Income Tax notice by process server held invalid for no acknowledgement or endorsement on the original notice as required under Code of Civil Procedure
In a recent judgment, Hon’ble High Court has laid down the essential requirement of service of income tax notice by a process server. The Hon’ble Court remanded the issue holding that notices u/s 148 and 142(1) by process server was not in accordance with the procedure provided under Order V Rules 16 & 18 of CPC which requires signature of the person to whom the copy is delivered or service of notice endorsed on the original summons.
ABCAUS Case Law Citation:
4826 (2025) (11) abcaus.in HC
In the instant case, the appellant assessee had filed a tax appeal before the Hon’ble High Court alleging that the order passed by the ITAT was unjustified in upholding the order passed by the CIT (Appeals) confirming ex-parte assessment order despite procedure for service of notices was not followed.
The appellant was an illiterate farmer and he was not required to file Income Tax Return for the relevant assessment year as his income was much less than the taxable income.
However, the AO initiated proceedings under Section 147 of the Income Tax Act, 1961 (the Act) on the ground that the appellant/assessee during the said year has made large amount of cash deposits in his savings bank account and had not filed his return of income and, therefore, considered his case of escapement of income.
Consequently, the assessing officer issued notice under Section 148 of the Act but the said notice was not served and returned back as un-served. Thereafter, again another notice was issued under Section 142(1) of the Act for his appearance which was claimed as served on the assessee in presence of his tenant.
Despite, the assessee failed to appear, which led to passing of ex-parte assessment order under Section 144/147 of the Act.
Before the Hon’ble High Court, the assessee contended that notice u/s 148 was never served upon the appellant and further notice under section 142(1) was also not served, therefore, the assessee could not appear before the assessing officer. Even the notice issued by the CIT(A) was also not served upon the assessee and, due to which, the assessee was deprived of its reasonable opportunity of being heard, due to which, great prejudice had been caused to him, as his appeal had been dismissed on the ground of non-prosecution.
The Hon’ble High Court observed that initial notice under Section 148 of the Act was unserved on the appellant. However, second notice under Section 142(1) requiring the appellant to appear within four days was served on the appellant in presence of his tenant and, thereafter, the order of re-assessment was passed by the assessing officer within one month.
The Hon’ble High Court observed that Section 282(1) of the Act prescribes modes of service of notice under Income Tax Act.
The Hon’ble High Court observed that in this case, the notice issued under Section 142(1) of the Act of 1961 had been served on the appellant by the process server in the manner as provided under Section 282(1) of the Act, for the purpose of service of notice. However, Order V Rule 16 of CPC provides that where the serving officer delivers or tenders a copy of the summons to the defendant personally, or to an agent or other person on his behalf, he shall require the signature of the person to whom the copy is so delivered or tendered to an acknowledgment or service endorsed on the original summons. Further, Order V Rule 18 of CPC also provides that the serving officer shall, in all cases in which the summons has been served under rule 16, endorse or annex, or cause to be endorsed or annexed, on or to the original summons, a return stating the time when and the manner in which the summons was served, and the name and address of the person (if any) identifying the person served and witnessing the delivery or tender of the summons.
The Hon’ble High Court observed that second notice served on the appellant in presence of tenant was not supported by the acknowledgment or endorsement as provided under Order V Rules 16 & 18 of CPC. Even otherwise, the appellant was summoned to appear only after 3-4 days, which in light of the decision of the Supreme Court cannot be treated to be adequate time so as to enable the appellant to make his representation and, in absence of providing adequate time/reasonable opportunity, the order passed becomes wholly vitiated.
Accordingly, the order passed by the assessing officer as affirmed by the CIT(A) and by the ITAT was set aside/quashed. The matter was remitted to the Assessing Officer for considering the matter afresh after providing due opportunity of hearing to the assessee.
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