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Facts
The Assessing Officer (AO) passed an assessment order u/s 144 of the Income Tax Act, 1961, making an addition of Rs. 62,59,440/- u/s 68, after attempting to serve notices u/s 143(2) and 142(1). The assessee challenged this before the CIT(A), arguing that the assessment was invalid due to non-service of notice u/s 143(2). The CIT(A) remanded the matter to the AO for a fresh assessment, acknowledging the AO's efforts to serve notices.
Held
The Income Tax Appellate Tribunal (ITAT) dismissed the assessee's appeal, upholding the CIT(A)'s order to remand the case for fresh assessment. The Tribunal found that the AO made substantial efforts to serve notices, and the assessee's claim of invalid proceedings due to non-service was not valid, as there was substantial compliance with Section 282 of the Act.
Key Issues
Whether the assessment order passed u/s 144, including an addition u/s 68, was invalid due to alleged non-service of notice u/s 143(2), and if the CIT(A)'s decision to remand the case for fresh assessment was justified.
Sections Cited
250, 144, 143(2), 142(1), 68, 251(1)(a), 153(3), 292B, 282, 143(3), 263, 33B, 271(1)(b), 271(1)(c), 156, 220(2)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, “B” BENCH, KOLKATA
Appearances by: Assessee represented by : A.K. Tibriwal, FCA Department represented by : Kapil Mandal, Addl. CIT, SR. DR Date of concluding the hearing : 21.08.2025 Date of pronouncing the order : 26.08.2025 O R D E R
PER SANJAY AWASTHI, ACCOUNTANT MEMBER
This appeal arises from order dated 04.02.2025, passed u/s 250 of the Income Tax Act, 1961 (hereafter “the Act”) by the Ld. Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi.
1.1 In this case, the Ld. AO passed an order u/s 144 of the Act, admittedly after attempting to serve notices u/s 143(2) and 142(1) of the Act on the assessee. Thereafter, the Ld. AO made an addition of Rs. 62,59,440/- u/s 68 of the Act.
1.2. The assessee approached the Ld. CIT(A) with his grievances against the Ld. AO but could not succeed fully since the matter was remanded back to the file of Ld. AO with the following decisions:
Krishna Kumar Kedia “6. I have gone through the grounds of appeal, statement of facts, assessment order and the submission filed by the appellant. It is seen that the appellant has mainly raised legal ground stating that notice u/s.143(2) of the Act was not served and therefore, the entire assessment order is invalid. This contention of the appellant appears to be devoid of any merit as it is clearly mentioned in the assessment order that notice u/s.143(2) of the Act was issued and served upon the appellant. The AO has further mentioned that subsequently notices issued could not be served through notice server, Inspector and Postal Department due to non-cooperation by the appellant despite issuing letters on all 3 to 4 address mentioned by the appellant in his PAN database, ITR etc. The appellant has also not brought on record any document obtained from the AO to support his contention that notice u/s.143(2) of the Act was not served. It is seen that the appellant has primarily highlighted the issue of non-service of notice without any documents to support his contention. The appellant has further stated that he is carrying out business of retail trade in Bitumen and total turnover was Rs.4,09,32,478/- and the sale proceeds were received in cheque and cash. It is also contended that there were transfer of amount from current account to saving account of the appellant to earn more interest and further there were withdrawals and deposits of cash in the said accounts. In my opinion, the appellant should be given one more opportunity to furnish all the relevant documents for verification by the AO to arrive at correct conclusion about the source of cash deposits in the bank account. (iii) Considering that the matter requires extensive factual verification, the assessment order is set aside and the AO is directed to make a fresh assessment after giving adequate opportunities to the appellant and complying with all extant rules and provisions and following principles of natural justice. The appellant may note that all necessary compliance should be made at the earliest and within the time limit prescribed in the notices issued by the AO. It should be the endeavour of the appellant to promptly submit necessary evidences in support of his Income tax return, suo-moto or as required by the AO without causing undue delays leading to submissions towards the fag end of the limitation period. In view of the power vested in CIT(A) as per the proviso to Section 251(1)(a) of the Act, the assessment order under consideration is set aside accordingly with a direction to the AO to make a fresh assessment in accordance with rules and timelines prescribed u/s 153(3) of the Act.”
1.2 Aggrieved with this action, the assessee has approached the ITAT with the following grounds:
“1. That Ld. Commissioner of Income Tax (Appeals), NFAC erred in dismissing the first ground of appeal wherein the Appellant Assessee challenged the Jurisdiction of the Assessing Officer to pass the impugned assessment order dated 26th March 2014 under section 144 of the Act without service of the Notice u/s 143(2) of the Act on the assessee
2. That the Appellant Assessee having furnished before the Ld. CIT(A), the copy of the letter dated 8th September 2017 issued by the Income Tax Officer, Ward 30(1), Kolkata wherein he accepted that the notice u/s 143(2) of the Act could not be served on the Assessee, the Ld. CIT(A) erred in holding that the Notice u/s 143(2) was served on the assessee referring to the impugned assessment order passed u/s 144 of the Act wherein the Ld. Assessing Officer arbitrarily noted that the Notice u/s 143(2) was served on the assessee.
Krishna Kumar Kedia 3. That on the facts and in the circumstances of the case, the impugned assessment order passed by the Assessing Officer is liable to be quashed since the same was passed without assuming legal jurisdiction to proceed in the matter of assessment without service of the Notice u/s 143(2) of the Act on the assessee.”
Before us, the Ld. AR stated that the primary challenge was the assumption of jurisdiction by the Ld. AO since admittedly he could not serve a notice u/s 143(2) of the Act. It was averred by the Ld. AR that in the absence of a proper service of the said notice the entire proceedings were vitiated and were a nullity in law. The Ld. AR relied on detailed written submissions which he presented for the perusal of this Bench. The Ld. AR read out from his submissions; some important portions deserve to be extracted for reference:
“4. In this case, the statutory notice u/s 143(2) of the Act for assumption of jurisdiction to scrutiny the return was never served on the Appellant Assessee. It has been alleged that the Ld. AO attempted to serve the Notice through notice server who could not serve the notice. The Ld. AO did not take any step to serve the notice u/s 143(2) of the Act by other modes of service prescribed u/s 282 of the Act viz. Registered Post, service by Affixture etc. It is settled law that the statutory Notice is required to be served on the assessee and/or any person authorized to receive the said notice. Thus, it is a case where the Notice u/s 143(2) was not served on the assessee. It is also settled law that in absence of service of the statutory notice u/s 143(2) of the Act on the assessee, the assessment order passed u/s 143(3) and/or u/s 144 and/or any other provisions of law, the assessment order is liable to be quashed. The Appellant Assessee submits that in absence of the service of any notice u/s 143(2) of the Act on the assessee, he could not participate in the assessment proceedings and therefore, the assessment was made u/s 144 of the Act. In these circumstances the provisions of section 292B of the Act do not come to rescue the department. In the following cases, the notices served on stranger, or an unauthorized person have been held to be no service in accordance with law.” The Ld. AR also relied on several case laws as under:
(i) Commissioner of Income Tax (Central) Vs. Chetan Gupta [2015] 62 taxmann.com 249 (Delhi) (ii) Saral Wire Craft (P) Ltd. Vs. Commissioner of Customs, Central Excise & Service Tax [2015] 60 taxmann.com 120 (SC) (iii) M/s Amarjus Shuttering Stone Vs. Income Tax Officer [ITA No. 688/Del/2010].
2.1 The Ld. DR, on the other hand, presented the assessment records for perusal of the Bench and stated that all manner of attempts were made by the Ld. AO to serve notices on the known addresses of the assessee and registered post communications were invariably returned with remarks “left” by postal authorities were available on record. The Ld. DR took pains to point out that six such unserved notices were part of the records and thus it could not be said that proper service within the meaning of section 282 of the Act was not affected on the assessee. The Ld. DR supported the order of Ld. CIT(A) and stated that the matter was merely remanded back to the Ld. AO since the facts had not been duly considered at that level.
We have carefully considered the submissions of Ld. AR/DR, gone through the orders of authorities below and considered the written submission of the Ld. AR and have also perused the assessment records produced before us. We find that the Ld. AO had made considerable number of attempts to serve the notice on the assessee but he could not succeed in spite of his best efforts. In this regard, we cannot support the Ld. AR’s contention that there was any infirmity in the action of the Ld. AO. In this regard, we find that there are a number of judgments which support the action of Ld. AO in terms of assuming proper service of notice. We may refer to the case of Success Tours & Travels (P) Ltd. reported in 394 ITR 37 (Cal). In this case law, the relevant portions may be extracted for our guidance and reference:
“15. Mr. Agarwal has relied on the judgment of the Supreme Court in the case of C.LT. v. Ramendra Nath Ghosh [1971] 82 ITR 888 to contend that there was no proper service of the notice to show-cause and the order passed by the Commissioner under section 263 of the 1961 Act was in breach of the principles of natural justice. In that case, it was held, on the aspect of non-service of notice, that substituted service in the manner provided under the Code of Civil Procedure ought to have been resorted to if service through regular course could not be effected. That was a judgment delivered under the provisions of 1922 Act. The said Act provided Krishna Kumar Kedia that a notice thereunder could be served on the person named therein either by post or, as if it were a summons issued by a court, under the Code of Civil Procedure. The dispute in that case was also over service of notice relating to proceedings under the 1922 Act and there was evidence of notices of the proceeding being served 16 days after the orders were passed. The authorities sought to justify service on affixing of notice. It was held by an Appellate Bench of the High Court that service was not properly effected, and appeal against the decision of the Appellate Bench was dismissed by the Supreme Court Another judgment of the Supreme Court, C.I.T. v. Electro House [1971] 82 ITR 824 on the point of service of notice has been referred to on behalf of the appellant. In that judgment, delivered in the context of Section 33B of the 1922 Act, the question which was examined by the Supreme Court was whether the Commissioner before assuming jurisdiction to proceed against an assessee was required to give any notice or not. This decision does not strengthen the appellant's case on the point of service of notice.
So far as the present Act is concerned, Section 282(1) provides: "282. (1) The service of a notice or summon or requisition or order or any other communication under this Act (hereafter in this Section referred to as "communication") may be made by delivering or transmitting a copy thereof, to the person therein named, - (a) by post or by such courier services as may be approved by the Board; or (b) in such manner as provided under the Code of Civil Procedure, 1908 (5 of 1908) for the purposes of service of summons; or (c) in the form of any electronic record as provided in Chapter IV of the Information Technology Act, 2000 (21 of 2000); or (d) by any other means of transmission of documents as provided by rules made by the Board in this behalf." It is apparent from the aforesaid provision that various modes of service specified therein are in the alternative and there is no mandatory requirement of following the Code of Civil Procedure. We are of the view that service by post, which had been returned with the endorsement "addressee not found", followed by an attempt at personal service and subsequent affixture would constitute substantial compliance of the provisions of Section 282 of the Act. In Ramendra Nath Ghosh (supra), there is observation of the Supreme Court to the effect that the question whether the assessees had been served in accordance with the law or not, is essentially a question of fact. The Tribunal, being the highest fact finding body, has already come to the finding that there has been proper service. Furthermore, we find from the order of Tribunal that the appellant was heard at length on factual as well as legal issues. We do not consider it necessary to go into the question as to whether Section 282 of the Act requires compliance or not for effecting service of notice in respect of a proceeding under Section 263 of the Act as we are of the opinion that substantial compliance of the provision of Section 282(1) has been effected in the case of the assessee (emphasis added). We do not find any perversity on the finding of the Tribunal on this issue. This issue also, in our opinion, does not involve any substantial question of law warranting our interference.” In this light, we may also reproduce the letter written by the Ld. AO
“This is to inform you that as per our record notice u/s 143(2) of the Act, dt- 07.09.2012 was attempted to be served by the notice server but could not be served. It is observed that the assessee is in a habit of changing his address. The address as per PAN and return is different. Notices u/s 271(1)(b) were served in three addresses ie 69A Palm Avenue, Kolkata-700019,47C/1 Dharmatalla Road, Kol- 700042, and 113 Park Street, Kol-16 by post but all of them were returned unserved. The order u/s 144/143(3), dt 26.03.2014 and demand notice and notice u/s 271(1) (c) were served through postal department but again all the matters were returned unserved by post with comment "LEFT" on 07.04.2014. At last the orders and notices were served by affixation by departmental Inspector on 14.05.2014. Still on the basis of your letter dated 21.08.2017 the certified copy of notice u/s 143(2), dated-07.09.2012 assessment order u/s 144, dated 26.03.2014, demand notice u/s 156, penalty notice dated 26.03.2014 and penalty order u/s 271(1)(c), dated 30.09.2014 for your necessary action In this regard this is also to inform you that the following demands along with interest u/s 220(2) of the I.T. Act are still outstanding. SI Asst. Section Amount of Intt. u/s Total No. Year demand (Rs) 220(2) demand outstanding 1 2011-12 144/143(3) 27,16,890/- 11,13,925/- 38,30,185/- dt 26.03.2014 2 2011-12 271(1)(c), dt 18,86,154/- 6,60,154/- 25,46,308/- 30.09.2014 Total 63,77,123/-
You may please note that you would be treated as assessee in default for non payment of demand within 7(seven) days from the receipt of this letter.” 3.1 Considering the facts as discussed above, especially contained in the AO’s letter dated 08.09.2017 (supplied by the Ld. AR), and also from a perusal of the assessment records, it deserves to be held, especially in light of the Hon’ble Calcutta High Court’s judgment in the case of Success Tours & Travels (P) Ltd. (supra), that while the Ld. AO has made every effort to serve notices on the assessee he has not succeeded because of frequent change of address by the assessee for which the Ld. AO cannot be faulted. We cannot agree with the Ld. AR that because of alleged non service of notice u/s 143(2) of the Act, the proceedings are vitiated. On the other Krishna Kumar Kedia hand, we find that the Ld. CIT(A) has passed a judicious order and has remanded the matter back to the Ld. AO for an assessment on the facts of the case. We support this order and the directions given thereon.
In result, appeal of the assessee is dismissed.
Order pronounced on 26.08.2025