By TIOL News Service

RAIPUR, MAY 14, 2018: THE ISSUE is - Whether notice served on the assessee u/s 148 through a Chartered Accountant can be treated as a valid notice based on which the AO can finalise such proceedings. AND THE ANSWER IS NO.

Facts of the case:

The assessee company, had returned income for the AY 2009-10, which was duly assessed by the AO. However, on 13-4-2016, the assessee was served with notice u/s 148(1) through his Chartered Accountant (CA). In reply, the assessee had returned income on 2-5-2016 and thereafter, sought reasons to believe from the AO. Thereafter, again, on 4-5-2016, the assessee was served with notice u/s 143(2) for the relevant AY. On 9-5-2016, the assessee filed objections against the reasons provided for reopening the completed assessment u/s 148 by stating that the disputed notice dated 15-3-2016 was never served upon it. Further, the assessee had also submitted that it already changed the address and the same was updated in the PAN database and the new address was also updated in the tax returns. However, the assessee's objections were rejected by stating that notice was issued on 15-3-2016 on the address shown in the assessee's tax returns but, the same remained unserved by citing a reason to be "left". Aggrieved assessee has preferred the present writ by stating that no notice was issued within the limitation period as prescribed u/s 149(1)(b) r/w Sec. 148(1) and, hence, the initiation of reassessment proceeding was barred by limitation.

High Court held that,

++ it is the case of the Revenue that notice was issued u/s 148(1) by the officer concerned on 15-3- 2016 on the address shown in the return and it was sent for delivery well within the period of limitation through speed post for delivering to the assessee, which is seriously disputed by the assessee and even prayed for production of said notice, but ultimately, it has not been produced by the Revenue on record. The said notice was ultimately, said to have been returned unserved on 28-3-2016 and served to the assessee through its CA on 13-4-2016 after the period of limitation which is 31-3-2016. The notice dated 13-4-2016 is filed along with the writ petition in which the assessee's address;

++ burden to establish that notice u/s 149(1)(b) r/w Sec. 148(1) has been issued to the assessee was on the Revenue which the Revenue has failed to discharge, as the Revenue has clearly failed to establish that the notice was issued on or before 31-3-2016 on the assessee's correct address and it was dispatched on or before 31-3-2016 and it was put to the proper serving officer for serving in accordance with law. Therefore, I have no hesitation to hold that no notice u/s 149(1)(b) r/w Sec. 148(1) was issued to the assessee well within the period of limitation on or before 31-3-2016 on the officially notified correct address available in the official record for service of notice to the assessee which is a jurisdictional fact and condition precedent for initiation of assessment proceeding u/s 148(1);

++ it is the case of the Revenue that the assessee has participated in the assessment proceedings after service of notice through CA and filed return and also raised objections and objections were decided on 18-7-2016, therefore, the assessee is deemed to have waived the service of notice u/s 149(1) relying upon Sec. 292BB. A careful perusal of the said provision would show that a proviso is appended to the main provision which provides that the said provision would not apply where the assessee has raised such objection before the completion of such assessment or reassessment. In the instant case, the assessee has raised objections while submitting its reply to the reasons for reassessment on 18-7-2016. No notice was served to the assessee. The plea of Sec. 292BB would not be available to the assessee as the assessee has submitted its objection on 18-7-2016 to the AO prior to the completion of assessment proceeding. Law in this regard is well settled which may be noticed herein profitably. A Full Bench of the Allahabad High Court in the matter of Laxmi Narain Anand Prakash has held that the notice of initiation proceeding u/s 21 of the U.P. Sales Tax Act, 1947 was a condition precedent and not only a procedural requirement. The mere fact that the assessee had obtained knowledge of the proceeding and participated could not validate the proceeding being initiated without jurisdiction. It has been subsequently held that "it is firmly established that where a Court or Tribunal has no jurisdiction, no amount of consent, acquiescence of waiver can create it";

++ on the basis of legal analysis, I have no hesitation to hold that no notice was served to the assessee u/s 148(1) and service of notice to the CA of the assessee is not service at all and participation of the assessee by filing return and filing objection to the notice to the reasons to believe cannot be held to be a valid service of notice as held by the Delhi High Court in Chetan Gupta's case and, therefore, it cannot be held that the assessee was served with notice u/s 148(1). Thus, having answered both the questions in favour of the assessee and against the Revenue, I hold that neither notice u/s 148(1) within the period of limitation as prescribed in Sec. 149(1)(b) was issued to the assessee nor it was served in terms of Sec. 148(1), therefore, the reassessment proceedings initiated by the said notice and the order deciding objection dated 5-8-2016 are without jurisdiction and without authority of law. Thus, the notices dated 15-3-2016 and 13-4-2016 and the order dated 5-8- 2016 deserve to be and are hereby quashed. The assessee would also be entitled for a cost of Rs. 25,000/-.

(See 2018-TIOL-906-HC-CHHATTISGARH-IT)