2016 (7) TMI 1 - AT - Income Tax

Tribunal voids reassessment due to incorrect notice address, rectification proceedings deemed infructuous.

The Tribunal upheld the annulment of reassessment proceedings under sections 147/148 of the Income Tax Act as the notice was not served on the correct ... Reopening of assessment - non service of notice - Held that:- Notice under section 148 of the Act dated 22.03.2013 have not been served upon assessee, therefore, the re-assessment made under section 147/148 cannot be held to be valid because the same is bad in law. There is no question of service by affixture by the Inspector at the wrong address upon assessee. The ld. CIT(Appeals), therefore, in proper perspective correctly set aside the re-assessment proceedings. We do not find any justification to interfere with the order of the ld. CIT(Appeals) in allowing the appeal of the assessee Issues Involved:1. Validity of the reassessment proceedings under section 147/148 of the Income Tax Act.2. Validity of the rectification proceedings under section 154 of the Income Tax Act.Detailed Analysis:1. Validity of the reassessment proceedings under section 147/148 of the Income Tax ActGrounds of Appeal by Revenue:The revenue contended that:- The order of the learned CIT(A) is erroneous and contrary to facts and law.- The Ld. CIT(A) erred in accepting the assessee's argument that the assessment proceedings were not in his knowledge.- The Ld. CIT(A) failed to appreciate the efforts made by the AO in serving the notice under section 148.- The order of the Ld. CIT(A) should be cancelled, and the assessing officer's order should be restored.Findings of CIT(A):- The reassessment was initiated based on a notice under section 148, which was never served on the appellant.- The notice was served through affixture at an incorrect address (House No. 1626, Sector 18-D, Chandigarh), whereas the appellant resided at House No. 1627, Sector 18-D, Chandigarh.- The reassessment made as a consequence of this notice is null and void.Tribunal’s Analysis:- The Tribunal noted that the Assessing Officer (AO) recorded reasons for issuing the notice under section 148, mentioning the wrong address and incorrect fact that no return of income was filed.- The notice under section 148 was served by affixture at the wrong address.- The AO did not verify the correct address from the records, which showed the correct address as House No. 1627, Sector 18-D, Chandigarh.- The Tribunal referenced several legal precedents, including the Hon'ble Supreme Court and High Courts, which established that the service of notice under section 148 is a condition precedent to the validity of any reassessment made under section 147/148.- The Tribunal concluded that since the notice was not served on the correct address, the reassessment proceedings were invalid and bad in law.Conclusion:The Tribunal upheld the CIT(A)'s decision to annul the reassessment proceedings as the notice under section 148 was not served on the correct address, making the reassessment proceedings null and void.2. Validity of the rectification proceedings under section 154 of the Income Tax ActGrounds of Appeal by Revenue:- The revenue challenged the order of the CIT(A) regarding the rectification proceedings under section 154.Findings of CIT(A):- The CIT(A) noted that since the reassessment proceedings under section 148 were annulled, the rectification proceedings under section 154 would not survive.Tribunal’s Analysis:- The Tribunal dismissed the main appeal of the revenue (ITA 335/2015), making the rectification proceedings under section 154 infructuous.Conclusion:The Tribunal dismissed the departmental appeal regarding the rectification proceedings under section 154, as the main reassessment proceedings were already annulled.Final Judgment:Both appeals of the Revenue were dismissed. The reassessment proceedings under section 147/148 were annulled due to improper service of notice, and consequently, the rectification proceedings under section 154 were deemed infructuous.