Reopening notice u/s 148 served by affixture at a wrong address and consequent re-assessment made u/s 147/148 invalid.

In a latest judgment, ITAT Chandigarh has held that notice u/s 148 of the Income Tax Act, 1961 served upon by affixture at a wrong address and consequent re-assessment made under section 147/148 cannot be held to be valid.

Case Details:
I T A No s . 335 & 336/ CHD/2015 Assessment Year: 2006-07
ITO vs. Om Parkash Kukreja
Date of Judgment/Order: 08/04/2016

Brief Facts of the Case:
The assessee had filed original return of income on 11.01.2007. Later on, case was reopened by issue of notice under section 148 after recording the reasons The notice u/s 148 was served upon assessee on 26.03.2013 by affixture. Assessee filed reply stating that no notice under section 148 had been received by him. The Assessing Officer, however, held that the notice had been duly served by affixture, therefore, it was a proper service and accordingly, completed the assessment under section 147/148 vide order dated 27.03.2014.

The assessee challenged the re-assessment order before CIT(Appeals) and contended that proceedings were invalid and barred by limitation since no notice u/s 148 was served. That the Assessing Officer had issued notice under section 148 at the address “House No. 1626, Sector 18-D, Chandigarh” whereas the assessee was residing at house No. 1627, Sector 18-D, Chandigarh. Thus non-receipt of the valid notice had rendered re-assessment proceedings void ab-initio. CIT(A) annulled the re-assessment proceedings holding that no notice u/s 148 was served upon the assessee.

Contentions of the Revenue:
Before ITAT, the Revenue stated that the assessee had himself given his address at house No. 1626, Sector 18-D, Chandigarh in a letter dated 24.01.2014 filed in response to notice u/s 142(1) dated 17.01.2014. It was further contended that even for lack of notice, it would not mean that Revenue authorities had no jurisdiction to assess and such a defect is curable.

Contentions of the Assessee:
The assessee submitted that assessee has not received any notice under section 148 of the Act and was not residing at house No. 1626. regarding letter dated 24.01.2014, assessee stated that he had mentioned the address of house no 1626, because it was mentioned in the notice under section 142(1) in respnse to which the letter was written. He further submitted that the said letter was filed much later than the service of the notice under section 148 by affixture on dated 26.03.2013 and would not cure the illegality already committed by the Assessing Officer.

Excerpts from ITAT Judgment:

In this judgement, Hon’ble Madras High Court has referred to the decision of Hon’ble Supreme Court in the case of Narayana Chetty Vs ITO 35 ITR 388 in which it was held by the Hon’ble Supreme Court that; “The notice prescribed by Section 34 of the Indian Income Tax Act, 1992, for the purpose of initiating reassessment proceedings is not a mere procedural requirement, that the service of the notice on the assessee is a condition precedent to the validity of any re-assessment made under this Section and that if no notice is issued or if the notice issued is shown to be invalid, then the proceedings taken by the Assessing Officer without a notice or in pursuance of an invalid notice would be illegal and void”.

…… It may also be noted here that in the return of income, originally filed by assessee, the assessee has given his address to be house No. 1627, Sector 18-D, Chandigarh. Therefore, Assessing Officer has recorded both wrong facts in the reasons recorded for re-assessment i.e. wrong address of the assessee as well as that no return of income have been filed…….The Assessing Officer, thereafter, completed re-assessment on 27.03.2014 and correctly mentioned the address of the assessee in the reassessment order as House No. 1627, Sector 18-D Chandigarh. Therefore, the Assessing Officer did not attempt to verify the address of the assessee from his own record as well as did not mention the correct address in the notice under section 148 of the Income Tax Act.

The ld. DR heavily relied upon letter of the assessee dated 24.01.2014 which was issued in response to notice under section 142(1) dated 17.01.2014 in which assessee has mentioned the address to be house No. 1626, Sector 18-D Chandigarh. First of all, this letter is filed after alleged service of the notice under section 148 by affixture, therefore, it may not be relevant for the purpose of deciding the issue. Further, according to submission of ld. counsel for the assessee, this wrong address was mentioned because the same address was mentioned in the notice of the Assessing Officer under section 142(1) of the Act as well. Therefore, explanation of the assessee is acceptable that again wrong address has been mentioned in this reply because it was mentioned in the notice issued by Assessing Officer under section 142(1) which was in reference to the reply filed before the Assessing Officer.

The ld. DR relied upon decision of the Supreme Court in the case of M/s Deepak Agro Foods Vs State of Rajasthan (supra) in which the issue was with reference to proceedings under Rajasthan Sales Tax Act in which Hon’ble Supreme Court observed there is a fine distinction between the orders which are null and void and the orders which are irregular, wrong or illegal. Where an authority making order lacks inherent jurisdiction, such order would be without jurisdiction, null, non est and void ab initio as defect of jurisdiction of an authority goes to the root of the matter and strikes at its very authority to pass any order and such defect cannot be cured even by consent of the parties.

it is clear that notice under section 148 of the Act dated 22.03.2013 have not been served upon assessee, therefore, the re-assessment made under section 147/148 cannot be held to be valid because the same is bad in law. There is no question of service by affixture by the Inspector at the wrong address upon assessee.

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