2006 (9) TMI 128 - HC - Income Tax

Interpretation of Notice Service under Income-tax Act: Emphasis on Actual vs. Dispatch Date

Commissioner of Income-Tax Versus Vardhman Estate P. Limited.

The High Court clarified the interpretation of the service of notice under section 143(2) of the Income-tax Act, emphasizing the significance of the ... 'Whether the actual service of a notice under section 143(2) of the Income-tax Act, issued before the date prescribed in the said provision, would relate back to the date of the issuance of the notice?' - return was filed on October 31, 2001, and in terms of section 143(2) the notice had to be served on the assessee on or before October 31, 2002. The argument is that there were two modes of service, i.e., by speed post as well as by a process server. The date of service, so far as speed post is concerned, is said to be November 1, 2002, but so far as the process server is concerned it is stated to have been effected on October 31, 2002. The Tribunal has accepted the contention of the assessee that the date of service through speed post was November 1, 2002 - So far as service by speed post is concerned, contention of the Revenue that the words 'served' and 'issued' are synonymous and interchangeable, is rejected – revenue appeal is rejected Issues:1. Interpretation of the service of notice under section 143(2) of the Income-tax Act, 1961.2. Determining the date from which the actual service of notice relates back.Issue 1: Interpretation of the service of notice under section 143(2) of the Income-tax Act, 1961:The High Court addressed the question of whether the actual service of a notice under section 143(2) of the Income-tax Act, issued before the prescribed date, would relate back to the date of issuance of the notice. The court clarified typographical errors in the formulation of the question and referred to a previous decision in CIT v. Lunar Diamonds Ltd. The court agreed with the previous decision that the words 'served' and 'issued' are not synonymous and cannot be interchanged. It was established that the date of service is crucial and cannot be deemed based on the dispatch date.Issue 2: Determining the date from which the actual service of notice relates back:In the case under consideration, the return was filed on October 31, 2001, and the notice under section 143(2) had to be served on or before October 31, 2002. The argument presented two modes of service: speed post and a process server. The Tribunal accepted that the notice was served through speed post on November 1, 2002. The appellant failed to provide evidence that the notice sent by speed post was served earlier. The court rejected the contention that the date of dispatch should be deemed the date of service. Regarding service through the process server, a crucial document was not filed before the Income-tax Appellate Tribunal initially. The appellant argued that the Tribunal should have considered the document, but the court disagreed, citing the previous decision in CIT v. Lunar Diamonds Ltd. The court dismissed the appeal as no substantial question of law arose.In conclusion, the High Court clarified the interpretation of the service of notice under section 143(2) of the Income-tax Act and determined that the actual date of service is essential, rejecting the notion of deeming the dispatch date as the date of service. The court emphasized the importance of providing evidence of service and upheld the decision based on previous legal precedents, ultimately dismissing the appeal due to the absence of a substantial legal question.