Proper service of notice under the Income-tax Act is essential; failure to use substituted service rendered the assessment unsustainable.

Assessment under the Income-tax Act was unsustainable where notice under Section 143(2) was not duly served and the Assessing Officer did not use the available substituted service modes. Inconsistent reports from the notice-server and Inspector did not cure the defect, and affixture at the former address was insufficient once the department knew the assessee had left the premises. Section 282 and the applicable service procedure required recourse to prescribed alternate methods, such as newspaper publication, when ordinary service failed. Because the proper substituted mode was not adopted, the defect in service remained material and the revenue's challenge failed.

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Issues: Whether the assessment could be sustained when notice under Section 143(2) was not duly served and the Assessing Officer did not adopt the available substituted mode of service.

Analysis: The notice-server's report and the Inspector's report were inconsistent as to service. Once the department found that the assessee had sold the house and left the premises, service at the same address by affixture was not sufficient by itself. The statutory scheme under Section 282 of the Income-tax Act, 1961, read with the applicable substituted service procedure, permitted recourse to publication in a newspaper or other prescribed modes where ordinary service could not be effected. As the Assessing Officer failed to adopt the proper alternate mode of service, the defect in service remained material.

Conclusion: The assessment was rightly treated as unsustainable for want of proper service of notice, and the challenge by the revenue failed.

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