Strict service of reassessment notice required; speed post dispatch and missing affixation were insufficient for valid notice.

Service of notice under section 148 is a condition precedent for reassessment, and deemed service by post must satisfy the statutory requirements strictly. The text states that dispatch by speed post, without a returned envelope establishing valid postal service, was insufficient to presume service under section 27 of the General Clauses Act. It also states that where the assessee was not traceable, failure to affix the notice at the last known address meant the alternative mode of service was not complied with. On that basis, the reassessment could not be sustained for want of valid notice service.

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Issues: (i) Whether service of notice under section 148 of the Income-tax Act, 1961 could be presumed from dispatch by speed post in the absence of the returned envelope on record; (ii) whether, where the assessee was not traceable, failure to affix the notice at the last known address vitiated the reassessment proceedings.

Issue (i): Whether service of notice under section 148 of the Income-tax Act, 1961 could be presumed from dispatch by speed post in the absence of the returned envelope on record.

Analysis: Service of notice under section 148 is a precondition for reassessment and, being part of a taxing statute, must be construed strictly. The statutory scheme treated service by post under section 282 as supporting deemed service only where the requirements of section 27 of the General Clauses Act, 1897 were satisfied. On the facts found, the notice had been sent by speed post and the record did not establish the return of the envelope in a manner that could justify a presumption of valid service. Speed post was not treated as equivalent to registered post for invoking deemed service under section 27 in this context.

Conclusion: The issue was decided in favour of the assessee. There was no valid service of notice under section 148 by post so as to sustain reassessment.

Issue (ii): Whether, where the assessee was not traceable, failure to affix the notice at the last known address vitiated the reassessment proceedings.

Analysis: When personal service is not possible, the statutory mode contemplated by section 282, read with the applicable civil procedure principles, requires affixation at the relevant address. The record showed that the assessee was not traceable, yet the notice was not affixed at the last known address. In the absence of such affixation, the attempt at service through the Inspector did not amount to valid service.

Conclusion: The issue was decided in favour of the assessee. Service through affixation was not validly made and the reassessment could not be sustained on that basis.

Final Conclusion: The reassessment proceedings failed for want of valid service of notice, and the appellate order upholding service was set aside.

Ratio Decidendi: In reassessment proceedings, valid service of notice under section 148 is a condition precedent, and deemed service cannot be presumed unless the statutory requirements for service by post are strictly satisfied; where personal service fails, the prescribed alternate mode such as affixation must also be duly complied with.

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