2015 (9) TMI 965 - HC - Income Tax

Non service of notice under Section 143(2) - Held that - The Court finds that the question of law stands covered against the Revenue by the decision of the Supreme Court in ACIT v. Hotel Blue Moon (2010 (2) TMI 1 - SUPREME COURT OF INDIA) where the Supreme Court has categorically held that the service of the notice under Section 143(2) of the Act upon the person to whom it is addressed is mandatory requirement. For the purposes of Section 282 (1) of the Act, it is seen that unless the person upon whom the notice was served is an agent empowered to accept service , in terms of Order V Rule 12 CPC, such service of notice cannot be treated to be valid. In the present case, admittedly, Smt. Asha Mehra was not an agent of the Assessee duly empowered to receive notice on its behalf. It is seen in terms of the proviso to Section 292BB of the Act, the said provision would not apply where the Assessee has raised the objection before the completion of the assessment. In any event Section 292BB of the Act has been introduced retrospectively from 1st April 2000. In that view of the matter, the question is answered in favour of the Assessee and against the Revenue

Summary

Issues:
1. Validity of notice under Section 143(2) of the Income Tax Act, 1961 for AY 1991-92.
2. Consideration of additional evidence by ITAT in AY 1990-91.
3. Service of notice on an unauthorized person for AY 1991-92.

Issue 1: Validity of notice under Section 143(2) for AY 1991-92:
The High Court addressed the appeal by the Revenue against the order passed by the ITAT for AY 1991-92. The main issue was whether the notice dated 30th December 1992 under Section 143(2) of the Income Tax Act, 1961 was validly served on the Assessee. The Revenue argued that the notice was served on a person not authorized to receive it. However, the Court relied on the Supreme Court decision in ACIT v. Hotel Blue Moon, emphasizing that the notice must be served on the person to whom it is addressed. The Court found that the person served was not an agent empowered to accept service on behalf of the Assessee, rendering the notice invalid.

Issue 2: Consideration of additional evidence by ITAT in AY 1990-91:
In the appeal for AY 1990-91, the Revenue challenged the ITAT's decision to consider additional evidence in the form of an affidavit filed by the Principal Officer of the Assessee. The Revenue contended that this was contrary to law and the Appellate Tribunal Rules. However, the ITAT accepted the affidavit, noting that the statutory presumption of service of notice under Section 27 of the General Clauses Act was rebuttable. The Court upheld the ITAT's decision, ruling in favor of the Assessee.

Issue 3: Service of notice on an unauthorized person for AY 1991-92:
Regarding the notice served for AY 1991-92, the Revenue claimed that the notice was served on an unauthorized person, the wife of one of the Directors of the Assessee. The ITAT analyzed the relevant provisions of the Act and the Civil Procedure Code, concluding that service on an unauthorized individual does not constitute valid service on the Assessee. The Court, citing legal precedents, highlighted the mandatory requirement of serving the notice on the intended recipient. The Court also rejected the Revenue's argument based on Section 292BB of the Act, emphasizing that objections to improper notice service can be raised before the completion of assessment. Consequently, the Court ruled in favor of the Assessee, dismissing the appeals with no order as to costs.