2007 (8) TMI 322 - HC - Income Tax

Appeal dismissed due to invalid notice under Income-tax Act; proper service requirements emphasized

The court dismissed the appeal, ruling that the notice under section 147/148 of the Income-tax Act was not validly served on the assessee. It was found ... Non-service of notice - case of the assessee was that it was only when he received a notice under sections 142(1) and 143(2) of the Act that he came to know that a notice had been issued to him under section 147/148 – notice received by person other than assessee – not proved that person was authorized - onus would be on the Revenue to prove deemed receipt of the notice - Revenue did not discharge this burden - if a summon is accepted by a person who is authorised to do so, then only can it be said that the defendant (or the assessee in this case) has received the summons or that that service is good service Issues:1. Whether the notice under section 147/148 of the Income-tax Act was received by the assessee.2. Whether the notice under section 147/148 of the Act was correctly addressed to the assessee.Issue 1:The first issue revolved around whether the notice under section 147/148 of the Income-tax Act was actually received by the assessee. The court examined the receipt of the notice by an individual named Lalmani, who was an employee of the assessee. The court deliberated on the legal provisions under Section 282(1) of the Act, which allows for service through post or as a court summons. It was emphasized that for service to be valid, it must be accepted by an authorized person. The court concluded that there was no evidence to suggest that Lalmani was authorized to accept the notice on behalf of the assessee, hence the receipt by Lalmani did not constitute valid service on the assessee.Issue 2:The second issue focused on whether the notice under section 147/148 of the Act was correctly addressed to the assessee. The court analyzed the requirements under Order V, rule 9(5) of the Code of Civil Procedure, emphasizing the need for proper addressing and sending by registered post. The notice in question was sent by speed post to an incorrect address, as per the postal receipt. The court highlighted that the burden of proving correct addressing rested with the Revenue, which they failed to discharge. The court dismissed the argument that the notice was served based on the absence of a return remark on the envelope, emphasizing the assessee's explicit denial of receiving the notice. The court further noted that the assessee's appearance before the Assessing Officer was in response to a different notice, under sections 142(1) and 143(2) of the Act, indicating the lack of receipt of the section 147/148 notice. Consequently, the court rejected the contention that the assessee's participation in the proceedings validated the notice's service.In conclusion, the court dismissed the appeal, stating that no substantial question of law arose from the issues presented. The judgment highlighted the importance of proper service and correct addressing in legal notices, emphasizing the burden of proof on the party claiming valid service.