COMMISSIONER OF INCOME TAX vs. AVTAR SINGH

IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH. I.T.A. No. 449 of 2007 DATE OF DECISION : 14.02.2008 Commissioner of Income Tax-I, Ludhiana .... APPELLANT Versus Sh. Avtar Singh ..... RESPONDENT CORAM :- HON'BLE MR. JUSTICE SATISH KUMAR MITTAL HON'BLE MR. JUSTICE RAKESH KUMAR GARG

Present: Mr. Sanjiv Bansal, Advocate, for the appellant-revenue.

* * * SATISH KUMAR MITTAL, J. The instant appeal filed by the revenue under Section 260-A of the Income Tax Act, 1961 (hereinafter referred to as `the Act') is directed against the order dated 13.4.2007 passed by the Income Tax Appellate Tribunal, Chandigarh Bench `A' Chandigarh (hereinafter referred to as `the Tribunal') in ITA No. 181/CHANDI/2006 in case of the respondent for the Assessment Year 1998-99, by raising the following substantial questions of law :- (i) Whether on the facts and in the law, the Tribunal was justified in holding that reassessment has been made without mandatory requirement of service of notice under Section 148 of the Act, by ignoring the fact that notice -2- issued on 30.3.2001 within the limitation under Section 149 (1) of the Act was sent through Registered Post, which tantamount to valid service as per section 27 of the General Clauses Act, 1897? In the present case, during the course of a search operation at the business premises of M/s Damini Resorts & Builders Pvt. Ltd., a copy of agreement of sale of land, allegedly entered into by the assessee, respondent herein, with said M/s Damini Resorts & Builders Pvt. Ltd., was found. According to that agreement of sale, the assessee had agreed to sell his share of land situated in village Dhandra for a sum of Rs. 16,42,522/-. However, subsequently the registered sale deed with regard to the said land was executed only for Rs. 5,22,641/- by suppressing sale consideration to the tune of Rs. 11,19,920/-. It is the case of the revenue that the assessee did not file return of income in respect of capital gain arising from the aforesaid sale transaction. With the object to bring the said capital gain to tax, the Assessing Officer issued notice under Section 148 of the Act to the assessee on 30.3.2001. Subsequently, notices under Section 142 (1) of the act were issued, but no return of income was filed by the assessee in response to those notices. Consequently, the Assessing Officer completed the assessment to the best of his judgment under Section 144 of the Act and assessed the long term capital gain at Rs. 13,70,680/-. Aggrieved against the said order, the assessee filed an appeal before the Commissioner of Income Tax (Appeals)-I, Ludhiana [hereinafter referred to as `the CIT (A)']. Since nobody attended the proceedings, -3- therefore, the said appeal was dismissed, and the order of the Assessing Officer was confirmed. Subsequently, the assessee filed application for re- calling the said order. The application was also dismissed by the CIT (A). Against the said order, the assessee approached the Tribunal, who vide order dated 22.9.2005 allowed the appeal of the assessee and directed the CIT (A) to decide the appeal filed by the assessee on merits. Consequently, the CIT (A) allowed the appeal of the assessee holding that the assumption of juri iction by the Assessing Officer was wrong as there was no service of notice under Section 148 of the Act. Not satisfied with the order of the CIT (A), the revenue preferred appeal before the Tribunal, who vide the impugned order dated 13.4.2007 has dismissed the appeal, while holding that Section 148 of the Act makes it mandatory for the Assessing Officer to serve a notice before making re-assessment or recomputation under Section 147 of the Act. It has been held that valid service of notice under Section 148 is condition precedent for validity of proceedings under Section 147 of the Act. It has been further held that mere issuance of notice under Section 148 within the time allowed under Section 149 of the Act was not enough, but it has to be proved that notice under Section 148 of the Act was served upon the assessee.

We have heard learned counsel for the appellant-revenue and gone through the impugned order passed by the Tribunal. Counsel for the appellant-revenue submits that in the instant case, notice under section 148 of the Act was sent to the assessee through Registered Post on 30.3.2001. Therefore, the same tantamounts to a valid -4- service as per Section 27 of the General Clauses Act, 1897. We are not inclined to accept the submission made by learned counsel for the appellant-revenue, as in the present case, no evidence in the shape of postal receipt was produced by the revenue before the Authority that actually, the said notice was sent by registered post and was served upon the assessee. The Tribunal has affirmed the categoric finding recorded by the CIT (A) that in the present case, the revenue has not led any evidence to show that notice under Section 148 of the Act was actually served upon the assessee. In our view, the CIT (A) as well as the Tribunal have recorded a pure finding of fact, after considering the material available on record to the effect that notice under Section 148 of the Act was actually not served upon the assessee, which was a condition precedent for making re- assessment or recomputation under Section 147 of the Act. We do not find any ground to interfere in the said finding of fact, and in our view no substantial question of law is arising from the order of the Tribunal. Dismissed. ( SATISH KUMAR MITTAL ) JUDGE February 14, 2008 ( RAKESH KUMAR GARG ) ndj JUDGE