2012 (10) TMI 366 - AT - Income Tax

Reassessment proceedings u/ 147 - assessee challenged validity of service of notices - Held that - The validity of service of notice issued under sec. 148 was raised by the assessees both before the AO and CIT(A) who have not bothered to dispose of such legal objection before proceeding further on merits of the case. The AO has not whispered a word on the issue whereas the CIT(A) has disposed of the issue in single line as the issue regarding objection by the appellant for issuing notice u/s 148 is deemed to have been met by the AO in view of the assessment order passed. Thus under these circumstances it fit to set aside the matter back to the file of the CIT(A) to decide the issue afresh after considering the submissions of the assessees and verifying the material available on record before the AO - in favour of assessee for statistical purposes.

Issues:
1. Validity of notices issued under section 148 of the Act.
2. Consideration of objections regarding the validity of service of notice.
3. Assessment based on proper service of notice under section 148.
4. Failure of the Assessing Officer to address objections on the validity of service of notice.
5. Applicability of relevant legal decisions on the issue of notice service.
6. Setting aside the matter for the consideration of objections and merits by the CIT(A).

Issue 1: Validity of notices issued under section 148 of the Act
The appellants questioned the validity of notices issued under section 148 of the Act, arguing that they were not served in accordance with the law. The learned AR highlighted that objections on the validity of the notices were raised before the Assessing Officer, emphasizing the importance of proper service for jurisdictional purposes. The AO failed to address this objection, leading to the contention that service of notice under section 148 is essential for jurisdiction under section 147 of the Act. The Tribunal found that the objections were not adequately dealt with by the lower authorities, leading to the decision to set aside the matter for further consideration by the CIT(A).

Issue 2: Consideration of objections regarding the validity of service of notice
The appellants contended that objections regarding the validity of service of notice under section 148 were not properly considered by the Assessing Officer and the CIT(A). The learned AR argued that the objections raised on legal grounds should have been addressed before proceeding on the merits of the case. The Tribunal agreed that the objections were crucial and required proper consideration, leading to the decision to remand the matter to the CIT(A) for a fresh decision after thorough examination of the submissions and evidence on record.

Issue 3: Assessment based on proper service of notice under section 148
The Tribunal emphasized that the validity of service of notice under section 148 is fundamental for establishing jurisdiction to proceed with assessments under the Act. The failure of the Assessing Officer to address objections on the validity of notice service was deemed a serious oversight, warranting a fresh consideration by the CIT(A) to ensure justice is served and legal procedures are followed diligently.

Issue 4: Failure of the Assessing Officer to address objections on the validity of service of notice
The Tribunal noted that the Assessing Officer did not address the objections raised by the appellants regarding the validity of service of notice under section 148. Despite the appellants' participation in the assessment proceedings, the failure to address fundamental objections on notice service raised concerns about the proper application of legal procedures and the need for a thorough review by the CIT(A).

Issue 5: Applicability of relevant legal decisions on the issue of notice service
The learned AR cited relevant legal decisions to support the appellants' argument regarding the validity of service of notice under section 148. The Tribunal differentiated the present case from past decisions where objections were not raised by the assessee, highlighting the importance of addressing objections on notice service to ensure fair and lawful assessment proceedings. The Tribunal found that the legal objections raised by the appellants required proper consideration, leading to the decision to remand the matter for a fresh assessment by the CIT(A).

Issue 6: Setting aside the matter for the consideration of objections and merits by the CIT(A)
In light of the failure to address objections on the validity of notice service and the importance of ensuring proper jurisdiction for assessments, the Tribunal decided to set aside the matter for the CIT(A) to reconsider the objections and merits of the case. The appellants' contentions on both legal and merit-based issues were deemed significant, warranting a fresh examination by the CIT(A) to uphold the principles of justice and legal correctness in the assessment process.

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