Improper service of notice by Assessing Officer leads to invalid reassessment proceedings

The Tribunal found that the Assessing Officer (A.O.) improperly assumed jurisdiction for reopening the assessment due to the invalid service of the notice under section 148. The A.O. failed to exercise due diligence in verifying the correct address, rendering the service of notice by affixture at the wrong address invalid. As a result, the reassessment proceedings were deemed invalid. The matter was remanded to the A.O. to address any objections raised by the assessee regarding the notice service. The appeal was allowed for statistical purposes.

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Issues Involved:
1. Service of notice under section 148.
2. Disposal of objections raised by the assessee.
3. Validity of jurisdiction without notice under section 143(2).
4. Justification of the addition of Rs. 22,00,000.

Detailed Analysis:

1. Service of Notice under Section 148:
The assessee challenged the validity of the notice issued under section 148, arguing that it was served at an incorrect address. The notice was issued to an address where the assessee no longer resided, and the notice server reported that no one by the assessee's name was available at that address. Despite this, the Assessing Officer (A.O.) directed service by affixture at the same incorrect address. The Tribunal observed that the A.O. failed to exercise due diligence in verifying the correct address from the assessee's returns or PAN database. It was held that the service of notice by affixture at the wrong address was not valid as per the mandate of law. The Tribunal also referenced the judgment of the Bombay High Court in Harjeet Surajprakash Girotra, which emphasized that service of notice is necessary for a valid reassessment.

2. Disposal of Objections Raised by the Assessee:
The assessee argued that the A.O. did not dispose of the objections raised against the reasons recorded for reopening the assessment. The Tribunal noted that the A.O. did not issue a speaking order to address these objections. This failure to address the objections was a procedural lapse on the part of the A.O.

3. Validity of Jurisdiction Without Notice under Section 143(2):
The assessee contended that the A.O. did not issue a notice under section 143(2) after the assessee filed a return in response to the notice under section 148. The Tribunal observed that the issuance of a notice under section 143(2) is mandatory for assuming valid jurisdiction. The absence of such a notice rendered the reassessment proceedings invalid.

4. Justification of the Addition of Rs. 22,00,000:
The assessee challenged the addition of Rs. 22,00,000 made by the A.O. as unexplained investment in shares. The assessee claimed that the investment was sourced from a joint bank account with his mother, which included loan proceeds and credits belonging to his mother. However, the A.O. rejected this claim, citing a lack of evidence to establish the nexus between the withdrawals and the investment. The Tribunal did not delve into the merits of this addition, as the primary issue of the validity of the notice under section 148 was sufficient to decide the appeal.

Conclusion:
The Tribunal concluded that the A.O. had invalidly assumed jurisdiction for reopening the assessment due to the improper service of the notice under section 148. The matter was remanded to the A.O. for a limited purpose: to verify whether the assessee had raised objections regarding the service of the notice during the assessment proceedings. If such objections were raised, the reassessment order would be vacated. The appeal was allowed for statistical purposes.

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