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TMI Blog2018 (5) TMI 639X X X X Extracts X X X X X X X X Extracts X X X X ..... s served with notice under Section 148(1) of the IT Act through his Chartered Accountant and the petitioner was never served with notice alleged to be issued under Section 148(1) of the Act on 15-3-2016. Responding to the notice so issued, the petitioner filed return on 2-5-2016 and thereafter, sought reasons to believe from the assessing officer and thereafter, he was served with notice dated 4-5-2016 under Section 143(2) of the IT Act for the assessment year 2009-10. Thereafter, the petitioner sought certain information by letter dated 9-5-2016 and ultimately, he filed objections against the reasons for reopening the completed assessment under Section 148 of the IT Act on 18-7-2016 clearly stating that he was never served with notice dated 15-3-2016 and he had already changed his address duly updated in the PAN data base and the address has been clearly mentioned in the tax returns and request was made for closure of the case. But, thereafter, on 5-8-2016, the objection against reassessment proceedings initiated under Section 148 of the IT Act for the said assessment year, was rejected indicating that notice was issued on 15-3-2016 on the address shown in the tax returns and it h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... therefore, the correct address of the petitioner was well within the knowledge of the said assessing officer and as such, issuance of notice on wrong address cannot be said to be issuance of proper notice under Section 149(1)(b) of the IT Act for initiation of reassessment proceeding under Section 148(1) read with Section 147 of the IT Act. Alternatively, it is further submitted that no notice under Section 148(1) of the IT Act was ever served to the petitioner which is sine qua non and condition precedent as well for opening the reassessment proceeding under Section 147 read with Section 148 of the IT Act. Mere participation of the petitioner in the reassessment proceeding would not amount to service of notice as contemplated under Section 148(1) of the IT Act. Therefore, the entire reassessment proceedings initiated and the objections rejected for reopening the assessment proceeding deserves to be quashed. 6. Mrs. Naushina Ali, learned counsel appearing for the respondents, would vehemently oppose the submissions made on behalf of the petitioner and would submit that notice issued under Section 148(1) of the IT Act dated 15-3-2016 to the address of the petitioner Company mention ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ences The High Court may, therefore, issue a high prerogative writ prohibiting the Income-tax Officer from proceeding with reassessment when it appears that the Income-tax Officer had no jurisdiction to commence proceeding". 11. The principle of law laid down in Calcutta Discount (supra) has been followed with approval by the Supreme Court thereafter in the matter of The Commissioner of Income-tax, Gujarat v. M/s. A. Raman and Co. AIR 1968 SC 49 in which Their Lordships have held that the High Court exercising jurisdiction under Article 226 of the Constitution has power to set aside a notice issued under Section 147 of the Income Tax Act, 1961, if the conditions precedent to the exercise of jurisdiction under Section 147 of the Act do not exist, and observed as under: - "6. The High Court exercising jurisdiction under Article 226 of the Constitution has power to set aside a notice issued under Section 147 of the Income Tax Act, 1961, if the condition precedent to the exercise of the jurisdiction does not exist. The Court may, in exercise of its powers, ascertain whether the Income Tax Officer had in his possession any information: the Court may also determine whether from that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessment. Each case shall be examined on its own merits keeping in view the scope of judicial review while entertaining such matters, as laid down by this Court in various judgments. 4. We are conscious of the fact that the High Court has referred to the judgment of this Court in Commissioner of Income Tax v. Chhabil Dass Agarwal, [(2013) ITR 357 (SC)]. We find that the principle laid down in the said case does not apply to these cases." 13. Thus, in light of the principle of law laid down in Calcutta Discount (supra) followed in M/s. A. Raman and Co.'s case (supra) and Jeans Knit Private Ltd. (supra) and considering the facts leading to challenge to the show cause notice, I do not have any slightest doubt in my mind to hold that the writ petition is maintainable to challenge the notice for reassessment issued under Section 147 read with Section 148 of the Act, 1961 and accordingly, I overrule the first preliminary objection raised on behalf of the Revenue in that regard. 14. This determination would bring me to the merits of the matter. Two questions that arise for consideration would be, (i) Whether notice under Section 148 of the IT Act has been issued in terms o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on by holding that the existence of the reason(s) to believe is supposed to be the check, a limitation, upon his power to reopen the assessment. Section 148(2) of the IT Act imposes a further check upon the said power, viz., the requirement of recording of reasons for such reopening by the Assessing Officer. Section 151 imposes yet another check upon the said power, viz., the Commissioner or the Board, as the case may be, has to be satisfied, on the basis of the reasons recorded by the Income-tax Officer, that it is a fit case for issuance of such a notice. The power conferred upon the Assessing Officer by Sections 147 and 148 is thus not an unbridled one. It is hedged in with several safeguards conceived in the interest of eliminating room for abuse of this power by the Assessing Officers. All the requirements stipulated by Section 147 must be given due and equal weight. 18. The Gujarat High Court in the matter of P.V. Doshi v. CIT (1978) 113 ITR 22 (Guj.) had laid down the conditions precedent for initiating reassessment proceedings which as under: - "(i) reasonable belief reached by the Assessing Officer under clause (a) or clause (b) of Section 147; (ii) recording of reaso ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in accordance with Section 282 (1) of the Act read with Order V Rule 12 CPC and Order III Rule 6 CPC. (iii) Although there is change in the scheme of Sections 147, 148 and 149 of the Act from the corresponding Section 34 of the 1922 Act, the legal requirement of service of notice upon the Assessee in terms of Section 148 read with Section 282 (1) and Section 153 (2) of the Act is a jurisdictional pre- condition to finalizing the reassessment. (iv) The onus is on the Revenue to show that proper service of notice has been effected under Section 148 of the Act on the Assessee or an agent duly empowered by him to accept notices on his behalf. In the present case, the Revenue has failed to discharge that onus. (v) to (vii) xxx xxx xxx" 20. The requirement of issue of notice is satisfied when a notice is actually issued within the period of limitation prescribed. Service of notice under the Act is not a condition precedent to conferment of jurisdiction on the Assessing Officer to deal with the matter but it is a condition precedent for making of the order of assessment. 21. In the matter of R.K. Upadhyaya v. Shanabhai P. Patel (1987) 3 SCC 96, the Supreme Court has held that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unts to or is likely to amount to one lakh rupees or more for that year. Explanation.-In determining income chargeable to tax which has escaped assessment for the purposes of this sub-section, the provisions of Explanation 2 of section 147 shall apply as they apply for the purposes of that section." 25. A focused glance of the aforesaid provision would show that the maximum time limit for issuance of notice under Section 148 of the IT Act is six years from the end of relevant assessment year. In the present case, the relevant assessment year is 2009-10 and the impugned notice is said to have been issued on 15-3-2016 on the incorrect address of the petitioner / assessee which has already been changed on the date of issuance of notice by updating the PAN data base. The term 'shall be issued' used in Section 149 of the IT Act is extremely important. 26. The expression "issue" has been defined in Black's Law Dictionary to mean "To send forth; to emit; to promulgate; as, an officer issues order, process issues from court. To put into circulation; as, the treasury issues notes. To send out, to send out officially; to deliver, for use, or authoritatively; to go forth as au ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r to establish that the orders are complete and effective i.e., it is issued, so as to be beyond the control of the authority concerned within the period of limitation. Likewise, the Kerala High Court in the matter of Government Wood Works v. State of Kerala (1988) 69 STC 62 has held that in the absence of dispatch date made available to the Court from the records, to prove that the order is issued within the prescribed period, order passed by Assessing Officer is barred by limitation. 30. At this stage, Section 27 of the General Clauses Act, 1897 may noticed herein profitably. Section 27 of the General Clauses Act, 1897 reads as follows: - "27. Meaning of service by post.-Where any Central Act or Regulation made after the commencement of this Act authorizes or requires any document to be served by post, whether the expression "serve" or either of the expressions "give" or "send" or any other expression is used, then, unless a different intention appears, the service shall be deemed to be effected by properly addressing, pre-paying and posting by registered post, a letter containing the document, and, unless the contrary is proved, to have been effected at the time at which the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der ceased to have any control over such order and that it left his hand soon after it was passed. The Department having failed to do so, a presumption has to be drawn that the final assessment order was not passed within the time period specified under Section 144(c)(4) read with Section 144(c)(3) of the IT Act. 33. Having noted the principles of law governing issuance of notice under Section 149(1) of the IT Act, reverting to the facts of the present case, it is the case of the Revenue that notice was issued under Section 148(1) of the IT Act by the officer concerned on 15-3- 2016 on the address shown in the return and it was sent for delivery well within the period of limitation through speed post for delivering to the present petitioner, which is seriously disputed by the petitioner and even prayed for production of said notice, but ultimately, it has not been produced by the Revenue on record. The said notice was ultimately, said to have been returned unserved on 28-3-2016 and served to the petitioner through its Chartered Accountant on 13-4-2016 after the period of limitation which is 31-3-2016. The notice dated 13-4-2016 is filed along with the writ petition in which the pe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... IT Act has been issued to the petitioner was on the Revenue which the Revenue has failed to discharge, as the Revenue has clearly failed to establish that the notice was issued on or before 31-3-2016 on the assessee / petitioner's correct address and it was dispatched on or before 31-3-2016 and it was put to the proper serving officer for serving in accordance with law. Therefore, I have no hesitation to hold that no notice under Section 149(1)(b) read with Section 148(1) of the IT Act was issued to the petitioner well within the period of limitation on or before 31-3-2016 on the officially notified correct address available in the official record for service of notice to the petitioner which is a jurisdictional fact and condition precedent for initiation of assessment proceeding under Section 148(1) of the IT Act. Thus, the first question is answered accordingly. Question No.2 37. This would bring me to the second question, whether notice under Section 148(1) of the IT Act was served to the petitioner, as service of notice is the condition precedent for reopening assessment under Section 148(1). This plea is an alternative plea raised on behalf of the petitioner without prej ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... requirement of the proviso to section 292BB of the Act. 5. We most respectfully submit that in view of the factum of the non service of the notice, the re-opening of assessment for the AY 2009-10 ought to be dropped and the notice u/s 148 withdrawn." 40. The objections have been replied by the Revenue as under: - "I. You have contended that the notice u/s 148 of the Act was not served through the correct address and in view of the factum of the non-issuance and service of notice as per the requirement of the provision to section 292BB of the Act, the re-opening of assessment for A.Y. 2009-10 ought to be dropped and the notice u/s 148 withdrawn. In this connection, it is to inform you that this office had issued notice u/s 148 of the Income tax Act, 1961 dated 15.03.2016 to the address of your company as mentioned on PAN and in tax returns of M/s Ardent Steel Ltd. Any notice sent through speed post by Indian Postal Department is a valid service of notice as per the manner and procedures provided in the Act. The sad notice was returned back to this office by the Indian Postal Department citing the reasons "Left" on 28.03.2016. II. It is also to inform you that the notice u/s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the assessee under Section 148(1) of the IT Act are invalid and laid down the principles in this regard as under: - "(i) to (iv) xxx xxx xxx (v) The mere fact that an Assessee or some other person on his behalf not duly authorised participated in the reassessment proceedings after coming to know of it will not constitute a waiver of the requirement of effecting proper service of notice on the Assessee under Section 148 of the Act. (vi) Reassessment proceedings finalised by an AO without effecting proper service of notice on the Assessee under Section 148 (1) of the Act are invalid and liable to be quashed. (vi) Section 292 BB is prospective. In any event the Assessee in the present case, having raised an objection regarding the failure by the Revenue to effect service of notice upon him, the main part of Section 292 BB is not attracted." 44. Similar is the proposition laid down by the Gauhati High Court in Mintu Kalita's case (supra) holding that service of notice is condition precedent for exercise of power under Section 148 of the IT Act. 45. Thus, on the basis of above-stated legal analysis, I have no hesitation to hold that no notice was served to the petitioner ..... X X X X Extracts X X X X X X X X Extracts X X X X
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