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Facts
The assessee's appeal was filed 75 days after the due date, prompting an application for condonation of delay. The core issue is whether the notice under Section 148 of the Income Tax Act, 1961, was validly served on the assessee within the stipulated time.
Held
The Tribunal condoned the delay in filing the appeal, holding that the notice under Section 148 was not validly served upon the assessee within due date. Consequently, the assessment passed under Section 147 was deemed void ab initio.
Key Issues
Whether the notice under Section 148 of the Income Tax Act, 1961, was duly served on the assessee within the prescribed time limit, and if not, whether the subsequent reassessment proceedings are void ab initio.
Sections Cited
147, 148, 149, 253(5), 249(3), 5, 143(3), 143(2), 139, 142(1)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, DIVISION BENCH, ‘A’ CHANDIGARH
Before: SHRI RAJPAL YADAV & SHRI KRINWANT SAHAY
The assessee is in appeal before the Tribunal against the order of ld. Commissioner of Income Tax (in short ‘the CIT’) dated 13.05.2024 passed for assessment year 2011-12.
2. The Registry has pointed out that appeal of the assessee is time barred by 75 days. The assessee has filed an application for condonation of delay. It has pleaded that login A.Y.2011-12 2 ID of the Accountant Shri Surinder Kumar S/o Shri Jia Lal Goyal was given on the Income Tax Portal. The appeal was filed on 21.09.2019 before CIT (Appeals) and there remained a long gap after filing the appeal till its disposal in 2021. The Accountant could not keep a tab on the communication given by the Department.
Sub-section 5 of Section 253 contemplates that the Tribunal may admit an appeal or permit filing of memorandum of cross- objections after expiry of relevant period, if it is satisfied that there was a sufficient cause for not presenting it within that period. This expression sufficient cause employed in the section has also been used identically in sub- section 3 of section 249 of Income Tax Act, which provides powers to the ld. Commissioner to condone the delay in filing the appeal before the Commissioner. Similarly, it has been used in section 5 of Indian Limitation Act, 1963. Whenever interpretation and construction of this expression has fallen for consideration before Hon’ble High Court as well as before the Hon’ble Supreme Court, then, Hon’ble Courts were unanimous in their conclusion that this expression is to be used liberally. We may make reference to the following
Ordinarily a litigant does not stand to benefit by lodging an appeal late.
Refusing to condone delay can result in a meritorious matter being thrown out at the very threshold and cause of justice being defeated. As against this when delay is condoned the highest that can happen is that a cause would be decided on merits after hearing the parties. 3. "Every day’s delay must be explained" does not mean that a pedantic approach should be made. Why not every hour's delay, every second's delay? The doctrine must be applied in a rational common sense pragmatic manner. 4. When substantial justice and technical considerations are pitted against each other, cause of substantial justice deserves to be preferred for the other side cannot claim to have vested right in injustice being done because of a non-deliberate delay. 5. There is no presumption that delay is occasioned deliberately, or on account of culpable negligence, or on account of mala fides. A litigant does not stand to benefit by resorting to delay. In fact, he runs a serious risk.
A.Y.2011-12 4 6. It must be grasped that judiciary is respected not on account of its power to legalize injustice on technical grounds but because it is capable of removing injustice and is expected to do so.
Similarly, we would like to make reference to authoritative pronouncement of Hon’ble Supreme Court in the case of N. Balakrishnan Vs. M. Krishnamurthy (1998) 7 SCC 123 dated 03.09.1998. It reads as under:
Rule of limitation are not meant to destroy the right of parties. They are meant to see that parties do not resort to dilatory tactics, but seek their remedy promptly. The object of providing a legal remedy is to repair the damage caused by reason of legal injury. Law of limitation fixes a life-span for such legal remedy for the redress of the legal injury so suffered. Time is precious and the wasted time would never revisit. During efflux of time newer causes would sprout up necessitating newer persons to seek legal remedy by approaching the courts. So a life span must be fixed for each remedy. Unending period for launching the remedy may lead to unending uncertainty and consequential anarchy. Law of limitation is thus founded on public policy. It is enshrined in the maxim Interest reipublicae up sit finislitium (it is for the general welfare that a period be putt to litigation). Rules of limitation are not meant to destroy the right of the parties. They are meant to see that parties do not resort to dilatory tactics but seek their remedy promptly. The idea is that every legal remedy must be kept alive for a legislatively fixed period of time. A court knows that refusal to condone delay would result foreclosing a suitor from putting forth his cause. There is no presumption that delay in approaching the court is always deliberate. This Court has held that the words sufficient cause" under Section 5 of the Limitation Act should receive a liberal construction so as to advance substantial A.Y.2011-12 5 justice vide Shakuntala Devi lain Vs. Kuntal Kumari [AIR 1969 SC 575] and State of West Bengal Vs. The Administrator, Howrah Municipality [AIR 1972 SC 749]. It must be remembered that in every case of delay there can be some lapse on the part of the litigant concerned. That alone is not enough to turn down his plea and to shut the door against him. If the explanation does not smack of mala fides or it is not put forth as part of a dilatory strategy the court must show utmost consideration to the suitor. But when there is reasonable ground to think that the delay was occasioned by the party deliberately to gain time then the court should lean against acceptance of the explanation. While condoning delay the Could should not forget the opposite party altogether. It must be borne in mind that he is a looser and he too would have incurred quiet a large litigation expenses. It would be a salutary guideline that when courts condone the delay due to laches on the part of the applicant the court shall compensate the opposite party for his loss”.
5. In the light of above, if we examine explanation of the assessee, then it would reveal that on account of a communication gap between the Income Tax Department vis- à-vis the Accountant, appeal could not be filed well in time. There is no deliberate attempt at the end of the assessee to make the appeal time barred because it will not gain by filing the appeal after expiry of limitation. Therefore, we condone the delay and proceed to decide it on merit.
6. The assessee has taken nine grounds of appeal. Apart from these nine grounds of appeal, assessee has filed an application for permission to raise additional ground of appeal A.Y.2011-12 6 and this application was allowed by the ITAT vide its order dated 28.04.2025. The order of the ITAT dated 28.04.2025 read as under : “The present appeal is directed at the instance of the assessee against the order of ld. CIT(A) dated 13.05.2024 passed for assessment year 2011-12. The assessee has taken nine grounds of appeal
originally alongwith Form 36, however, it has filed an application to raise one more additional ground of appeal, which reads as under : 'That the Ld. Commissioner of Income Tax (Appeals), NFAC, Income Tax Department is unjustified in upholding the order of the Ld. Assessing Officer passed u/s 143(3) r.w.s. 147 of the I.T. Act, 1961 as the Ld. Assessing Officer has failed to serve the first notice u/s 148 of the I.T. Act, 1961 on the appellant within the stipulated time u/s 149 of the I.T. Act, 1961 and the consequential re-assessment proceedings without valid service of initial notice u/s 148 within the prescribed time is void-ab-initio which deserves to be quashed."
2. The ld. Counsel for the assessee has pointed out that the alleged additional ground of appeal is a jurisdictional issue whereby it has to be determined whether notice under Section 148 was duly issued and served upon the assessee or not.
3. With the assistance of ld. Representative, we have gone through the record carefully. We find that the issue raised under this additional ground of appeal is a jurisdictional issue which will ultimately affect the taxability of the assessee, therefore, following the judgement of Hon'ble Supreme Court in the case of NTPC Ltd. vs. CIT, (1998) 229 ITR 0383 (SC) we admit this ground for consideration on merit.
4. The ld. Counsel for the assessee while impugning the orders of the Revenue Authorities, took us through page No. 9 of the Paper Book wherein copy of the notice issued under Section 148 of the Income Tax Act has been placed on the record. He pointed out that this notice has been issued by ITO Shri Sham Singh, Ward 3(4), Chandigarh. He drew our attention towards the address of the assessee mentioned in this Show Cause Notice. In this Show Cause Notice, the address of the assessee is being given as “House No. 20, Shivalik Enclave, NAC, Manimajra, Chandigarh”. According to the ld. Counsel for the assessee, all communications during the assessment proceedings has taken place on this address. The notices have been attended by the assessee during the assessment proceedings. He further apprised that ld. counsel himself inspected the assessment record and did not find any receipt of Postal A.Y.2011-12 7 Authority or Courier Agency vide which it can be demonstrated that this notice left the office of the AO before midnight of 31.03.2018. He further drew our attention to page No. 10 of the Paper Book wherein service upon the assessee was made through Affixture on 06.04.2018. According to the ld. Counsel for the assessee, if notice was duly issued on 31.03.2018, then what was the necessity to affix the notice immediately within one week without waiting the response of the assessee.
In his next fold of submission, he pointed out that DCIT/ACIT, Central Circle-3(1) has issued one more notice under Section 148 on the online Portal of the Income Tax Department. This notice is being issued by Ms. Lovleen Kaur. According to the ld. Counsel for the assessee, even both the officers are having concurrent jurisdiction (for sake of argument) then also, how both were satisfied simultaneously about escapement of income. It is not ascertainable who was possessing the file. Thus, he submitted that notice dated 31.03.2108 was not issued on that day and simultaneously two notices could have not been issued upon the assessee.
The ld. Sr.DR present before us is not possessing the complete details. She is unable to respond on both these issues without having assessment record. Therefore, we deem it appropriate to adjourn the hearing to 20.05.2025. The AO is directed to send assessment record which should contain the evidence of service of notice upon the assessee, as discussed above. This appeal be treated as part heard. Copy of this ordersheet be supplied to both the parties.”
Thereafter, the appeal was heard on 20.05.2025 and 6.1 the Bench has passed the following order :
In compliance to order dated 28.04.2025 of the Bench, the ld. DR has produced assessment record, but it does not contain the evidence of dispatch of notice. She seeks time to verify the same from the dispatch register. On her request hearing adjourned to 26.05.2025. Continued as Part Heard.
Before adverting to the factual position emerging out from the record, we deem it appropriate to make a reference to the legal position. Section 143 contemplates assessments A.Y.2011-12 8 and how assessments are to be made. The relevant part of Section 143 read as under :
(1) Where return has been made u/s 139, or in response to a notice under sub-section (1) of Section 142, such return shall be processed in the following manners, namely : x x x (2) Where a return has been furnished under section 139, or in response to a notice under sub-section (1) of section 142, the Assessing Officer or the prescribed income-tax authority, as the case may be, if, considers it necessary or expedient to ensure that the assessee has not understated the income or has not computed excessive loss or has not under-paid the tax in any manner, shall serve on the assessee a notice requiring him, on a date to be specified therein, either to attend the office of the Assessing Officer or to produce, or cause to be produced before the Assessing Officer any evidence on which the assessee may rely in support of the return: Provided that no notice under this sub-section shall be served on the assessee after the expiry of [three] months from the end of the financial year in which the return is furnished.
A perusal of sub-clause (2) would indicate that before taking up any assessment for scrutiny, a notice u/s 143(2) within the time limit provided in the proviso is required to be served upon the assessee. The dispute in the present appeal is whether that notice was served or not. It is pertinent to note that alleged notice was stated to be served upon the assessee on 31.03.2018. We have called upon the A.Y.2011-12 9 details from the Revenue vide our order-sheet dated 28.04.2025 (extracted supra). The original assessment record has been produced before us but it does not contain any postal receipts or receipts from Courier Agency exhibiting the service of notice upon the assessee. The ld. Sr.DR has produced Dispatch Register of the Range and according to her, the notice was stated to be dispatched. However, we are of the view that there is no material available with the Revenue whether this notice left the premises of the AO before the midnight of 31 st March. Moreoso, whether sufficient time was there with the AO for a presumption under the General Clauses Act that notice would have been served upon the assessee. If a notice is being dispatched on 31 st March, how it can be inferred that it was served on that very day. The notices from the Income Tax Department or even the ITAT are being sent to the postal authorities with a long list and the postal authorities issued due acknowledgement by stamping the list produced before the authorities. Such list is being kept for reference, but no such thing has been produced. There is no stamp on the Dispatch Register by the postal authorities. Therefore, we are satisfied that no notice u/s 143(2) was served upon the A.Y.2011-12 10 assessee within due date and no assessment could have been passed upon the assessee u/s 147 of the Income Tax Act. Accordingly, appeal of the assessee is allowed.
In the result, the appeal of the assessee is allowed.
Order pronounced on 19.06.2025.