Appeal allowed due to invalid notice; assessment order quashed. Other issues not decided.

The Tribunal allowed the appeal for A.Y. 2005-06, ruling that the notice under Section 143(2) was not validly served, leading to the quashing of the assessment order. Consequently, other issues raised by the assessee, including the disallowance of interest payable to Mukand Limited, rates and taxes, and carry forward of business losses, were not adjudicated. The assessment order dated 29.11.2007 was declared void ab initio.

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Issues Involved:
1. Validity of the notice under Section 143(2) of the Income Tax Act, 1961.
2. Disallowance of interest payable to Mukand Limited.
3. Disallowance of rates and taxes.
4. Carry forward of business loss of earlier years.

Issue-Wise Detailed Analysis:

1. Validity of the Notice under Section 143(2) of the Act:
The assessee contended that no notice under Section 143(2) was served within the prescribed time limit, rendering the assessment invalid. The return was filed on 24.10.2005, and the notice should have been served by 31.10.2006. However, the first notice was received on 05.09.2007, and the assessee objected to its legality. The Assessing Officer (AO) claimed that the notice was issued on 23.10.2006 and served by affixture on 31.10.2006 at the old address despite the assessee having notified the change of address on 19.06.2006. The Tribunal found that the service by affixture was not properly executed as it lacked the signatures of two independent witnesses and was served at the wrong address. The Tribunal concluded that the notice was invalid, and the AO had no jurisdiction to proceed with the assessment, thereby quashing the assessment order.

2. Disallowance of Interest Payable to Mukand Limited:
The assessee challenged the disallowance of Rs. 11,07,57,156/- as interest payable to its holding company, Mukand Limited. The Tribunal did not adjudicate this issue since the primary ground regarding the validity of the notice under Section 143(2) was decided in favor of the assessee, rendering the assessment itself void.

3. Disallowance of Rates and Taxes:
The assessee contested the disallowance of Rs. 29,06,197/- incurred as rates and taxes, arguing that these expenses were for business purposes and should be allowed as revenue expenditure. Similar to the interest disallowance, this issue was not adjudicated due to the quashing of the assessment.

4. Carry Forward of Business Loss of Earlier Years:
The assessee argued that the CIT(A) erred in disallowing the carry forward of business losses from earlier years, asserting that the losses were from business activities and had been settled in previous years. Since the assessment was declared void, this issue was also not adjudicated.

Conclusion:
The Tribunal allowed the appeal on the ground that the notice under Section 143(2) was not validly served, thus quashing the assessment order. Consequently, other grounds raised by the assessee were not adjudicated. The appeal for A.Y. 2005-06 was allowed, and the assessment order dated 29.11.2007 was declared void ab initio.

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