2015 (10) TMI 169 - AT - Income Tax

Validity of assessment framed u/s 147 r.w.s 143(3) - notice issued u/s 148 was not served upon the assessee within the prescribed time limit - Held that - The assessee had filed its return of income for the assessment year 2005-06 and subsequent assessment years with the new address. On the changed address intimation/order and correspondence have also been made by the department. Intimation u/s 143(1) dated 25.01.2008 for assessment year 2006-07 was also sent by the same AO at the changed address. Hence we concur with the contention of the Ld. AR that there was no justification for the AO to issue notice u/s 148 of the Act dated 27.03.2008 in question at the old address of the assessee. The revenue also fail to establish that on which address out of the two addresses mentioned in the notice u/s 148 was sent and served upon the assessee. The presumption of service comes to the rescue of the revenue only when the notice is dispatched through registered post and the notice is properly addressed. Here is the case where the dispute is to whether the notice u/s 148 dated 27.03.2008 was sent on a proper address or not. It is an established position of law that service of notice u/s 148 of the Act within the prescribed time limit is a condition precedent and mandatory to acquire jurisdiciton by the AO to frame the assessment u/s 147 r.w.s 143(3) of the Act. In absence of service of the said notice issued u/s 148 of the Act upon the assessee, the assessment in question u/s 147 r.w.s 143(3) of the Act is null & void. - Decided in favour of the assessee

Summary

Issues involved:
1. Validity of assessment framed under sections 147/148 due to alleged improper service of notice.
2. Deletion of addition made by the AO under section 68 of the Act.

Issue 1: Validity of assessment framed under sections 147/148:
The Appellate Tribunal ITAT Delhi addressed the revenue's challenge against the deletion of an addition made by the AO under section 68 of the Act. The assessee objected to the validity of the assessment framed under sections 147/148, citing non-receipt of notice within the prescribed time limit. The Tribunal decided to first address the cross-objection raised by the assessee, as it involved a fundamental legal issue. The assessee contended that the reopening under sections 147/148 was improper, emphasizing the lack of valid notice service and the absence of material facts disclosure allegations. The Tribunal carefully considered the arguments presented by both parties on the objections raised by the assessee.

Issue 1 - Detailed Analysis:
The assessee argued that the notice under section 148 was not served within the time limit, rendering the assessment null and void. The Authorized Representative (AR) highlighted discrepancies in the address used for the notice, as the department was informed about the change in the assessee's address. The AR presented evidence of the address change and previous correspondences to support the claim of improper notice service. The AR also referenced legal decisions to strengthen the argument against the validity of the notice service. On the contrary, the Senior Departmental Representative (Sr. DR) defended the actions of the authorities, stating that the notice served was within the prescribed time limit.

Issue 1 - Tribunal's Decision:
After evaluating the submissions, the Tribunal found that the notice under section 148 was sent to the old address of the assessee, despite the department being aware of the updated address. The Tribunal emphasized that proper notice service within the time limit is crucial for jurisdiction in framing assessments under sections 147/143. Since the notice was not served upon the assessee at the correct address, the assessment under section 147/143 was deemed null and void. Consequently, the objections raised by the assessee regarding the validity of the notice were upheld, favoring the assessee.

Issue 2: Deletion of addition made under section 68 of the Act:
Due to the Tribunal's decision on the validity of the assessment order, the issue of deleting the addition made under section 68 of the Act became irrelevant and did not require adjudication. The Tribunal noted that this issue had become infructuous based on the finding regarding the validity of the assessment order.

Conclusion:
The Appellate Tribunal ITAT Delhi ruled in favor of the assessee, allowing the cross-objection and dismissing the appeal filed by the revenue. The Tribunal's decision was based on the improper service of the notice under section 148, rendering the assessment under sections 147/143 null and void. Therefore, the deletion of the addition made by the AO under section 68 of the Act was not addressed as it became irrelevant in light of the primary issue's resolution.