AO not bound to bring on record an acknowledgment of service of the notice which is issued by registered post / speed post to the correct address.
In a recent judgment, Hon’ble Supreme Court has dismissed Special Leave Petition (SLP) against the judgment of the Delhi High Court holding that AO was not bound to bring on record an acknowledgment of service of the notice which was issued by registered post / speed post to the correct address of the assessee.
ABCAUS Case Law Citation:
4719 (2025) (08) abcaus.in SC
The main issue in this case was in respect of the service of the validity of notice(s) issued under Section 148 of the Income Tax Act, 1961 (the Act).
The Assessee did not file return of income for three Assessment Years. For two assessment years proceedings u/s 147 were initiated vide notices. Notices u/s 148 & 142 (1) of the Act were also issued in all the aforesaid years and stated to have been served upon the assessee.
Subsequently, Assessment were completed making additions towards income from undisclosed sources. The CIT(A) confirmed the additions.
Before the Tribunal the assessee challenged the legal issue as to the service of the notice u/s 148 on the ground that they were not served upon him.
The Tribunal observed that as per narration in the assessment order given by the AO as to issuance of service of notice u/s 148 showed that it did not contain facts if the notice(s) were ever served upon the assessee, it only contained the fact that notices u/s 148 were issued on the given date.
The Tribunal further examined assessment record viz. order sheet prepared by the AO and dispatch register. There was no doubt that copy of notices were reportedly issued on the date mentioned vide dispatch register but the record was altogether silent if the said notices were served upon the assessee or received back served/unserved nor copy of acknowledgement from the postal authority acknowledging the receipt of notice was there on the file.
The Tribunal opined that it is settled principle of law that when the assessee has specifically challenged service of notice u/s 148 as well as u/s 142(1) since the stage of assessment it is the duty of the Revenue to prove the service of notice.
Accordingly, the Tribunal held that the Revenue had failed to prove the mandatory service of notice upon the assessee issued u/s 148 and u/s 142(1), as the case may be, assessment framed by the AO u/s 254/144 of the Act was not sustainable, hence orders were quashed.
The Revenue challenged the order of the ITAT before the Hon’ble High Court.
The High Court observed that it was evident from the assessment record that although the notice had been duly dispatched, the assessee had failed to furnish a return in response thereto. It was on the aforesaid basis that it appeared to have been alleged that there was no valid and effective service of the Section 148 notice.
The Hon’ble High Court noted that the Tribunal had found upon perusal of the dispatch register that although the same did evidence the issuance of the notice, the record was altogether silent as to whether they had been duly served, received back unserved or whether a copy of the acknowledgment existed on the record.
The Hon’ble High Court further noted that the CIT(A) had observed that the said notices were not returned back or undelivered. In fact, the AO, vide his letter had duly informed the assessee about this fact and the proof of service of notices, i.e. the speed post, had been given to the assessee with this letter and requested the assessee to cooperate with the assessment proceedings. Also, the assessment order were sent to the same address on which the notices issued during the original assessment proceedings were issued which were duly received by the appellant enabling him to file appeal. Thus, the assessee had acknowledged receipt of certain notices and letters at his choice and objected to the receipt of notices u/s 148 of the Act issued initially in the manner it suited his interests.
The Hon’ble High Court noted that the Hon’ble Supreme Court had held that according to Section 114 of the Evidence Act when it appears to the court that the common course of business renders it probable that a thing would happen, the court may draw presumption that the thing would have happened, unless there are circumstances in a particular case to show that the common course of business was not followed. But the presumption that is raised under Section 27 of the General Clauses Act (GC Act) is a far stronger presumption.
The Hon’ble Supreme Court stated that Section 27 gives rise to a presumption that service of notice has been effected when it is sent to the correct address by registered post. In view of the said presumption, when stating that a notice has been sent by registered post to the address of the drawer, it is unnecessary to further aver in the complaint that in spite of the return of the notice unserved, it is deemed to have been served or that the addressee is deemed to have knowledge of the notice. Unless and until the contrary is proved by the addressee, service of notice is deemed to have been effected at the time at which the letter would have been delivered in the ordinary course of business. When a notice is sent by registered post and is returned with a postal endorsement “refused” or “not available in the house” or “house locked” or “shop closed” or “addressee not in station”, due service has to be presumed.
The Hon’ble High Court opined that the presumption which Section 27 of GC Act constructs was neither examined, evaluated nor borne in consideration by the Tribunal. It had, in fact, and to the contrary held that it was incumbent upon the AO to bring on record an acknowledgment of service of the notice in question.
The Hon’ble High Court held that the Tribunal had clearly erred in holding that there was no valid service of notice.
Accordingly, the appeal of the Revenue was allowed and the order of the Tribunal was set aside and remitted to the Tribunal for examination afresh.
Aggrieved by the order of the Hon’ble High Court, the assessee challenged it before the Hon’ble Supreme Court by way of filing a Special Leave Petition (SLP).
However, the Hon’ble Supreme Court dismissed the SLP with the following observations,
“We do not see any good ground to interfere with the impugned judgment(s) and order(s) of the High Court. Hence, the Special Leave Petitions are dismissed.”
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