2021 (12) TMI 142 - HC - Income Tax

Invalid Notice Service: Retroactive Application Denied. Importance of Proper Notice & Procedural Compliance

Principal Commissioner Of Income Tax-I, New Central Revenue Building, Statue Circle, Jaipur (Raj) Versus M/s Mahla Real Estate Pvt. Ltd.

The Tribunal found the notice served under Section 148 of the Income Tax Act for the assessment year 2007-08 to be invalid due to improper service. ... Reopening of assessment u/s 147 - No notice served on assessee - HELD THAT:- Notice of re-opening of the assessment was never served on the assessee or its authorised representative - We do not find that the Tribunal has committed any error in setting aside the assessment. The counsel for the revenue however has strenuously argued that in view of Section 292BB inserted in the Income Tax Act, mere defect in service of notice had to be factually ignored. Tribunal has however correctly observed in Chetan Gupta [2015 (9) TMI 756 - DELHI HIGH COURT] that Section 292BB of the Act cannot be given a retrospective effect. Admittedly, the said provision was inserted in the Income Tax Act in 2008. Revenue appeal dismissed. Issues:1. Validity of notice served under Section 148 of the Income Tax Act.2. Applicability of Section 292BB of the Income Tax Act.Issue 1:The main issue in this case revolved around the validity of the notice served under Section 148 of the Income Tax Act for the assessment year 2007-08. The Tribunal found that the notice of re-opening of assessment was never served on the assessee or its authorized representative. Despite the revenue's argument that the defect in service of notice should be ignored under Section 292BB, the Tribunal held that this provision cannot have a retrospective effect. It was noted that the notice was not served at the registered office address of the assessee company, and no valid authority was given to the individual who allegedly received the notice. The Tribunal concluded that the absence of proper service of notice rendered the assessment invalid, leading to the dismissal of the income tax appeal.Issue 2:The second issue raised was regarding the applicability of Section 292BB of the Income Tax Act. The Tribunal held that this provision, which deals with the validity of notice, cannot be applied retrospectively. The revenue contended that Section 292BB should overlook the defect in the service of notice, but the Tribunal disagreed, citing a judgment by the Delhi High Court. The Tribunal emphasized that Section 292BB was inserted in the Income Tax Act in 2008 and cannot be given retrospective effect. Therefore, the Tribunal dismissed the appeal, stating that no question of law arose in this matter.In conclusion, the High Court upheld the Tribunal's decision, emphasizing the importance of proper service of notice under the Income Tax Act and clarifying the limited applicability of Section 292BB. The judgment highlights the significance of adhering to procedural requirements in tax assessments and the limitations on retrospective application of statutory provisions.