Facts of the Case

The assessee filed the return of income for Assessment Year 2006-07. The assessee contended that no notice under Section 143(2) of the Income Tax Act was served within the statutory limitation period prescribed under law. Despite this, the Assessing Officer proceeded with the assessment and finalized the assessment on 12.12.2008 by making additions to the income of the assessee.

The assessee challenged the assessment before the Commissioner of Income Tax (Appeals), contending that the assessment proceedings were invalid due to non-service of notice within the prescribed period. However, the CIT(A) rejected the contention on the basis that notice had allegedly been issued through the assessee’s Chartered Accountant.

The assessee further appealed before the Income Tax Appellate Tribunal (ITAT), which upheld the order of the CIT(A), observing that the assessee had participated in the assessment proceedings, though under protest.

Issues Involved

  1. Whether notice under Section 143(2) of the Income Tax Act was validly served upon the assessee within the statutory limitation period.
  2. Whether participation in assessment proceedings under protest cures the defect of non-service of statutory notice.
  3. Whether the burden to prove valid service of notice lies upon the Revenue.

Petitioner’s Arguments

  • The assessee argued that no notice under Section 143(2) was served within the statutory period prescribed by law.
  • It was contended that the first notice was received only in October 2007, beyond the limitation period.
  • The assessee consistently objected to the validity of the assessment proceedings through written objections dated 05.11.2007 and 12.05.2008.
  • It was further argued that mere participation in assessment proceedings under protest does not validate an otherwise illegal assessment proceeding.

Respondent’s Arguments

  • The Revenue contended that notice dated 28.06.2007 under Section 143(2) had been issued through the Chartered Accountant representing the assessee.
  • It was argued that the assessee participated in the assessment proceedings and filed details before the Assessing Officer from time to time, thereby validating the proceedings.
  • The Revenue relied upon the findings of the CIT(A) and ITAT to support the validity of the assessment.

Court Order / Findings

The Delhi High Court held in favour of the assessee and against the Revenue. The Court observed that although carbon copies of notices were available on record, there was no material to establish that such notices were actually dispatched before the limitation period expired.

The Court further noted that:

  • The notice was neither sent through registered post nor affixed at the assessee’s address.
  • Therefore, the statutory presumption under Section 7 of the General Clauses Act could not be invoked.
  • Participation in assessment proceedings under protest could not cure the defect of non-service of mandatory notice.
  • The Revenue failed to discharge the burden of proving due service of notice under Section 143(2).

Accordingly, the Court set aside the findings of the ITAT and CIT(A) and allowed the appeal of the assessee.

Important Clarification

The judgment reiterates that:

  • Service of notice under Section 143(2) within the prescribed limitation period is mandatory.
  • Mere issuance of notice is insufficient unless proper service is proved.
  • Participation in assessment proceedings under protest does not amount to waiver of jurisdictional defects.

The burden to establish valid service of notice lies entirely upon the Revenue authorities.

Sections Involved

  • Section 143(2) of the Income Tax Act, 1961
  • Section 7 of the General Clauses Act, 1897

Link to Download the Order https://delhihighcourt.nic.in/app/case_number_pdf/2015:DHC:1374-DB/RKG11022015ITA182014.pdf

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