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2016 (1) TMI 773 - AT - Income TaxValidity of assessment - Non-service of notice u/s 143(2) - Held that - It clear that the Revenue miserably failed to discharge its onus to show that the notice u/s 143(2) of the Act was validly and properly served upon the assessee within the prescribed limit and hence, the contention of the Revenue is rejected. We are, therefore, of the considered opinion that it is a clear case of non-service of notice u/s 143(2) of the Act within the statutory period as per proviso to Section 143(2) of the Act as existed in the statutory provisions of the Act prior to substitution of new sub-section (2) to Section 143 w.e.f. 01.06.2002 and, therefore, the assessment order cannot be held as sustainable and we quash the same - Decided in favour of assessee.
Issues Involved:
1. Validity of assessment order due to non-service of statutory notice under Section 143(2) within the prescribed time limit. 2. Onus of proof regarding the service of notice. 3. Consequences of non-service of notice on the assessment order. Issue-wise Detailed Analysis: 1. Validity of Assessment Order due to Non-Service of Statutory Notice under Section 143(2) within the Prescribed Time Limit: The primary issue addressed in the judgment is whether the assessment order for the assessment year 1998-99 is valid given the alleged non-service of the statutory notice under Section 143(2) of the Income-tax Act, 1961 within the prescribed time limit. The assessee argued that the return for the assessment year 1998-99 was filed on 31.10.1998, and as per Section 143(2), the notice should have been issued and served on or before 31.10.1999. The assessee supported this claim with an affidavit asserting non-service of the notice within the stipulated period. The Tribunal noted that the assessment order was silent about the service of the notice, and the Department failed to provide evidence of such service within the prescribed time limit. The Tribunal referenced several judgments, including "Whirlpool India Holdings Ltd., 1 SOT 165 (Delhi)" and "Worldwide Exports Pvt. Ltd., 272 ITR 162 (Delhi)," emphasizing the necessity of serving the notice within the allowed time for a valid assessment. 2. Onus of Proof Regarding the Service of Notice: The Tribunal discussed the onus of proof concerning the service of the notice. The assessee's representative argued that once the assessee denies the service of notice by filing an affidavit, the burden shifts to the Department to rebut the same and establish valid and proper service of notice within the prescribed time limit. The Department attempted to discharge this onus by submitting various documents, including affidavits of the notice server and a tax assistant, and entries from the notice server's register. However, the Tribunal found inconsistencies in the dates and details provided by the Department's evidence. The Tribunal cited the case of "CIT Vs. Lunar Diamonds Ltd. - 281 ITR 1 (Delhi)," where it was held that the burden is on the Department to prove service of notice when the assessee denies it. 3. Consequences of Non-Service of Notice on the Assessment Order: The Tribunal concluded that the Department failed to discharge its onus to prove that the notice under Section 143(2) was validly and properly served on the assessee within the prescribed time limit. The Tribunal noted discrepancies in the Department's evidence, such as differing dates of service and missing acknowledgments. The Tribunal emphasized that for a partnership firm, the notice should be served on a partner, authorized representative, or manager, as required by Section 282(2)(a) of the Act. Given the Department's failure to establish proper service, the Tribunal quashed the assessment order dated 30.03.2001 for the assessment year 1998-99. Consequently, the additional ground No.7 of the assessee's appeal and ground No.1 of the cross-objection were allowed, and the remaining grounds were dismissed as infructuous. Conclusion: The Tribunal allowed the assessee's additional ground regarding non-service of notice and quashed the assessment order for the assessment year 1998-99. The Tribunal dismissed the Revenue's appeal and other grounds of the cross-objection as infructuous. The decision was pronounced in the open Court on 30.10.2015.
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