Assessment proceedings void without proper service of section 143(2) notice despite Revenue's affixture claims

The ITAT Mumbai held that assessment proceedings were invalid due to non-service of mandatory notice under section 143(2). The Revenue failed to prove service through ordinary post or RPAD and could not substantiate claimed service through affixture, lacking proper substituted service orders and procedural compliance. Following Supreme Court precedent in CIT vs Laxman Das Khandelwal, the tribunal ruled that absence of notice service cannot be cured under section 292BB. Since valid notice service is a condition precedent for assessment validity, the entire proceedings were deemed void ab-initio and the assessment order was quashed in favor of the assessee.

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Issues:
1. Condonation of delay in filing appeal due to oversight.
2. Treatment of long term capital gain income as unexplained cash credit.
3. Alleged non-service of notice under section 143(2) of the Income-tax Act, 1961.

Analysis:
1. The Assessee filed an appeal against an order passed by the Commissioner of Income-tax for A.Y. 2014-15, citing a delay of 59 days in filing the appeal. The delay was attributed to oversight by the tax consultant due to various compliance obligations. The Appellate Tribunal, after considering the Assessee's explanation as genuine and bonafide, condoned the delay and allowed the appeal to proceed.

2. The Assessing Officer treated the long term capital gain income earned from the sale of shares as unexplained cash credit based on a report from the Kolkata Investigation Wing. The Commissioner affirmed this addition, leading to the Assessee's appeal. The Tribunal examined the legal aspects raised by the Assessee, focusing on the alleged non-service of notice under section 143(2) of the Act. The Assessee contended that the notice was served through affixture without proper evidence or procedure, challenging the validity of the assessment order.

3. The Tribunal analyzed the legal requirements for serving notices under section 143(2) of the Act, emphasizing the necessity of proper service as a condition precedent for valid assessment proceedings. Despite the Revenue department's reliance on section 292BB of the Act to cover any notice irregularities, the Tribunal found the service through affixture in this case unproven and inconsistent with legal procedures. Citing precedents, the Tribunal concluded that absence of valid notice service renders assessment proceedings void-ab-intio, leading to the quashing of the Assessment Order in this case.

In conclusion, the Tribunal allowed the Assessee's appeal, emphasizing the critical importance of valid notice service in assessment proceedings and ruling that the Assessment Order was quashed due to the lack of proper service of notice under section 143(2) of the Act.

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