TMI Blog2019 (7) TMI 941X X X X Extracts X X X X X X X X Extracts X X X X ..... f Rule 127 and in particular, sub-rule (2) therefore, having regard to the further proviso therein, the Department had to deliver the notice of reassessment at the petitioner s address given by her to the bank where her account was maintained No such steps were taken. Service of notice, therefore, was not complete. In absence of service of notice before the last date envisaged under section 149 for such purpose, the AO could not have proceeded further with the reassessment proceedings. His consequential steps of attempting to serve the notices of scrutiny assessment were of no consequence. Reopening of assessment was invalid. No valid assessment thereon could have been framed. - Decided in favour of assessee. - WRIT PETITION NO. 513 OF 2019 - - - Dated:- 16-7-2019 - AKIL KURESHI S.J. KATHAWALLA, JJ. Mr. Anupam Dighe with Ms. Chandni Tanna i/b India Law Alliance for the Petitioner Mr. Sham Walve for the Respondent No.2 P.C.: 1. Heard learned Counsel for the parties for final disposal of the petition. The petitioner has challenged a notice dated 13.2.2019 and the consequential actions taken by the respondents pursuant to such not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... also necessary. In the present case, the notice issued by the Department could not be served since the petitioner had changed her address. The Department, therefore, had to follow the procedure prescribed under the Income Tax Rules, 1961 ( Rules for short) to serve such notice. In the present case, the same has not been done. Without valid service of notice, reassessment could not have been done. 6. On the other hand, the learned Counsel for the Department opposed the petition, contending that the notice of reopening of assessment was issued by the Assessing Officer. This would be sufficient compliance with the requirement of section 148 of the Income Tax Act ( the Act for short). The notice was also despatched for service at the petitioner s address given by her in her PAN card. She never intimated the change in address. The Department had, therefore, no information about her not residing at the said place if at all. The petitioner was systematically dodging the service of notice. The Counsel pointed out that several notices were issued during the reassessment which also, the petitioner did not accept. He further submitted that the petitioner had entered into high value ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... notice required to be issued under the said section has not been issued against the assessees contemplated therein. In the present case the Income Tax Officer has purported to act under s.34(1)(a) against the three firms. The said sub-section provides inter alia that if the Income Tax Officer has reason to believe that by reason of the omission or failure on the part of the assessee to make a return of his income under Section 22 for any year or to disclose fully and truly all material facts necessary for his assessment for that year, income, profits or gains chargeable to income-tax has been underassessed , he may, within the time prescribed, serve on the assessee a notice containing all or any of the requirements which may be included in the notice under sub-section (2) of Section 22 and may proceed to reassess such income, profits or gains . The argument is that the service of the requisite notice on the assessee is a condition precedent to the validity of any reassessment made under Section 34; and if a valid notice is not issued as required, proceedings taken by the Income Tax Officer in pursuance of an invalid notice and consequent orders of reassessment passed by him woul ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ore the assumption of jurisdiction. These stages, according to Mr. Kaji, are the issuance of notice within the prescribed period and service of the notice on the assessee. On the plain reading of sections 147, 148 and 149, we do not think that this contention of Mr. Kaji can be sustained. Though the marginal notes of the sections are not decisive, they give us an idea about the intention of the legislature, that it did not contemplate two stages as contended by Mr. Kaji. Section 148 provides for the service of notice before the jurisdiction for reassessment can be assumed. The marginal note of this section reads, Issue of notice where income has escaped assessment . Section 149 provides for issuance of notice before the expiry of the prescribed period and the marginal note of this section reads: Time limit for notice . In our opinion, therefore, these words, service of notice or issuance of notice , have no fixed connotation but are interchangeable, as held by the Supreme Court in Banarsi Debi's case. The Division Bench of this court in Induprasad Devshanker Bhatt v. J.P. Jani, Income-tax Officer, Circle IV, Ward-O, Ahmedabad , was dealing with a similar contention that t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the case of Major Tikka Khushwant Singh vs. The Commissioner of Income Tax, Patiala Anr. reported in (1975) 101 ITR 106. The Court observed as under: Thus, it will be assumed that while enacting the 1961 Act, the legislature knew that the words serve and issue were being used interchangeably according to the judicial interpretation. In spite of the knowledge it preferred to use the words in the aforesaid Act. Mr. Awasthy, the learned counsel for the revenue, has argued that in the 1961 Act, the two words have been used in two different sections. According to him before making the assessment, reassessment or re-computation under section 147, it is the duty of the Income-tax Officer to serve a notice on the assessee as required by section 148, whereas he can assume jurisdiction after issuance of the notice within the prescribed period under section 149 even though the same may not be served upon the assessee. He also submits that by dividing the provisions of section 34 of the 1922 Act in the 1961 Act, the intention of the legislature has become clear. We express our inability to accept the contention of the learned counsel for the Revenue. A reading of sections 14 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or decision before the Full Bench was absolutely different. The learned counsel cannot derive any benefit from that case. In view of the aforesaid discussion, we are of the opinion that the words issue and serve are interchangeable and that the word issue has been used in section 1489 of the 1961 Act in the same sense in which the word serve has been used. 12. As per these decisions, thus, the notice of reassessment under section 148 of the Act had to be served on the assessee. In this context, we may examine the stand of the Department. We may recall, the notice dated 15.3.2018 was despatched to the petitioner s address as contained in her PAN card. This notice was returned by the postal department on or around 22.3.2018 with the remark left . It is also an admitted positiion that the petitioner had not intimated to the Department about her change of address. After receiving the envelope containing the notice from the postal department, till 31.3.2018 which was the last date for service of such notice, the department took no further steps. In this background, the question is can the Department contend that there was due service of the notice. 13. Secti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... after in this rule referred to as communication ) may be delivered or transmitted shall be as per sub-rule (2). (2) The addresses referred to in sub-rule (1) shall be- (a) for communications delivered or transmitted in the manner provided in clause (a) or clause (b) of sub-section (1) of section 282- (i) the address available in the PAN database of the addressee; or (ii) the address available in the income-tax return to which the communication relates; or (iii) the address available in the last income-tax return furnished by the addressee; or (iv) in the case of addressee being a company, address of registered office as available on the website of Ministry of Corporate Affairs: Provided that the communication shall not be delivered or transmitted to the address mentioned in item (i) to (iv) where the addressee furnishes in writing any other address for the purposes of communication to the income-tax authority or any person authorised by such authority issuing the communication: Provided further that where the communication cannot be delivered or transmitted to the address mentioned in item (i) ..... 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