TMI Blog2009 (2) TMI 17X X X X Extracts X X X X X X X X Extracts X X X X ..... eason to believe that income of the Petitioner, chargeable to tax, has escaped assessment. In such an event, Section 148 of the IT Act requires the AO to serve the Petitioner with a Notice requiring her to furnish a Return of her income. It is mandated by Section 149 of the IT Act that this Notice must be issued within six years from the end of the relevant Assessment Year (which in this case is 2001-2002) since the income chargeable to tax, which has escaped assessment, amounts to or is likely to amount to Rupees one lakh or more for that year. The prayers in the Petition are for quashing (a) the Notice dated 25.3.2008 issued under Section 148 of the IT Act; (b) the Notices dated 25.6.2008 and 3.11.2008 issued under Section 142(1) of the IT Act; and (c) the Order dated 27.11.2008. 2. The factual sequence is short and uncontroverted. The A.O. had passed an Order on 24.3.2008 stating that he has reason to believe that the Petitioner had not declared full and true particulars of her income. On 25.3.2008, the CIT, Central Range-III, recorded the approval to this proposal for initiation of proceedings and issuance of notice under Section 148 of the IT Act. Accordingly, the AO has i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n shall be taken under this section after the expiry of four years from the end of the relevant assessment year, unless any income chargeable to tax has escaped assessment for such assessment year by reason of the failure on the part of the assessee to make a return under section 139 or in response to a notice issued under sub-section (1) of section 142 or section 148 or to disclose fully and truly all material facts necessary for his assessment, for that assessment year: Provided further that the Assessing Officer may assess or reassess such income, other than the income involving matters which are the subject-matter of any appeal, reference or revision, which is chargeable to tax and has escaped assessment. Explanation 1. - Production before the Assessing Officer of account books or other evidence from which material evidence could with due diligence have been discovered by the Assessing Officer will not necessarily amount to disclosure within the meaning of the foregoing proviso. Explanation 2. - For the purposes of this section, the following shall also be-deemed to be cases where income chargeable to tax has escaped assessment, namely :- (a) where no return of inco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... st day of October, 1991 and ending on the 30th day of September, 2005, in response to a notice served under this section, and (b) subsequently a notice has been served under clause (ii) of sub-section (2) of section 143 after the expiry of twelve months specified in the proviso to clause (ii) of sub-section (2) of section 143, but before the expiry of the time limit for making the assessment, reassessment or recomputation as specified in sub-section (2) of section 153, every such notice referred to in this clause shall be deemed to be a valid notice. Explanation. - For the removal of doubts, it is hereby declared that nothing contained in the first proviso or the second proviso shall apply to any return which has been furnished on or after the 1st day of October, 2005 in response to a notice served under this section. (2) The Assessing Officer shall, before issuing any notice under this section, record his reasons for doing so. 149. (1) No notice under section 148 shall be issued for the relevant assessment year,- (a) if four years have elapsed from the end of the relevant assessment year, unless the case falls under clause (b); (b) if four years, but not more than si ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 149 of the IT Act must also be served within the period set-down in that Section since the discussion centred upon Section 27 of the General Clauses Act, 1897 which specifies that service of such a notice would be presumed to be legally proper as it would be deemed to have been delivered in the ordinary course at the correct address. It had, inter alia, been expressed that while there would be no justification for enlarging the period of limitation prescribed by the statute itself, we should also not lose sight of the fact that disadvantage or discomfort of the assessee is only that he has to explain the correctness and veracity of the Return filed by him. A reasonable balance of burden of proof must also, therefore, be maintained. In the facts and circumstances of the present case, we are satisfied that because notice was dispatched on August 25, 1998 and was duly addressed and stamped, the Department has succeeded in proving its service before August 31, 1998. On the other hand, the assessee has failed to prove a stateme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Dharampal Singh Rao vs Income Tax Officer, (2004) 191 CTR (All) 158). Reference would be relevant to three decisions of Division Benches of this Court, viz. CIT vs Lunar Diamonds Ltd., [2006] 281 ITR 1(Delhi), CIT vs Vardhman Estates (P) Ltd., [2006] 287 ITR 368 (Delhi) and CIT vs Bhan Textiles (P) Ltd., [2006] 287 ITR 370. In the context of Section 143(2) of the IT Act it has been held that the words issuance of notice and service of notice are not synonymous and interchangeable and accordingly, the notice under this Section would lose all its legal efficacy if it had not been actually served on the assessee within the scheduled and stipulated time. In this dialectic, a fortiori, since the word 'served' is conspicuous by its absence in Section 149, and the Legislature has deliberately used the word 'issued', actual service within the period of four or six years specified in the Section, would not be critical. In fairness to Mr. Salve, his argument was that whilst it was not mandatory for the impugned Notice to have been actually served on the Petitioner before 31.3.2008, it could not have been left abandoned on the file. We are not convinced a bit by the argument of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... upon and the reasons conveyed to the assessee which were predicated on the Commissioner's noting, should be ignored. The contention of the Revenue was that the assessee had been made aware of the opinion of the AO in the Counter Affidavit of the Revenue filed on 5.11.2007. It was in that context that it was observed in Haryana Acrylic that six years had elapsed by that time. GKN Driveshafts ( India ) Limited vs Income Tax Officer, (2003) 1 SCC 72 was applied to emphasise the fact that the reasons should have been furnished within a reasonable time. It was clarified that ?where the notice has been issued within the said period of six years, but the reasons have not been furnished within that period, in our view, any proceedings pursuant thereto would be hit by the bar of limitation inasmuch as the issuance of the notice and the communication and furnishing of reasons go hand-in-hand. The expression within a reasonable period of time as used by the Supreme Court in GKN Driveshafts (supra) cannot be stretched to such an extent that it extends even beyond the six years stipulated in Section 149. The factual matrix in Haryana Acrylic is inapplicable to the sequence of eve ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Pradesh. All three addresses belonged to the Petitioner at the relevant time. 12. Wherever service of a notice is essential or critical, experience shows that it is a most difficult task to achieve. It is for this reason that Section 27 of the General Clauses Act creates a statutory presumption to the effect that if a letter is properly addressed, it must be deemed to have been served. Section 27 reads as follows:- 27. Meaning of service by post Where any Central Act or Regulation made after the commencement of this Act authorises 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 letter would be delivered in the ordinary course of post. 13. In this regard, the observations made in Har Charan Singh vs Shiv Rani, AIR 1981 SC 1284 call for reproduction: 7. Section 27 of the General Clauses Act, 189 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dge of the contents of the registered notice because, in our view, the presumption raised under Section 27 of the General Clauses Act as well as under Section 114 of the Indian Evidence Act is one of proper or effective service which must mean service of everything that is contained in the notice. It is impossible to countenance the suggestion that before knowledge of the contents of the notice could be imputed the sealed envelope must be opened and read by the addressee or when the addressee happens to be an illiterate person the contents should be read over to him by the postman or someone else. Such things do not occur when the addressee is determined to decline to accept the sealed envelope. It would, therefore, be reasonable to hold that when service is effected by refusal of a postal communication the addressee must be imputed with the knowledge of the contents thereof and, in our view, this follows upon the presumptions that are raised under Section 27 of the General Clauses Act, 1897 and Section 114 of the Indian Evidence Act. 14. In C.C. Alavi Haji vs Palapetty Muhammed, (2007) 6 SCC 555 their Lordships attention had been engaged on service of a notice under the Ne ..... X X X X Extracts X X X X X X X X Extracts X X X X
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