Appeal granted due to improper notice service under IT Act

The court allowed the appeal against the decision under section 146 and the appeal against the ex-parte assessment under section 144 for statistical purposes. The judgment emphasized the importance of proper service of notice and compliance with procedural requirements in assessments to uphold fairness and legal standards. The court found that there was no valid service of notice under section 143(2) on the assessee, as the notice was not served properly through post or personal service as required by the IT Act and procedural rules. Consequently, the orders of the AAC and the ITO were set aside, directing the ITO to reopen the assessment and grant the assessee a full opportunity to be heard.

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Issues: Ex-parte assessment under section 144, Reopening of assessment under section 146, Validity of notice under section 143(2) of the IT Act, 1961, Proper service of notice through affixation, Compliance with procedural requirements for service of notice.

Analysis:
The judgment pertains to two appeals by the assessee concerning the ex-parte assessment under section 144 and the decision not to reopen that assessment under section 146 for the assessment year 1974-75. The ex-parte assessment was conducted due to the assessee's non-compliance with the notice under section 143(2) of the IT Act. The assessee applied for reopening the assessment under section 146, contending that no proper notice under section 143(2) was served, and the assessment was hurriedly made under the assumption of it being time-barring. The ITO rejected the application, stating that the notice was served correctly through affixation. The AAC also upheld the validity of the notice served by affixture.

Upon thorough examination, it was determined that there was no proper and valid service of notice under section 143(2) on the assessee. The IT Act mandates that notice may be served by post or as a summon issued by a Court. In this case, no attempt was made to serve the notice by post, and the notice server only visited the assessee's residence once, reporting the absence of the assessee without making adequate efforts for personal service. The judgment highlighted that due diligence, as required by the Civil Procedure Code, was not exercised by the notice server. The serving officer failed to make necessary enquiries or additional attempts to effect personal service, which was crucial in this scenario.

Furthermore, it was noted that the procedural requirements for service of notice under Rule 17 of Order 5 were not met. Rule 19 of Order 5 necessitates the verification of the serving officer's return and examination on oath by the Court, which was not adhered to in this case. Consequently, the service by affixation was deemed invalid due to non-compliance with these essential procedural aspects. As a result, the orders of the AAC and the ITO were set aside, directing the ITO to reopen the assessment and provide the assessee with a full opportunity to be heard.

In conclusion, the appeal against the decision under section 146 was allowed, and the appeal against the ex-parte assessment under section 144 was allowed for statistical purposes. The judgment emphasizes the significance of proper service of notice and adherence to procedural requirements in assessments to ensure fairness and compliance with legal standards.

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