2017 (5) TMI 171 - HC - Income Tax

Service of notice - whether sending of a notice under Section 148 of the Act to the addressee at his correct address by registered post would be deemed to be served, if not returned undelivered and would be sufficient service for the purposes of Section 148 of the Act and reassessment proceedings? - Held that - In view of the Section 27 of General Clauses Act, since the notice under Section 148 of the Income Tax Act was admittedly sent to the respondent-assessee by registered post at his proper address and the same was not returned unserved, a presumption of service of the said notice arises. After the service of the notice as aforesaid, proceedings under Section 142 were drawn and notice under Section 142(1) was issued to the respondent-assessee on 23.01.2002. In respect to the said notice, the respondent-assessee filed reply on 04.02.2002 and claimed that he had not received any notice under Section 148 of the Act - The filing of the aforesaid reply by the respondent-assessee reveals that he actually had the knowledge of the notice under Section 148 of the Act. Moreover, as desired by him, the reasons for issuing the notice under Section 148 of the Act were communicated to him as is evident from the order-sheet entry dated 05.03.2002. A notice sent by post to the addressee at his proper address would be deemed to have been delivered to him in the ordinary course, if not returned undelivered and such service is sufficient even for the purposes of Section 148 of the Act. Appeal allowed - decided in favor of Revenue.

Summary

Issues:
Validity of notice under Section 148 of the Income Tax Act, 1961 for assessment year 1996-97.

Detailed Analysis:

1. Service of Notice under Section 148:
- A notice under Section 148 of the Income Tax Act, 1961 was sent to the respondent-assessee by registered post on 16.10.2000 at the correct address. The notice was not returned undelivered.
- The Commissioner of Appeals and the Tribunal held that since the notice was not physically served on the respondent-assessee, the reassessment proceedings were deemed invalid.
- Section 282 of the Act allows service of notice by post, and Section 27 of the General Clauses Act, 1897 presumes service by post unless proven otherwise.
- The burden of proof lies on the party contesting the service of notice, as established in legal precedents like Shimla Development Authority Vs. Santosh Sharma and Sunil Kumar Sambhudayal Gupta Vs. State of Maharashtra.

2. Knowledge of Notice and Response:
- The respondent-assessee filed a reply to a subsequent notice under Section 142(1) claiming no knowledge of the Section 148 notice. However, the reasons for the Section 148 notice were communicated to the respondent-assessee.
- The respondent-assessee's reply to the Section 142(1) notice indicated awareness of the Section 148 notice, establishing that the purpose of the notice was duly served.

3. Applicability of Section 292(BB):
- The appellant relied on Section 292(BB) of the Act, which deems a notice served if the assessee has appeared in related proceedings. However, this provision was added in 2008 and is not applicable retroactively.
- The court held that the notice sent by post to the correct address, not returned undelivered, is considered delivered in the ordinary course, and such service is sufficient for Section 148 purposes.

4. Judgment:
- The court ruled in favor of the Revenue, setting aside the Tribunal's and Commissioner's orders, and allowing the appeal. The notice sent by post to the correct address was deemed served, and the reassessment proceedings were upheld as valid for the assessment year 1996-97.