2018 (2) TMI 1474 - SC - Income Tax

Supreme Court validates income tax notice served on authorized representative despite assessee's unavailability

The Supreme Court overturned the High Court's decision and ruled that the notice issued under Section 143(2) of the Income Tax Act, 1961 was valid. ... Selection of case of scrutiny assessment - validity of notice - Attainment of requirement u/s 143(2) - deemed service of notice - High Court [2012 (12) TMI 1148 - ALLAHABAD HIGH COURT] answered the question in the negative taking the view that what is required to be satisfied by the Revenue is service of notice and not mere issuance thereof - Held that:- The non-availability of the respondent – Assessee to receive the notice sent by registered post as many as on two occasions and service of notice on 19th October, 2006 on the authorized representative of the respondent Assessee whom the respondent Assessee now disowns, in our considered view, is sufficient to draw an inference of deemed service of notice on the respondent – Assessee and sufficient compliance of the requirement of Section 143(2) of the Income Tax Act, 1961. We have taken we are of the opinion that the High Court was not right in coming to the impugned conclusion in the facts of the instant matter. We, accordingly, allow this appeal and set aside the order of the High Court. Issues:Validity of notice under Section 143(2) of the Income Tax Act, 1961.Analysis:The Supreme Court addressed the issue of the validity of a notice dated 16th October, 2006 issued under Section 143(2) of the Income Tax Act, 1961. The High Court had quashed the notice in response to a writ petition filed by the Assessee. The key question was whether the Revenue had fulfilled the requirement under Section 143(2) by serving the notice on the respondent-Assessee. The notice was dispatched on 18th October, 2006 by registered post and was eventually served on the authorized representative of the Assessee on 19th October, 2006, as the Assessee was not available on two previous occasions. The High Court held that mere issuance of the notice was not sufficient, emphasizing the need for actual service.The Supreme Court, however, took a different view. They considered the circumstances of the case and concluded that the non-availability of the Assessee to receive the notice on two occasions, coupled with the subsequent service on the authorized representative, amounted to deemed service of the notice on the Assessee. The Court opined that this constituted adequate compliance with the requirements of Section 143(2) of the Income Tax Act, 1961. Consequently, the Court disagreed with the High Court's decision and allowed the appeal, setting aside the High Court's order.In their judgment, the Court clarified that they did not need to definitively decide the question regarding the sufficiency of service in this case, as it could be left open for determination in a more suitable scenario. The Court's decision was based on the specific facts of the case, where they found the service of the notice on the authorized representative, despite the Assessee's disownment of the representative, to be satisfactory for deeming the notice as served on the Assessee.