Assessment Order Void due to Late Notice - Assessee's Appeal Allowed

The Tribunal found that the notice under section 143(2) was not served within the prescribed time and mode, rendering the assessment order void ab-initio. As a result, the assessment order dated 10/11/2003 was quashed, and the appeal of the assessee was allowed. All other grounds raised by the assessee regarding the merits of the additions were dismissed as infructuous.

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Issues Involved:
1. Validity of the assessment order due to non-service of notice under section 143(2) within the stipulated period.
2. Legality of service of notice by affixture.
3. Applicability of section 292BB of the Income Tax Act, 1961.
4. Participation of the assessee in assessment proceedings as a validation of notice service.

Issue-wise Detailed Analysis:

1. Validity of the assessment order due to non-service of notice under section 143(2) within the stipulated period:
The primary grievance raised by the assessee was that the assessment order was void ab-initio because no notice under section 143(2) of the Income Tax Act, 1961, was issued and served within the stipulated period. The return of income was filed on 30/11/2000, and the notice was required to be served by 30/11/2001. The notice dated 29/11/2001 was served by affixture on the same date. The assessee argued that this service was invalid as it did not comply with the requirements of section 282(1) of the Act, which mandates service either by post or as if it were a summons issued by a Court under the Code of Civil Procedure, 1908.

2. Legality of service of notice by affixture:
The assessee contended that the service by affixture was impermissible as the Assessing Officer did not follow the mandatory requirement of showing that the assessee was avoiding service or that the notice could not be served in the ordinary way. The Tribunal noted that the Assessing Officer's decision to serve the notice by affixture to avoid time lag was not a valid reason. The Tribunal relied on the judgment of the Hon'ble Delhi High Court in CIT v. Hotline International (P.) Ltd., which emphasized that service by affixture is valid only when the assessee or his agent refuses to sign the acknowledgment or could not be found. The Tribunal concluded that the Assessing Officer did not exhaust the ordinary process of service and resorted to affixture at the last minute, which was not justified.

3. Applicability of section 292BB of the Income Tax Act, 1961:
The Revenue argued that the assessee's participation in the assessment proceedings validated the service of notice under section 143(2) in terms of section 292BB of the Act. However, the Tribunal pointed out that section 292BB was introduced by the Finance Act, 2008, effective from 01/04/2008, and thus did not apply to the assessment year in question. The Tribunal also cited the Hon'ble Bombay High Court's decision in CIT v. Salman Khan, which held that section 292BB is prospective and would not apply to assessment years before 2008-09.

4. Participation of the assessee in assessment proceedings as a validation of notice service:
The Revenue claimed that the assessee's appearance before the Assessing Officer on 10/12/2001 indicated awareness of the notice served on 29/11/2001. However, the Tribunal found that the appearance was in response to a different notice issued on 06/12/2001 to the Director of the assessee company. The Tribunal rejected the Revenue's argument and distinguished the facts from the case of CIT v. Vision Inc., where the assessee's participation was directly linked to the disputed notice.

Conclusion:
The Tribunal held that the notice under section 143(2) was not served within the time and mode prescribed under the Act, rendering the assessment order void ab-initio. Consequently, the assessment order dated 10/11/2003 was quashed. All other grounds raised by the assessee relating to the merits of the additions were dismissed as infructuous. The appeal of the assessee was allowed.

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