Reassessment invalid without serving notice personally/by affixture where notice returned

Reassessment proceedings without sending Inspector to serve notice personally or by affixture where notice served by speed post was returned by Postal Authorities

ABCAUS Case Law Citation
ABCAUS 3583 (2022) (02) ITAT

In the instant case, the assessee had challenged the order passed by the CIT(A) in confirming the addition on account of unexplained cash deposited in bank account of the assessee.

On the basis of Annual Information Return (AIR) Assessing Officer (AO) received information that large amount of cash was deposited in savings bank account of the assessee.

It was noticed that no return of income for the relevant assessment year had been filed by the assessee. Hence, proceedings u/s 147 of the Income Tax Act, 1961 (the Act) were initiated after recording of reasons and the statutory notice u/s 148 of the IT Act, 1961 was issued.

In response to notice u/s 148, the assessee filed his ITR. The AO after considering the submissions made an addition on account of failure of assessee to substantiate the genuineness and creditworthiness of the creditors.

Before the CIT(A), apart from challenging the addition on merit, the assessee challenged the validity of the reassessment proceedings on the ground that the notice u/s 148 was not served on the assessee.

However, the CIT(A) dismissed the appeal of the assessee.

The Tribunal observed that although the AO had issued notice u/s 148 of the Act to the assessee, the same was never served on the assessee and was returned back by the Postal Authorities and the same was available in the case record.

The Tribunal further observed that as per the relevant provisions, before making the assessment,  reassessment or recomputation under section 147, the Assessing Officer shall serve on the assessee a notice requiring him to furnish within such period, as may be specified in the notice, a return of his income or the income of any other person in respect of which he is assessable under this Act during the previous year corresponding to the relevant assessment year, in the prescribed form  and  verified  in  the  prescribed  manner.

The Tribunal noted that in the instant case, although a notice had been issued by the AO, however, the same had not been served on the assessee since the notice issued by the AO through speed post was returned by the Postal Authorities unserved and there was no other evidence on record to show that the AO has made any other effort such as sending the Ward Inspector to serve the notice personally or through affixture.

As a result, the Tribunal held that the reassessment proceedings finalised by the AO without serving the notice u/s 148 was invalid. 

Accordingly, the ITAT set aside the order of the CIT(A) and allowed the jurisdictional ground raised by the assessee challenging the validity of the reassessment proceedings.

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