2021 (10) TMI 660 - AT - Income Tax

Assessment order quashed for failure to serve notice timely. Appeal allowed with no merits findings.

Sh Parveen Kumar Bansal Versus The ITO, Ward 1 (3) Chandigarh

The Tribunal quashed the assessment order due to the failure to serve the statutory notice under section 143(2) within the specified period. As a result, ... Validity of the assessment initiated without service of the notice u/s. 143(2)(i) - Notice was never served upon the assessee within the limitation period - HELD THAT:- In the present case since the notice u/s. 143(2) of the Act was not served upon the assessee within specified period i.e on or before the Ist day of June 2003, therefore, the assessment framed in the absence of service of notice u/s. 143(2) of the Act on the assessee within the specified period provided u/s. 143(2)(i) of the Act for the relevant assessment year under consideration by the Assessing officer was not valid. Accordingly, the same is quashed. Appeal of the assessee is allowed. Issues Involved:1. Validity of the assessment order by the Income Tax Officer.2. Non-service of mandatory notice under section 143(2)(i) of the Income Tax Act.3. Classification of the amount received by the appellant as salary or capital receipt.4. Applicability of sections 15 to 17 of the Income Tax Act to the received amount.5. Levy of interest under section 234A of the Income Tax Act.Detailed Analysis:1. Validity of the Assessment Order:The appellant contended that the order by the Income Tax Officer, Ward 1(3), Chandigarh, was illegal and should be quashed. This ground was general in nature and did not require specific comments from the Tribunal.2. Non-service of Mandatory Notice under Section 143(2)(i):The primary grievance was that the mandatory notice under section 143(2)(i) of the Income Tax Act was not served validly and within the prescribed timeframe, rendering the assessment proceedings void ab initio. The facts revealed that the notice was issued on 30.5.2003, but the appellant claimed it was received by a maid on 1.6.2003, beyond the statutory deadline of 31.5.2003. The appellant argued that the notice was not served on the assessee but on a maid, and the benefit of presumption under section 292BB was not applicable as it was inserted w.e.f. AY 2008-09. The Tribunal found merit in the appellant's argument, noting that the appellant had filed an RTI application seeking proof of service, which was not responded to by the Assessing Officer. Consequently, the Tribunal concluded that the notice was not served within the specified period, making the assessment invalid.3. Classification of the Amount Received:The appellant challenged the classification of Rs. 7,76,051/- received as part of salary, arguing it was a capital receipt for loss of employment. The Tribunal did not provide findings on this issue as the assessment was quashed due to the non-service of the notice.4. Applicability of Sections 15 to 17:The appellant contended that the provisions of sections 15 to 17 of the Income Tax Act were wrongly applied to the received amount, which was not a salary but compensation for loss of employment. Again, the Tribunal did not delve into this issue due to the quashing of the assessment.5. Levy of Interest under Section 234A:The appellant argued that no interest under section 234A was leviable as the return of income was filed within the due date. This issue was not addressed by the Tribunal as the primary ground of non-service of the notice led to the quashing of the assessment.Conclusion:The Tribunal quashed the assessment order passed by the Assessing Officer due to the failure to serve the statutory notice under section 143(2) within the specified period. Consequently, no findings were given on the merits of the case, and the appeal of the assessee was allowed.