2012 (8) TMI 153 - HC - Income Tax

High Court upholds Income Tax Act notice validity, remands for comprehensive adjudication.

The High Court upheld the validity of the notice served under Section 143(2) of the Income Tax Act, 1961, in favor of the Revenue. However, it found that ... Non serving the notice under Section 143(2)- assessee contested against notice not being served within the stipulated period as provided under Section 143(2) (ii) - Held that:- Department sent the notice u/s 143(2) to the Assessee on the assessee's address, and that too through Speed Post which is more reliable mode therefore, it is required to be presumed that notice was delivered to the addressee in accordance with law under Section 282(1)- the notice sent through 'Speed-post' did not return to the Income Tax Department as undelivered - no uncertain terms in terms of section 27 of the General Clauses Act, unless and until the contrary is proved by the addressee, service of notice is deemed to be effected at the time at which the letter would have been delivered in the ordinary course of business when it is sent to the addressee at his address by registered post. Speed post versus Registered post - held that:- There are two principal attributes of registered post: one, there is established system in which receipt of the mail is recorded; and two, movement of such mail as also its delivery is recorded. If the aforesaid attributes of registered post are present in any other class of mail or post forming part of an established system, that mail or post would, in substance, be registered post notwithstanding the name by which it may be called. 'Speed post' is a part of established system of delivery in which the receipt of mail as also its movement and delivery are recorded. 'Speed Post' has all the principal attributes of 'registered post'. As the assessee has led no evidence to prove that the impugned notice was not received by him or that he was not responsible for its non-service and the details given by the AO in the assessment order included not only the receipt no. under which speed post was sent but also the tracking code, it is thus proved that a proper notice was issued to assessee in the course of the assessment proceedings. When any authority decides the matter on preliminary issue and if finding on that preliminary issue is reversed, then normally, the matter is required to be remanded for deciding the remaining issues, if the remanding authority/Court itself is not deciding the other issues - As CIT(A) allowed the assessee's appeal only on the ground of notice u/s 143(2) without deciding other issues now the matter is remanded to the C.I.T. (Appeal) for considering it afresh . Issues Involved:1. Validity of service of notice under Section 143(2) of the Income Tax Act, 1961.2. Tribunal's jurisdiction to address the correctness of additions made by the Assessing Officer without remanding the matter to the C.I.T. (Appeal).Detailed Analysis:Issue 1: Validity of Service of Notice under Section 143(2)The appellant-assessee argued that the notice under Section 143(2) of the Income Tax Act, 1961 was not served within the statutory period, making the assessment order invalid. The C.I.T. (Appeal) agreed with this contention, leading to the cancellation of the assessment. The Revenue appealed, and the Income Tax Appellate Tribunal reversed the C.I.T. (Appeal)'s finding, holding that the notice was duly served.The Tribunal's decision was based on the interpretation of Section 292BB of the Income Tax Act, which deems notice to be valid if the assessee has appeared or cooperated in the proceedings. However, the appellant contended that since the objection was raised before the completion of the assessment, the presumption under Section 292BB could not apply.The High Court examined the evidence, including the order sheets and the dispatch details of the notice sent via Speed Post. It concluded that the notice was sent to the correct address and was not returned undelivered, thus presuming it was served. The Court also discussed the applicability of Section 27 of the General Clauses Act, 1897, which creates a presumption of service when a document is properly addressed, prepaid, and posted by registered post. The Court extended this presumption to Speed Post, interpreting 'registered post' to include Speed Post, given its reliability and tracking features.The High Court upheld the Tribunal's finding that the notice under Section 143(2) was validly served, answering Issue 1 in favor of the Revenue.Issue 2: Tribunal's Jurisdiction on Correctness of AdditionsThe second issue concerned whether the Tribunal could reject the assessee's contentions on the correctness of the additions made by the Assessing Officer without remanding the matter to the C.I.T. (Appeal) after reversing the preliminary finding on the service of notice.The High Court noted that when a matter is decided on a preliminary issue and that finding is reversed, the case should typically be remanded to the lower authority to decide the remaining issues. The Court referred to Order XLI Rule 23 of the Code of Civil Procedure, which allows for remanding a case if a decree is reversed on a preliminary point.The High Court found that the Tribunal should have remanded the case to the C.I.T. (Appeal) to address the other issues raised by the assessee. Therefore, Issue 2 was decided in favor of the assessee, and the Tribunal's order was modified to remand the matter to the C.I.T. (Appeal) for a comprehensive adjudication on all issues.Conclusion:The High Court concluded that the notice under Section 143(2) was validly served, thus upholding the Tribunal's decision on this point. However, it also held that the Tribunal erred in not remanding the case to the C.I.T. (Appeal) for deciding the remaining issues. The matter was remanded to the C.I.T. (Appeal) for further consideration, and the appeal was partly allowed. The parties were directed to appear before the Appellate Authority on 01.08.2012 for expeditious resolution.