2010 (8) TMI 66 - HC - Income Tax

Reassessment - serving of a notice - AO noted that the assessee company had made disclosure of income under the VDIS, 1997. The assessee failed to deposit the taxes in accordance with the VDIS and, therefore, the declaration was held to be void in terms of Section 67(2) of the Scheme. Notices under Section 148 of the Act were issued on 24.12.1999 - Held that - the issue was raised on an earlier occasion before the CIT(A) who after scanning the factual matrix in detail, expressed the view that the notice was served on the assessee. The said finding was affirmed by the tribunal. Service of notice or non-service of notice is in the realm of facts and as a matter of fact it was put to rest. Thus, it does not give rise to a total pure question of law. Thus, the said decision is distinguishable. - notice service through registered post is presumed to be served unless contrary proved by the assessee

Summary

Issues Involved:
1. Jurisdictional infirmity due to non-service of notice under Section 148 of the Income Tax Act.
2. Contravention of settled judicial principles by the tribunal.
3. Re-assessment proceedings being barred by time.

Issue-wise Detailed Analysis:

1. Jurisdictional Infirmity due to Non-service of Notice under Section 148:

The court examined whether the non-service of notice under Section 148 rendered the entire proceedings a nullity. The appellant argued that the non-service of notice within the stipulated time caused the proceedings to be void ab initio. The CIT(A) initially found that the notices under Section 148 were sent by registered post, creating a presumption of service, which the assessee failed to rebut. The tribunal upheld this finding, noting that the Managing Director of the assessee company had attended the reassessment proceedings, indicating compliance with the notices. The High Court affirmed that once a finding of service of notice was recorded and affirmed by the tribunal, it could not be reopened by the CIT(A) in subsequent proceedings.

2. Contravention of Settled Judicial Principles by the Tribunal:

The appellant contended that the tribunal's decision was perverse and contrary to binding judicial authorities. The tribunal had earlier remanded the matter to the assessing officer with specific directions, which the CIT(A) later expanded upon by re-examining the service of notice issue. The High Court held that the CIT(A) overstepped its jurisdiction by delving into issues that had already attained finality. The court emphasized that the tribunal's directions on remand were specific and limited, and the CIT(A) was bound by these directions. The tribunal's decision to set aside the CIT(A)'s order and direct a fresh adjudication on merits was upheld, reinforcing the principle that lower authorities must adhere to the hierarchy and scope of remand orders.

3. Re-assessment Proceedings Being Barred by Time:

The appellant argued that the reassessment proceedings were barred by the statutory period of six years. The CIT(A) initially found the notices issued under Section 148 to be valid and within the statutory period. The tribunal, in its earlier order, had concurred with this finding. The High Court reiterated that the issue of limitation had been conclusively settled in the first round of litigation and could not be reopened. The court emphasized that the doctrine of res judicata applied to the findings on the service of notice and limitation, as these were jurisdictional facts already determined by the tribunal.

Conclusion:

The High Court dismissed the appeals, holding that the CIT(A) had acted beyond its jurisdiction by re-examining issues already settled by the tribunal. The court underscored the importance of adhering to the hierarchical structure and the finality of judicial decisions. The tribunal's directions on remand were specific and binding, and the CIT(A) was not entitled to revisit the service of notice or limitation issues. The reassessment proceedings were upheld as valid, and the appeals were dismissed without any order as to costs.