2016 (6) TMI 117 - AT - Income Tax

Reopening of assessment - validity of service of notice u/s 148 which was never served upon the assessee - Held that - Whenever a reassessment is sought to be made u/s 147, issuing and serving of a valid notice u/s 148 is a mandatory precondition. The onus lies on the Revenue authorities to prove that the notice was served on the assessee within the stipulated period. It is only if the said notice is served on the assessee that the assessing officer would be justified in taking up proceedings against the assessee. If no notice is issued, or if the notice issued is shown to be invalid, then the proceedings taken up by the assessing officer would be illegal and void. In this case, it is very much apparent that the notice u/s 148 had not been served on the assessee. The Assessing Officer can assume jurisdiction to complete the assessment only after valid and legal service of the notice in accordance with law. Unless such notice has duly been served, the Assessing Officer cannot be said to have been clothed with the jurisdiction to pass the assessment order. The mandate of section 148 is that notice should be served on the assessee, by prescribed mode of service, which has undeniably not been carried out in this case. In the absence of a valid service of notice u/s 148, the reassessment order passed by the Assessing Officer is illegal and void ab initio. See CIT vs Chetan Gupta 2015 (9) TMI 756 - DELHI HIGH COURT - Decided in favour of assessee

Summary

Issues:
Validity of service of notice u/s 148 for reassessment proceedings.

Analysis:
The main issue in the present appeal before the Appellate Tribunal ITAT Delhi pertains to the service of notice u/s 148 of the Income Tax Act, 1961 for reassessment proceedings. The appellant contended that the notice was not served at the correct address, while the respondent argued that the notice was served at the address provided in the Return of Income. The appellant highlighted discrepancies in the address and argued that the notice was served to an unknown person, rendering it invalid. The respondent, on the other hand, claimed that the notice was correctly served based on the address in the Return of Income and that any defect should not invalidate the proceedings.

The Tribunal observed that the burden lies on the Revenue authorities to prove the valid service of notice u/s 148 within the stipulated period for reassessment proceedings to be justified. It noted that the notice had not been served on the appellant as claimed by the Department. The Tribunal emphasized that the Assessing Officer can only assume jurisdiction after valid service of notice as per the law. Citing the Hon'ble Delhi High Court's judgement in CIT vs Chetan Gupta, the Tribunal reiterated that proper service of notice is a jurisdictional requirement and failure to do so renders reassessment proceedings invalid and void ab initio.

Based on the legal principles established by the High Court, the Tribunal concluded that in the absence of valid service of notice u/s 148, the reassessment proceedings are void ab initio. Consequently, the Tribunal allowed Ground No. 2 of the appeal, declaring the reassessment proceedings as invalid, while dismissing the other grounds as inconsequential. The appeal of the assessee was partly allowed, with the order pronounced on 27th April 2016.