2014 (12) TMI 424 - AT - Income Tax

Notice under Section 143(2) Invalid, Appeal Dismissed, Cross-objection Allowed

DCIT Circle – 17(1) New Delhi Versus Vashistha Builders & Engineers Pvt. Ltd

The Tribunal concluded that the notice under Section 143(2) was not served within the prescribed time limit, rendering the assessment invalid. The appeal ... Validity of proceedings u/s 143(3) – validity of service of notice u/s 282 – Held that:- As per section 282 any notice under the Income Tax Act has to be served on the person named therein either by post or as if it were a summons issued by Court under the Code of Civil Procedure - Section 282 of the IT Act as effective on the date of issue of notice as on 17.9.2009 deals with the service of notice in general - nothing has been brought to notice by the department that the Board even as per sub section (2) hereinabove has made any rules providing for the addresses to which the communication referred to in sub-section (1) may be delivered or transmitted to the person therein named - any notice under the Income Tax Act has to be served on the person named therein either by post or as if it were a summons issued by the Court under the Code of Civil Procedure. In absence of mentioning of a specific actual date on which the assessee was served upon with the notice sent on 19.9.2008 it cannot be arrived at a conclusion that the notice was served well within the prescribed time limit - nothing is coming from record as to when this notice was served upon the assessee - The another notice issued u/s 143(2) dated 17.9.2010 which was served upon the assessee was admittedly beyond the prescribed time limit provided under the proviso to Section 143(2) of the Act - service of notice issued u/s 143(2) within the prescribed time limit is mandatory and condition precedent to proceed for framing of assessment u/s 143(3) - there is nothing on record to show as to on which date this notice was received at the given address of the assessee and on which date the same was re-directed. In CIT Vs. Vardhaman Estates (P) Ltd. [2006 (9) TMI 128 - DELHI High Court] it was held that in a case of service of notice u/s 143(2), the date of dispatch of notice is not deemed date of service and that where there was no material to suggest that the notice sent by speed post was served on any earlier date than that contended by the assessee, the assessment was not valid on the ground of limitation - the provisions laid down u/s 292BB of the Act regarding deeming of validity of a notice in certain circumstances are not helpful to the revenue as the proviso thereto extends shelter to the assessee in the present case who had raised objection about the validity of notice issued u/s 143(2) of the Act to the AO before the completion of the assessment - when there is nothing available on record to suggest that notice issued u/s 143(2) of the Act on the address that is FG- 67-C, Vikashpuri, New Delhi sent through speed post on 19.9.2008 was actually served upon the assessee within the time prescribed under proviso to Section 143(2)(ii) of the Act nor is there any scope of presumption of servicein absence of Rule 19A order V of CPC, no notice u/s 143(2) was served upon the assessee within the time limit prescribed under the proviso to Section 143(2)(ii) of the Act – Decided against revenue. Issues Involved:1. Validity of proceedings under Section 143(3) of the Income Tax Act.2. Validity and service of notice under Section 143(2) of the Income Tax Act.3. Time limitation for service of notice under Section 143(2) of the Income Tax Act.4. Applicability of Section 292BB of the Income Tax Act regarding the validity of notice.5. Relevance of the address used for serving the notice.Issue-wise Detailed Analysis:1. Validity of proceedings under Section 143(3) of the Income Tax Act:The appeal by the revenue was directed against the order of CIT(A)-XIX, New Delhi, dated 28.02.2011, pertaining to the assessment year 2007-08. The assessee raised an objection against the CIT(A)'s action to validate and uphold the proceedings conducted under Section 143(3) of the Act by the Assessing Officer (AO). The core issue was whether the assessment proceedings were valid, given the alleged improper service of notice under Section 143(2).2. Validity and service of notice under Section 143(2) of the Income Tax Act:The assessee argued that the notice issued under Section 143(2) was served after the expiry of the prescribed time limit and at an incorrect address. The correct address was 152, 2nd Floor, Sarai Julena, New Delhi, which was consistently used in IT returns and other correspondences. The AO allegedly did not entertain the objection raised by the assessee on 18.11.2009 regarding the improper service of notice.3. Time limitation for service of notice under Section 143(2) of the Income Tax Act:The return was filed on 30.11.2007, and the notice dated 17.9.2008 was sent through speed post on 19.9.2008. The proviso to Section 143(2)(ii) mandates that no notice shall be served after the expiry of six months from the end of the month in which the return is furnished. The Tribunal found no evidence of the actual date of service of the notice and concluded that the notice was not served within the prescribed time limit, rendering the assessment invalid.4. Applicability of Section 292BB of the Income Tax Act regarding the validity of notice:Section 292BB, which deals with the deeming of validity of a notice in certain circumstances, was not applicable in this case. The assessee had raised an objection about the validity of the notice under Section 143(2) before the completion of the assessment, thus falling under the proviso to Section 292BB, which protects the assessee in such scenarios.5. Relevance of the address used for serving the notice:The notice was sent to FG-67-C, Vikas Puri, New Delhi, which was not the correct address. The correct address was 152, 2nd Floor, Sarai Julena, New Delhi, consistently used in IT returns and other correspondences. The Tribunal noted that the PAN database still showed the Vikas Puri address as the head office, but there was no evidence that the notice was actually served at this address within the prescribed time limit.Conclusion:The Tribunal concluded that the notice under Section 143(2) was not served within the prescribed time limit, making the assessment invalid. The appeal by the revenue was dismissed, and the cross-objection by the assessee was allowed on the legal issue. Consequently, the grounds raised by the revenue on the merits of additions/disallowances and the remaining objections by the assessee became infructuous and were disposed of accordingly. The order was pronounced in the open court on 30th September 2014.