2009 (10) TMI 599 - HC - Income Tax

Reassessment - Service of notice u/s 148 - Since,the appellant submits that if notice was improper, nothing survived - In any case, there was no occasion to remand the case when the Commissioner of Income-tax (Appeals) had upheld the plea of the assessee on the merits and the Tribunal did not set aside the said finding. Reliance has been placed upon the judgment of the hon ble Supreme Court in CIT v. Thayaballi Mulla Jeevaji Kapasi 1967 -TMI - 5004 - SUPREME Court to submit that the absence of proper notice would vitiate all the proceedings - Thus, the substantial question of law whether the order of remand, without adjudicating upon the issues before the Tribunal could be justified, arises for consideration - Decided in favour of the assessee.

Summary

Issues:
1. Validity of notice under section 148 of the Income-tax Act, 1961.
2. Legality of remanding the case by the Tribunal after the Commissioner of Income-tax (Appeals) upheld the plea of the assessee on the merits.

Analysis:

Issue 1: Validity of notice under section 148 of the Income-tax Act, 1961
The appeal was filed by the assessee against the order of the Income-tax Appellate Tribunal, Amritsar Bench, regarding the service of notice under section 148 of the Income-tax Act, 1961. The Assessing Officer had issued the notice, which was served by affixation at the last known address of the assessee as the normal service was unsuccessful. Subsequently, reassessment was conducted, treating the investment in a house by the assessee as undisclosed. The Commissioner of Income-tax (Appeals) accepted the explanation of the assessee, upholding the reassessment. However, the Tribunal found the notice to be defective due to improper affixation and remanded the matter to the Assessing Officer for a fresh order after proper service to the assessee.

Issue 2: Legality of remanding the case by the Tribunal
The appellant argued that if the notice was improper, then the entire proceedings would be vitiated. Despite the Commissioner of Income-tax (Appeals) upholding the plea of the assessee on the merits, the Tribunal remanded the case, which was deemed unjustified by the appellant. The Department's standing counsel contended that the defect in service did not invalidate the proceedings. However, the Tribunal's remand was questioned as the Commissioner of Income-tax (Appeals) had already set aside the reassessment on the merits, making it unnecessary for the Tribunal to remand the matter.

In conclusion, the High Court allowed the appeal, setting aside the Tribunal's order and remanding the matter for a fresh decision in accordance with the law. The court found that the Tribunal's remand without adjudicating upon the issues before it was not justified, leading to the appeal being allowed in favor of the assessee. The parties were directed to appear before the Tribunal for further proceedings as per the court's decision.