Appeal allowed due to improper notice service under IT Act; reassessment deemed null and void.

The appeal was allowed as the reassessment proceedings were deemed null and void due to improper service of notice under section 148 of the IT Act, 1961. The Tribunal found that the notice was not properly served, rendering the entire reassessment invalid. Consequently, the reassessment order was quashed, leading to the dismissal of all additions made and interest charged under the invalid reassessment.

---

---

Issues Involved:
1. Legality of the assessment under sections 147/143(3) of the IT Act, 1961.
2. Validity of the proceedings initiated under section 147 and notice issued under section 148.
3. The correctness of the income assessed under the head 'Long-term capital gains'.
4. The appropriateness of the interest charged under section 234B.
5. The overall validity of the additions made, interest charged, and the assessment order passed.

Issue-wise Detailed Analysis:

1. Legality of the Assessment under Sections 147/143(3):
The appellant challenged the legality of the assessment made under sections 147/143(3) of the IT Act, 1961, contending that it was erroneous, wrong, illegal, and against the facts and law of the case. The Tribunal examined the procedural adherence to the statutory requirements, particularly focusing on the service of notice under section 148, which is a prerequisite for a valid reassessment. The Tribunal found that the notice was not properly served, thus rendering the reassessment proceedings null and void ab initio.

2. Validity of the Proceedings Initiated under Section 147 and Notice Issued under Section 148:
The appellant contended that the proceedings initiated under section 147 and the notice issued under section 148 were wrong and illegal, asserting that the notice was never properly served. The Tribunal scrutinized the service of notice, which was allegedly served through affixture. The Tribunal concluded that the service by affixture was not valid as the Department did not follow the correct procedure, such as ensuring multiple attempts for personal service and filing an affidavit by the process server. The Tribunal relied on the decisions of the Hon'ble Allahabad High Court in Jagannath Prasad vs. CIT and CIT vs. Satya Narain Poddar, which mandated strict compliance with procedural requirements for service by affixture.

3. Correctness of the Income Assessed under the Head 'Long-term Capital Gains':
The appellant disputed the assessment of long-term capital gains at Rs. 35,54,840 against Rs. 3,71,800 shown in the return. The Tribunal did not delve into the merits of this issue as it found the reassessment proceedings themselves to be invalid due to improper service of notice. Consequently, the Tribunal quashed the reassessment order, rendering the discussion on the quantum of long-term capital gains moot.

4. Appropriateness of the Interest Charged under Section 234B:
The appellant argued that the interest charged under section 234B on the assessed income was wrong and illegal. As the Tribunal quashed the reassessment proceedings due to invalid service of notice, the imposition of interest under section 234B was also rendered invalid and was not specifically addressed.

5. Overall Validity of the Additions Made, Interest Charged, and the Assessment Order Passed:
The appellant contended that the additions made, interest charged, and the assessment order passed were wrong, illegal, and against the facts and law of the case. The Tribunal, having found the reassessment proceedings to be null and void due to improper service of notice, quashed the entire reassessment order. Therefore, all additions and interest charged under the invalid reassessment order were also quashed.

Separate Judgments Delivered:
The judgment was delivered with a difference of opinion between the Judicial Member (JM) and the Accountant Member (AM). The JM found the service of notice under section 148 to be invalid and quashed the reassessment proceedings. The AM, however, believed that the service of notice was proper and even if it was defective, it did not invalidate the proceedings but only made them irregular, warranting a set aside for curing the defect. The matter was referred to a Third Member, who agreed with the JM, leading to the majority view that the reassessment proceedings were void ab initio due to improper service of notice.

Conclusion:
The appeal of the assessee was allowed based on the majority view that there was no valid service of notice under section 148, rendering the reassessment proceedings null and void. The Tribunal quashed the reassessment order, thereby allowing the appeal without addressing the merits of other grounds.

---