Reassessment Quashed Due to Failure to Serve Notice Under Section 148(1) as Required by Law

The HC upheld the ITAT's decision quashing the reassessment proceedings as the AO failed to serve the notice under Section 148(1) in accordance with law, a jurisdictional requirement. Proper service of notice under Section 148 read with Section 282(1) and relevant CPC provisions is mandatory for reopening assessments. The Revenue did not prove valid service on the Assessee or an authorized agent. Participation by an unauthorized person in proceedings does not waive the service requirement. Section 292BB is prospective and inapplicable as the Assessee objected to the lack of service. Consequently, the reassessment was held invalid and quashed, with the decision favoring the Assessee.

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Issues Involved:

1. Validity of service of notice under Section 148 of the Income Tax Act.
2. Jurisdictional requirement for reassessment under Section 148.
3. Applicability of Section 292 BB of the Income Tax Act.
4. Onus of proving service of notice on the Revenue.
5. Impact of participation in reassessment proceedings without proper service of notice.
6. The prospective nature of Section 292 BB.

Issue-wise Detailed Analysis:

1. Validity of Service of Notice under Section 148:
The court examined whether the notice under Section 148 was served properly on the Assessee. The notice was issued to an address different from the one provided by the Assessee and was received by an individual, Mr. Ved Prakash, who was not proven to be authorized to accept notices on behalf of the Assessee. The court emphasized that service of notice under Section 148 is a jurisdictional requirement and must be served in accordance with Section 282(1) of the Act and Order V Rule 12 CPC.

2. Jurisdictional Requirement for Reassessment under Section 148:
The court reiterated that both the issuance and service of notice under Section 148 are jurisdictional requirements. The Supreme Court's decision in R.K. Upadhyaya v. Shanbhai P. Patel was cited to affirm that reassessment cannot proceed without proper service of notice. The court held that service of notice is mandatory and not merely procedural.

3. Applicability of Section 292 BB of the Income Tax Act:
Section 292 BB, which deals with the participation of the Assessee in proceedings without objecting to the service of notice, was discussed. The court noted that this provision is prospective and not retrospective. Since the Assessee had objected to the service of notice before the completion of reassessment, the proviso to Section 292 BB applied, making the main provision inapplicable.

4. Onus of Proving Service of Notice on the Revenue:
The court held that the burden of proving that notice was served on the Assessee or his duly authorized representative lies on the Revenue. The Revenue failed to demonstrate that Mr. Ved Prakash was authorized to receive notices on behalf of the Assessee. The court referred to multiple precedents to support this principle.

5. Impact of Participation in Reassessment Proceedings Without Proper Service of Notice:
The court clarified that mere participation in reassessment proceedings by the Assessee does not constitute a waiver of the requirement for proper service of notice. The court cited cases to affirm that knowledge of proceedings does not substitute for proper service of notice.

6. The Prospective Nature of Section 292 BB:
The court confirmed that Section 292 BB is prospective and does not apply retrospectively. Since the Assessee had raised an objection regarding the service of notice before the completion of reassessment, the main part of Section 292 BB was not attracted.

Conclusion:
The court concluded that the reassessment proceedings were invalid due to the failure to serve notice properly under Section 148 of the Act. The ITAT's decision to quash the reassessment was upheld. The appeal was dismissed with no order as to costs. The court summarized that proper service of notice is a jurisdictional requirement, and the onus is on the Revenue to prove such service. Participation in proceedings does not waive the requirement of proper service. Section 292 BB is prospective and not applicable in this case.

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