2017 (4) TMI 348 - AT - Income Tax

Reopening of assessment - invalidity of service of notice - Held that - In identical facts as in the case of another assessee of the same group examination of the materials produced in this regard do not reflect any effort on the part of the AO to service the notice by post or by other ordinary means of service as required by section 282. This fact is evident from the date of issue of notice and the date of affixture being the same. The above clearly reveals that the AO has not taken reasonable steps to serve the notice in the ordinary course. Thus as in the case of CIT vs. Kishan Chand 2009 (11) TMI 535 - Punjab and Haryana High Court in this case also no other mode was adopted and steps of service of notice was taken except reportedly through the affixture about few days before time was expired. Thus it is clear that the AO has not made regular attempts for service of notice in regular manners and was not justified to make substituted service of notice. There is no report of notice server to the effect that there was any refusal of notice by the assessee. In the report of Inspector, names of two witnesses are referred. The addresses of the witnesses are far away from the premises of the assessee. The report of the Inspector does not state that witnesses have identified the place or was known to them personally. As a matter of fact despite assessee s repeated submission that notice has not been served properly, the AO has not bothered to serve the notice upon the assessee or his agent even though there was adequate time for the said service of notice through the ordinary means for subsequent years. It is settled law including that from the Hon ble Apex Court in the case of CIT vs. Ramendra Nath Ghosh (1971 (8) TMI 26 - SUPREME Court ) that in absence of proper service of notice the assessment procedure lose their validity. - assessment orders in these cases are void abinitio. - Decided in favour of assessee

Issues Involved:
1. Condonation of Delay
2. Validity of Reopening under Section 148 of the I.T. Act, 1961
3. Validity of Service of Notice under Section 148
4. Provision of Reasons for Issuance of Notice
5. Opportunity of Being Heard

Detailed Analysis:

1. Condonation of Delay:
The Tribunal noted a delay of 202 days in filing the appeals by the assessee. The delay was attributed to the illness and subsequent death of the assessee's previous counsel, Shri M. Mani. The appellate orders were misplaced in the counsel's office and were only forwarded to the assessee's office after the counsel's demise. The Tribunal, considering the overall facts and circumstances, found the cause reasonable and sufficient and condoned the delay, admitting the appeals for adjudication on merits.

2. Validity of Reopening under Section 148 of the I.T. Act, 1961:
The assessee challenged the validity of the reopening of assessment under Section 148, arguing that the notice issued was illegal, invalid, and bad in law. The Tribunal noted that the issue of jurisdiction and the invalidity of service of notice were identical to a previous case involving another assessee from the same group, Arunkumar Anandrao Moundekar. In that case, the Tribunal had quashed the assessment due to the lack of validity of the notice. The Tribunal decided to follow the same precedent.

3. Validity of Service of Notice under Section 148:
The Tribunal examined the service of notice under Section 148, which was reportedly served by affixture. The Tribunal referred to several legal precedents and procedural requirements under the Code of Civil Procedure, 1908, and found that the notice was not served in accordance with the law. The Tribunal noted that the AO did not make reasonable attempts to serve the notice through ordinary means and resorted to affixture without proper justification. The report of the Inspector lacked necessary details and verification, and the addresses of the witnesses were far from the assessee's premises. Consequently, the Tribunal held that the service of notice by affixture was not valid, rendering the assessment order void ab initio.

4. Provision of Reasons for Issuance of Notice:
The assessee argued that the reasons recorded for the issuance of the notice under Section 148 were not provided, which is a mandatory requirement. The Tribunal noted that the AO did not provide the reasons despite repeated requests from the assessee. This failure to provide reasons further invalidated the assessment proceedings.

5. Opportunity of Being Heard:
The assessee contended that no reasonable opportunity of being heard was provided before the assessment was framed. The Tribunal found that the AO did not adequately address the assessee's objections and failed to provide a fair opportunity to present their case. This lack of opportunity further supported the Tribunal's decision to quash the assessment.

Conclusion:
The Tribunal, after considering the submissions and examining the records, found that the service of notice under Section 148 was not valid and the assessment order was void ab initio. The Tribunal quashed the assessment on the grounds of lack of proper service of notice and failure to provide reasons for issuance of the notice. Consequently, the appeals by the assessee were allowed.

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