High Court rules notice under Section 143(2) invalid for 2006-07 assessment year, emphasizing proper service importance.

The High Court ruled in favor of the appellant, finding that the notice under Section 143(2) for the assessment year 2006-07 was not validly served within the statutory limitation period. The court emphasized the significance of proper notice service in income tax assessment proceedings, highlighting the revenue's failure to prove due service as required by law. The appeal was allowed, overturning the decisions of the ITAT and CIT(Appeals) and underscoring the revenue's burden of proof in establishing compliance with legal requirements.

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Issues:
Validity of notice under Section 143(2) for assessment year 2006-07.

Analysis:
The primary issue in this case is whether the Income Tax Appellate Tribunal (ITAT) erred in holding that the notice under Section 143(2) was served within the period of limitation to validate the assessment proceedings for assessment year 2006-07. The assessee contended that it did not receive any notice within the statutory limitation period, even though the Assessing Officer proceeded with the assessment. The Commissioner and the ITAT relied on the revenue's assertions that the notice was issued to the assessee through its chartered accountant. The ITAT acknowledged the assessee's participation in the assessment proceedings under protest but dismissed the appeal, upholding the CIT(Appeals) order.

The key argument presented was that the assessee consistently maintained that it never received the notice, and participation under protest should not be construed as acceptance of the notice. The High Court directed the revenue to produce the original assessment records, revealing that the notices alleged to have been sent before the limitation period lacked proof of dispatch. Furthermore, the notices were not sent through registered post or affixed at the known address of the assessee, hindering the presumption under Section 7 of the General Clauses Act. Relying on previous court rulings, including Shyam Gopal Charitable Trust v. Director of Income Tax, it was held that the revenue failed to prove due service of notice as required by law. Consequently, the findings of both the ITAT and CIT(Appeals) were deemed unsustainable, and the question of law was decided in favor of the appellant.

In conclusion, the High Court allowed the appeal, emphasizing that the notice served after the limitation period could not be upheld against the assessee. The judgment underscores the importance of proper service of notice in income tax assessment proceedings and the burden of proof on the revenue to establish compliance with legal requirements.

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