By TIOL News Service

CHENNAI, JAN 03, 2017: THE ISSUE IS - Whether dispatch register can be construed as sufficient evidence for proving deemed service of notice u/s 148 by the AO, in absence of any authenticated signature of AO on the same. NO IS THE VERDICT.

Facts of the case:

The assessee hospital during the subject year, had claimed a sum of Rs.1,25,54,244/- as revenue expenditure u/s 37 being software procured for MRI and Cardio Vascular System Cathlab machines. After a scrutiny assessment, the returns filed by assessee were accepted and orders have been passed showing balance tax payable as 'nil'. However, subsequently, a notice u/s 148 was issued without assigning any reason for re-opening the assessment. Upon demand of assessee, the reasons were furnished noting that it was due to excess carry forward of MAT credit u/s 115JA to the tune of Rs.38.55 lakhs.

On appeal, the HC held that,

++ As per section 148, the despatch of notice ought to have taken place on March 31, 2004. Then necessarily what is to be considered with reference to the show cause notice is date of despatch for the purpose of reckoning the period of limitation in the service of notice. Further, it appears that even with regard to extending of the benefit of section 27 of the General Clauses Act, with regard to deemed service of notice, on reading clause 27 of the General Clause Act, the Single Judge proceeded on the premises that notice shown to have been served only on Feb 10, 2015. In this regard, the Department sought to produce the despatch register maintain by them to contend that there is an endorsement on Mar 31, 2004, but, it is not authenticated with any signature therein. Further, the other pages of the despatch register contain signature. In such circumstances, although the Single Judge proceeded on the basis that date of service of notice would be the date of determination, but even otherwise, though it is mentioned as Mar 31, 2004, it does not carry any authenticity for having despatched the notice on that date;

++ What has been contemplated is mere escapement of assessment which is insufficient for initiating of action after expiry of four years from the end of assessment year. The Single Judge also observed that no proof had been shown that the notice has been served before the expiry of six years period and it has been accepted that the same has been served on the assessee on Feb 10, 2005, however, a stand has been taken by the Department that the notice must have been sent by registered post but, since the proof for the same has not been filed before the court, the court cannot accept the stand of counsel for the Department. Further, it has been observed by the Single Judge that though the wordings used in the section concerned is issue of notice, that does not mean affixing the signature itself will amount to issue of notice, but, the said notice has to be set in motion to get the meaning of the term 'issue of notice' and as far as the case in hand is concerned, since the notice has been served on the assessee by hand delivery only in February 2005, in the absence of contention to the contrary, the stand of the assessee has to be accepted. Considering the above facts and circumstances, this court is of the view that there is no scope for interference in the appeal filed by the Department.

(See 2017-TIOL-15-HC-MAD-IT)