2017 (1) TMI 1383 - AT - Income Tax

Validity of reopening of assessment - as per assessee notice was never served on the assessee or his agent - Held that - 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 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. This clearly shows as can t regard on the part of the assessee to the legal procedures. 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. - Decided in favour of assessee.

Summary

Issues Involved:
1. Condonation of delay in filing the appeal.
2. Validity of the service of notice under Section 148 of the Income Tax Act.
3. Validity of the assessment order passed under Section 144 read with Section 147 of the Income Tax Act.

Detailed Analysis:

1. Condonation of Delay in Filing the Appeal:
The appeals were filed with a delay of 545 days. The assessee submitted that the delay occurred because the initial counsel handling the case was unwell and subsequently passed away. The assessee believed the appeal had been filed within the stipulated time. However, upon receiving a notice from the Tax Recovery Officer, the assessee discovered that no appeal had been filed. The new counsel promptly filed the appeal. The Tribunal found the explanation credible and supported by relevant documents. It was noted that the assessee had no inherent benefit in delaying the appeal. Therefore, the delay was condoned, allowing the appeal to be adjudicated.

2. Validity of the Service of Notice Under Section 148:
The assessee challenged the validity of the service of notice under Section 148, claiming it was not served in accordance with the law. The notice was allegedly served by affixture after the assessee refused to accept it. The Tribunal examined the procedural requirements for valid service of notice, referencing relevant laws and case precedents. It was found that the AO did not make reasonable attempts to serve the notice through regular means before resorting to affixture. The Tribunal cited several case laws, including the Supreme Court's decision in CIT vs. Ramendra Nath Ghosh, which emphasized the necessity of proper service of notice. The Tribunal concluded that the notice served by affixture was not valid, as it did not comply with the mandated legal procedures.

3. Validity of the Assessment Order Under Section 144 Read with Section 147:
The assessment order was challenged on the grounds that it was based on an invalid service of notice under Section 148. The Tribunal noted that the AO proceeded with the assessment without properly addressing the assessee's objections regarding the service of notice. The Tribunal held that the lack of proper notice rendered the assessment order void ab initio. Consequently, the Tribunal quashed the assessment order, making further adjudication on other grounds of appeal unnecessary.

Conclusion:
The Tribunal allowed the appeals by the assessee, condoning the delay in filing the appeal and quashing the assessment order due to the invalid service of notice under Section 148. The Tribunal emphasized the importance of adhering to procedural requirements for serving notices to ensure the validity of assessment proceedings.