SHRI CHARAN SINGH ,ALWAR vs. INCOME TAX OFFICER, WARD, BHIWADI

In Ground No. 1, the assessee has contended that the ld. CIT(A) has erred in presuming the service of notice u/s 148 where as the fact of the 2 Charan Singh, Alwar Vs. ITO, Bhiwadi case is that the notice u/s 148 sent through speed post was received back by the Assessing Officer and remain undelivered, and thereafter, there has been no effort done by the Assessing Officer even to serve the notice by affixture. It was submitted that the service notice u/s 148 is a jurisdictional requirement that must be mandatorily complied with and in the absence of the same, the present proceeding needs to be quashed.

It was submitted that in the instant case, the notice u/s 148 was issued on 29.03.2016 sent through speed post by the AO on 30.03.2016 at the address Plot No. 196, sector-9, UIT Colony, Bhiwadi which is the address of one Sh. Bhardwaj through whom the assessee had applied for PAN, was received back by the AO with the postal remarks” ukt number par iss naam ka koi nahi rehta hai, atah vapas. Sd. Dated, 31.03.2016.” It was submitted that the envelope returned by the postal authorities containing un-served notice u/s. 148 is available on assessment records, a copy of which has been obtained by the assessee and is enclosed as part of paperbook. It was further submitted that as apparent from the assessment records, there has been no effort made by the AO to serve the said notice. It is apparent from the assessment records that the said notice was never served upon the assessee or any of his authorized agent or even through affixture.

It was further submitted that the correct permanent residential address of the assessee was available with the department from the very beginning at which address the assessment order has been passed by the AO and notice u/s. 142(1) was sent through speed-post on 07.10.2016. Therefore, no attempt was made by the AO to serve the notice u/s. 148 upon the assessee at the last known correct address. The A.O. has also not stated anything about service of the notice u/s 148 in the assessment order and the order- sheet maintained by him. 3 Charan Singh, Alwar Vs. ITO, Bhiwadi 5. It was submitted that it is an accepted legal position that service of notice u/s. 148 is a jurisdictional requirement that must be mandatorily complied with. This is not a procedural requirement. In this regard, reliance was placed on the decision of Hon'ble Delhi High Court in the case of CIT v. Chetan Gupta (2015) 94 CCH 13. The ld AR further placed reliance on the decision of Hon'ble Rajasthan High Court in the case of Mrs. Subhashri Panicker v. CIT (D.B. Income Tax Appeal NO. 202/2015, dated 24.10.2017) wherein the Hon’ble High Court relied on the decision in case of Chetan Gupta (supra) and others, and has allowed the appeal of the assessee admitting non-service of notice u/s. 148 of the Act.

Per contra, the ld. DR supported the order of the lower authorities and submitted that the notice u/s 148 has been duly issued and served on the assessee and therefore, there is no irregularity in assumption of jurisdiction by the Assessing Officer u/s 147 of the Act. In support, reliance was placed on the decision of the Hon’ble Delhi High Court in case of CIT V. Yamu Industries Ltd.(2008) 167 Taxman, 67. Further, he supported the findings of the ld CIT(A) which are reproduced as under:

We have heard the rival contentions and perused the material available on record. It is a settled legal position that before assumption of jurisdiction u/s 147, the issuance of notice u/s 148 and service of such notice upon the assessee are jurisdictional requirements that must be mandatorily complied with and these are not mere procedural requirement. Any breach of such jurisdictional requirement cannot be read as technical breach which can be rectified but will render the whole reassessment proceedings void ab-initio which are liable to be quashed. In the instant case, on perusal of the assessment order, it is noted that the Assessing Officer has stated that after recording the reasons and obtaining necessary approval from the Addl. CIT(A), Alwar, case was reopened by issuance of notice u/s 148 on 29.03.2016 and thereafter, the assessment was completed u/s 147 read with 144 of the Act. As far as the service of the notice u/s 148 is concerned, the assessment order is thus apparently silent and so is the case with the order- sheet which talks about issuance of notice u/s 148 only and nothing has been stated as to whether the same has been duly served on the assessee. Further, the ld AR has contended that the notice so issued u/s 148 has been returned back unserved and is available in the assessment records and a copy thereof placed in the paperbook. Where the initial notice has been received back unserved which is an undisputed fact in the instant case, it is incumbent upon the Assessing officer to take steps in terms of issuing another notice after determining the reasons for non-service and/or alternatively, service the notice through affixture. However, in the instant case, no such further steps have been taken by the AO either in terms of fresh notice or service through affixture. The AO knowing fully well that the 5 Charan Singh, Alwar Vs. ITO, Bhiwadi notice u/s 148 has been received back unserved has proceeded ahead with the proceedings and passed the order u/s 147 of the Act. The jurisdictional requirement of service of notice on the assessee has thus not been complied with in, therefore, the resultant proceedings cannot be sustained and liable to be set-aside.

Further, we have gone through the decision relied upon by the ld DR in case of Yamu Industries Ltd (supra), however, we find that the said decision doesn’t support the case of the Revenue as in that case, notice u/s 143(2) was sent by registered post at correct address of assessee had not been received back ‘unserved’ and a presumption under law was drawn that said notice had been duly served upon assessee within period of limitation unlike in the instant case, where the notice sent through speed post has been received back unserved and therefore, the question of presumption of service of notice doesn’t arise.

The decision of the Hon'ble Delhi High Court in the case of CIT v. Chetan Gupta (supra), which has been relied upon by the ld AR, supports the case of the assessee wherein it was held as under-

In light of above discussions, in absence of service of notice issued u/s 148 on the assessee, the reassessment proceedings completed u/s 147 r/w 144 ex-parte qua the assessee deserved to be quashed and are thus set- aside. Charan Singh, Alwar Vs. ITO, Bhiwadi 11. In view of the above, other grounds of appeal raised by the assessee become infructious and thus have not been adjudicated upon.