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TMI Blog2011 (3) TMI 543X X X X Extracts X X X X X X X X Extracts X X X X ..... ITAT was correct in law and on facts annulling the assessment framed by the AO under Section 147/143(3) of the Act? 2. Whether ITAT was correct in law in holding that since notice under Section 148 had not been served upon the assessee and therefore, assessment framed by the AO was bad in law? 3. The facts in brief are that the respondent/assessee filed return for the assessment year 1999-2000 declaring its income at Rs.4,91,550/-, which was assessed under Section 143 of the Income Tax Act (for short "the Act"). Thereafter information was received from DIT (Inv) that the assessee had received accommodation entries from M/s.Parivartan Financial Services Pvt. Ltd. and Victoria Advertising Pvt. Ltd. On this information, a notice dated 27.03.2006 under Section 148 of the Act was issued by the Assessing Officer (AO) at the address at which the return of the said year was filed by the assessee. A notice under Section 142(1) dated 28.02.2006 followed by another notice dated 6th November, 2006 was issued to the assessee. In response to this notice, counsel for the assessee appeared before the AO on 14th November, 2006 and sought adjournment. On that date, the counsel was g ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is presumed to be served. Second, it is further perused from the assessment order that in any case photo copy of the notice under Section 148 was served upon the AR of the appellant who appeared during the course of the assessment proceedings before the Assessing Officer on 24.11.2006. Therefore, the grievance of the assessee regarding non service of the notice no more survives. Three, it can be further sent that the AR of the assessee has been participating in the assessment proceedings from time to time. Queries were given by AO and details were filed by him. In any case it cannot be said that there was been violation of principles of natural justice. Therefore, the ground of the appellant on this issue is dismissed." 5. The Revenue filed appeal against the order of CIT(A) and assessee also filed cross-objections before the Tribunal. The Tribunal allowed the cross-objections of the assessee and dismissed the appeal of the Revenue on the following reasoning: "5. ..........Therefore, it could not be said that there had been violation of principles of natural justice. In the case before us it is not a question opportunity of being allowed to the assessee but it relat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce was issued at the correct address of the assessee, notice issued at the wrong address could not be said to be a valid service in the eyes of law and as such the assessment based on such a notice was bad in law. In this context, he has relied upon the judgments of R.K. Upadhyaya v. Shanabhai P. Patel, 166 ITR 163 (SC), CIT v. Mintu Kalia, 253 ITR 334 (Gau), Commissioner of Income Tax v. Thayaballi Mulla Jeevaji Kapasi (Decd.), 66 ITR 147 (SC), CIT v. Harish J Punjabi 297 ITR 424 (Del), CIT v. Rajesh Kumar Sharma 311 ITR 235 (Del), P. N. Sasikumar v. CIT 170 ITR 80 (Ker), CIT v. Mani Kakar 18 DTR 145 and an order of this court in CIT v. Eshaan Holding P. Ltd. ITA No. 1171 of 2008 dated 31-08-2009. 9. In the case of R.K. Upadhyaya (supra) it was held by the Supreme Court that since the Assessing Officer had issued notice of re-assessment under Section 147 by registered post on 31st March, 1970, which notice was received by the assessee on 3rd April, 1970, nevertheless, the notice was not barred by limitation and retained its legality. A distinction was drawn between "issue of notice" and "service of notice" on the following observations:- "...A clear distinction has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 42(1) of the Act, but, the assessee had filed his return under protest making it abundantly clear that he has not received the notice under Section 148. However, in the present case, the notice under Section 148 was issued to the assessee at the address as given by it in the return of the relevant year. The counsel for the assessee had also appeared before the AO on 14th November, 2006 in response to notice under Section 142(1) of the Act and was given copy of the notice under Section 148 of the Act. Then the assessee had also written letter within a few days thereafter, i.e., on 11th December, 2006 stating that the return as originally filed under Section 143 of the Act be treated as return in pursuance to notice under Section 148 of the Act. Not only this, various queries were also raised to which detailed replies were filed by the assessee. It was only thereafter that the assessment was framed. That being the position in the present case, the case of Rajesh Kumar Sharma (supra) is distinguishable from the present case. 12. The reliance has also been placed on the order of this Bench in CIT v. Eshaan Holding, ITA No.1171/2008 decided on 31st August, 2009. In this case als ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts necessary for the comprehensive completion of the assessment. What had transpired in that case was that whilst the initiation of the proceedings by the AO for approval of the Commissioner of Income Tax mentioned the failure on the part of the Assessee to disclose fully and truly all material facts relating to the alleged accommodation entries, the "reasons" disclosed to the Assessee on its request merely mentioned those accommodation entries as being the foundation for the belief that income to the extent of Rupees 5,00,000/- had escaped assessment. The distinction between these two situations has been perspicuously emphasised and adumbrated. The finding was that a reason to believe, without the essential concomitant of it being a result of the failure of the assessee to fully and truly disclose all material facts, would render the reassessment under Sections 147/148 unsustainable. In order to overcome this difficulty, it has been argued on behalf of the Revenue that since the AO had duly recorded the failure on the part of the assessee to fully and truly disclose all material facts this notation should be acted upon and the reasons conveyed to the assessee which were predicated ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r Section 147 of the IT Act; secondly, the period of thirty days (omitted by the Finance Act, 1996) is with regard to the furnishing of the return. 6. In stark contrast, Section 149 of the IT Act speaks only of the issuance of a notice under the preceding Section within a prescribed period. Section 149 of the IT Act does not mandate that such a notice must also be served on the assessee within the prescribed period. Speaking for the Division Bench of this Court, I had occasion to observe in CIT v. Shanker Lal Ved Prakash (2007) 212 CTR (Del) 47: (2008) 300 ITR 243(Delhi) the decision in CIT v. Jai Prakash Singh (1996) 132 CTR SC 262: 219 ITR 737 (SC) to the effect that failure to serve a notice under Section 143(2) would not render the assessment as null and void but only as irregular. The decision of the Rajasthan High Court in CIT v. Gyan Prakash Gupta (1986) 54 CTR (Raj) 69: (1987) 165 ITR 501 (Raj) opining that an assessment order completed without service of notice under Section 143(2) is not void ab initio and cannot be annulled was noted. Furthermore, from a reading of that judgment, it is evident that it had not been seriously contended that the notice under Section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erved by asking the petitioner to undertake the said exercise. So, that case is also absolutely distinguishable from the present case. 17. Learned counsel for the assessee also relied upon the cases of Fateh Chand Agarwal v. CWT, 97 ITR 701 (Orissa); B. Johar Forest Works v. CIT, 107 ITR 409 (J&K) and R.L. Narang v. CIT, 136 ITR 108 (Del). All these cases relate to service of notice on persons, not authorised by of the assessee. That being not the position in the present case, these cases are not applicable. 18. In view of our discussions as above, we are of the view that service of notice, a contemplated pre-condition before assessment would be a question of fact depending upon the facts and circumstances of each case. In the present case, not only that no objection was raised with regard to non-issue of notice dated 27.03.2006, the assessee vide its letter dated 11th December, 2006 adopted the return as originally filed as the return in response to the said notice under Section 148. It was only thereafter that the AO proceeded with the reassessment proceedings. During the assessment proceedings, certain queries were raised to which the assessee gave detailed respo ..... X X X X Extracts X X X X X X X X Extracts X X X X
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