2013 (12) TMI 635 - AT - Income Tax

Validity of service of notice u/s 143(2) The return of income was filed by the assessee on 30.10.2001 The notice was served on 31.10.2002 on Shri Devang Shah Chartered Accountant who has audited the accounts of the assessee-firm Held that - Following Shubham Enterprises Vs. ITO 2003 (8) TMI 461 - ITAT ALLAHABAD - The AO has not claimed that Shri Devang Shah CA was authorised to receive any notice on behalf of the assessee-firm or was the representative of the assessee or that any power of attorney was executed by the assessee firm in favour of the said Chartered Accountant The notice was not served validly within the stipulated time Decided in favour of assessee.

Summary

Issues involved: Validity of service of notice under Section 143(2) for assessment year 2001-2002.

Analysis:
The appeal was filed by the assessee against the order of the CIT(A)-VI, Ahmedabad for the assessment year 2001-2002. The main issue raised by the assessee was the validity of the service of the first notice under Section 143(2) of the Income Tax Act. The counsel for the assessee argued that the notice of hearing was not validly served within the statutory time frame of 12 months from the end of the month in which the return of income was filed. The counsel contended that the entire assessment proceeding under Section 144 was invalid due to the non-service of the notice of hearing within the specified time. The AO claimed that the notice was served on a Chartered Accountant who was not authorized to receive the notice on behalf of the assessee. The Tribunal found that the notice under Section 143(2) fixing the date of hearing was served on the CA, but there was no evidence of authorization or power of attorney for the CA to accept the notice. The subsequent notice was issued after the statutory period, and the assessee firm was closed after the expiry of the valid service period. The Tribunal relied on the decision in Shubham Enterprises Vs. ITO, where it was held that non-compliance with the mandatory provision of serving a valid notice under Section 143(2) within the stipulated time renders the assessment null and void. Consequently, the Tribunal allowed the appeal of the assessee, canceling the assessment framed in the case.

In conclusion, the Tribunal found that the service of the notice under Section 143(2) was not valid as it was not served within the statutory period of 12 months from the end of the month in which the return of income was filed. The lack of authorization for the Chartered Accountant to receive the notice further invalidated the service. The Tribunal, following precedent, held that non-compliance with the mandatory provision of serving a valid notice within the specified time renders the assessment null and void. Therefore, the Tribunal allowed the appeal of the assessee, resulting in the cancellation of the assessment for the relevant year.