Post office not an agent of the assessee. Notice u/s 143(2) dispatched to post office on the last date of limitation period not service to the assessee.

In a latest judgment, ITAT Delhi has held that post office is not an agent of the assessee. Notice u/s 143(2) dispatched to post office on the last date of limitation period  can not be deemed to be the date of service of notice to the assessee.

Case Law Details:
I.T.A .No.-2707/DEL/2012
Multiple Finance Co.  vs. DCIT
Date of Order/Judgment: 07/04/2016

Brief facts of the Case:

The assessee was a partnership firm and is a sub-broker dealing in shares and securities. The case of the assessee for the relevant assessment year was selected for scrutiny and notice u/s 143(2) of the Income tax Act, 1961 was issued.

The said notice u/s 143(2) was issued on 29/09/2008 but was received by the assessee after the expiry of time barring date on 30/09/2008. However CIT(A) did not agree with the assessee’s contentions that assessment order be quashed in view of lack of mandatory service of notice u/s 143(2). On the contrary he gave the finding that finding that the post office was the agent of the assessee and the date on which the notice is received by the post office was deem to be the date of service of notice to the assessee.

Aggrieved, the assessee contested the order before ITAT.

The revenue contended that since the amendment to proviso in respect of Section 143(2) of the Income Tax Act was not applicable in the present case because the Assessment Year 2007-08 would be governed by the earlier proviso and therefore CIT(A) order was just and proper and assessment order.

Excerpts from ITAT Judgment:

The Ld. AR relied upon the ITAT Delhi Bench decision in the case of OIP Sensor Systems India Liaison Office Vs. ADIT, ITA No. 5796/Del/2010 dated 28th December, 2013. The issue raised herein was already decided in favour of the assessee. In Para 15 and 16 of the said decision clearly stated out that the limitation for service of notice u/s 143(2) in accordance with applicability of the proviso to Section 143(2) (ii) would be six months from the end of the Financial Year in which the return is furnished. The Ld. AR submitted that the limitation as laid down in the amended proviso to Section 143(2) (ii) is applicable in accordance with the Delhi High Court decision in the case of C. B Richards Ellis Moritius Ltd. vs. ADIT 2008 Taxman 323 (Delhi). The Ld. AR also relied on the decision of CIT Vs. Lena Diamonds Ltd. 281 ITR 1 (Delhi) as well as CIT (A) Vs. Vardhman State Pvt. Ltd 287 ITR 368 (Del).

The notice u/s 143(2) was received after the expiry of the limitation period given under the Act by the assessee. Therefore, the contention of the Ld. AR appears to be just and proper. The post office is not an agent of the assessee. It is the service availed by the Department to serve the notice to the assessee. Infact the department issued the notice u/s 143(2) on 29.09.2008, but dispatched the same on the 30.09.2008 which is the last date of limitation period. If it is a case of the Revenue that the notice was delivered through hand on the very same day, then it is possible that the notice was served well within the time. The decision referred by the assessee clearly discussed the issue before us and it has gone further in respect of the implications of the amended proviso whether it is applicable for Assessment Year 2007-08 or not. Therefore, the Revenue’s contention as relates to amendment to proviso does not sustain.

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