Proper service of notice is essential before assessment; defective service vitiates assessment and dependent penalty and interest orders.

Proper service of notice is mandatory before assessment, and notices must comply with the prescribed mode of service, including personal service, service at the usual or last known address, or registered post to the proper address. Where the record shows inconsistent notice and order addresses and no compliance with the service endorsements, the assessee is denied a fair opportunity to respond and the assessment becomes unsustainable. Penalty and interest that arise from the defective assessment also fall with it. Fresh assessment proceedings may be initiated in accordance with law, and the assessee may raise limitation objections in those proceedings.

---

---

Issues: Whether the assessment order, and the consequential penalty and interest orders, were sustainable when the notices were not served in the manner prescribed; and whether the matter required fresh assessment proceedings.

Analysis: The notice and order addresses on the record were inconsistent, and the service endorsements did not show compliance with the prescribed mode of service. Rule 64 required personal service, service at the usual or last known address, or registered post to the proper address. In the absence of service in accordance with the prescribed procedure, the assessee was denied a proper opportunity to respond before assessment. Since the penalty and interest flowed from the assessment, they could not survive independently once the assessment itself was vitiated. The assessee was also permitted to raise the plea of limitation in the fresh proceedings.

Conclusion: The assessment order was unsustainable for want of proper service of notice, and the penalty and interest orders were also liable to be set aside. The assessee was directed to file objections to the show-cause notice and the respondents were directed to redo the assessment in accordance with law.

---