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Facts
The assessee's appeal arises from an order of the NFAC which sustained an addition of Rs. 16,40,960/-, deleting the remaining Rs. 23,59,040/-. The primary ground of appeal is that the notice under Section 148 was not served on the assessee, rendering the assessment void. The assessee did not appear, and the appeal was decided based on the respondent's (DR) submissions.
Held
The tribunal held that the issue of jurisdiction, stemming from the proper service of notice under Section 148, is fundamental and cannot be cured by subsequent provisions. The reliance by the NFAC on the AO's order without verifying service of notice was deemed insufficient. Therefore, the appeal was restored to the AO for proving service of the notice.
Key Issues
Whether the reassessment proceedings are void ab initio due to non-service of notice under Section 148 of the Income-tax Act, 1961.
Sections Cited
144, 147, 148, 292B, 292BB
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, AGRA BENCH “SMC”: AGRA
O R D E R PER M. BALAGANESH, A. M.: 1. The appeal in AY 2010-11, arises out of the order of the National Faceless Appeal Centre (NFAC), Delhi [hereinafter referred to as „ld. NFAC‟, in short] dated 06.10.2023 against the order of assessment passed u/s 144 r.w.s. 147 of the Income-tax Act, 1961 (hereinafter referred to as „the Act‟) dated 11.12.2017 by the Assessing Officer, ITO, Ward-2(1)(3), Agra (hereinafter referred to as „ld. AO‟).
None appeared on behalf of the assessee despite issuance of notice. Hence we proceed to dispose of this appeal after hearing the ld DR and based on materials available on record.
The assessee has raised the following grounds of appeal:-
“1. That the National Faceless Appeal Centre (NFAC), Delhi has erred in law and on facts in not considering that the order passed by the learned Assessing officer is Void-ab-initio, as no notice u/s 148 was ever Served on the appellant.
2. That the National Faceless Appeal Centre (NFAC), Delhi has erred in law and on facts in sustaining the addition of Rs. 16,40,960/- on account of unexplained cash deposit in the bank account.
3. That the National Faceless Appeal Centre (NFAC), Delhi has erred in law and on facts in only accepting part consideration of Rs. 3,00,000/- from Jai Bajrang Sahakari Awas Samiti Ltd. And not accepting the balance amount of Rs. 20,00,000/- received from them.
That the order is bad in law and against the facts of the case.
That any other relief or reliefs deemed fit in the facts and circumstances of the case may be granted.
6. The appellant craves leave to add, alter or vary the grounds of appeal
before or at the time of hearing.”
4. We find that the assessee had raised a preliminary ground that Notice under Section 148 of the Act was not served on him. In fact, the said objection was raised by the assessee before the Learned AO itself. The Learned AO had met those objections by stating that the Notice under Section 148 was served on the assessee through speed post in the address given by the assessee in the return of income, pursuant to which the Learned AO proceeded to frame the reassessment in the hands of the assessee for the year under consideration by treating the cash deposit of Rs 40 lakhs made in the bank account as unexplained money. Before the Learned NFAC, the assessee raised similar objection of Notice being not served and also furnished explanation for the source of cash deposits made in the bank account. The Learned NFAC partially accepted the explanation given by the assessee and sustained the addition only to the extent of Rs 16,40,960/- and deleted the remaining amount of Rs 23,59,040/-. Aggrieved by this order, only the assessee is in appeal before us.
5. With regard to non-service of Notice under Section 148 of the Act, we find that the Learned NFAC had merely relied on the observations made by the Learned AO in the re-assessment order and had also stated that the authorized representative of the assessee had indeed cooperated and participated in the reassessment proceedings and hence the objection of the assessee was dismissed. In our considered opinion, this is not the proper way of disposing of the ground. The assumption of jurisdiction is an important fact and the same starts with the issuance of Notice and service of Notice thereon. Jurisdictional defect, if any, cannot be cured even under section 292B or 292BB of the Act. This goes to the root of the matter. Hence we deem it fit and appropriate in the interest of justice and fair play, to restore this appeal to the file of Learned AO for first giving proof of service of Notice under Section 148 of the Act on the assessee. Once it is proved that the Notice had been duly served on the assessee, then the Learned AO is at liberty to proceed with the reassessment in the manner known to law after duly taking into account the objections and the explanations given by the assessee. Needless to mention that the assessee be given reasonable opportunity of being heard. With these directions, the grounds raised by the assessee are allowed for statistical purposes.
In the result, the appeal of the assessee is allowed for statistical purposes.
Order pronounced in the open court on 03/02/2025.