of notice under section 143(2) of the Income-tax Act. The appellant contended that the notice was not served within the prescribed time limit, rendering it invalid. The Tribunal found that the notice sent by registered post on October 30, 2002, was served beyond the limitation period, thus lacking valid service. Furthermore, the attempt to serve the notice by affixture raised doubts as no concrete evidence was provided to prove the assessee deliberately avoided service. The Tribunal highlighted discrepancies in the affixture process, emphasizing the lack of essential details such as time, witnesses, and proper documentation.

Issue 2:
The impact of the non-mentioning of the time of affixture on the validity of the assessment was a crucial aspect of the case. The Tribunal scrutinized the procedural irregularities in the affixture process, noting the absence of critical information required for a valid service. The failure to document essential details like the time of affixture, witnesses, and identification of the premises raised substantial doubts about the authenticity of the service. The Tribunal concluded that such deficiencies undermined the credibility of the service and cast doubt on the validity of the assessment based on the flawed service of notice.

Issue 3:
The case also delved into the Assessing Officer's actions regarding the service of notice through different methods. The Tribunal questioned the adequacy of the efforts made by the Revenue authorities to serve the notice, particularly highlighting the lack of diligence in attempting personal delivery before resorting to affixture. The Tribunal emphasized the importance of following the prescribed procedures under section 282 of the Income-tax Act for valid service, pointing out the shortcomings in the service attempts made by the Assessing Officer.

Issue 4:
Regarding the treatment of defects in notice service as an irregularity curable under section 292B, the Tribunal rejected the Revenue's argument. The Tribunal clarified that while section 292B addresses the issue of issuing notices, it does not encompass the service of notices. Therefore, the failure to comply with the specific requirement of service under section 143(2) cannot be rectified under section 292B. The Tribunal held that the mandatory service requirement must be met, and any action based on an invalid notice should be set aside, leading to the annulment of the assessment.

In conclusion, the High Court upheld the Tribunal's decision, dismissing the appeal and affirming the validity of the order dated August 24, 2007. The judgment emphasized the importance of strict adherence to the statutory provisions governing the service of notices under the Income-tax Act to ensure the legality and validity of assessments.