S. 148 notice issued within limitation period is valid even if service is later

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ITO vs. Lal Chand Agarwal (ITAT Agra Third Member)

S. 148 notice "issued" within limitation period is valid even if "service" is later

For AY 1998-99, the AO issued a notice u/s 148 dated 28.3.2005 (within the limitation period of 6 years). However, as this notice was returned un-served, a second notice dated 17.6.2005 (beyond 6 years) which issued & served. The assessee contended that since the AO had issued a second notice, the first one was non-est and as the second notice was issued beyond limitation period, the assessment proceedings were null and void. The CIT (A) upheld the plea. Before the Tribunal, the AM held that there was a difference between "issue" of the notice and its "service" and that the notice dated 28.3.2005 was valid, though not served, and the second notice was invalid and non-est. The JM took a contrary view and held that the first notice was invalid and the second notice having been issued after the limitation period did not give jurisdiction to make the assessment. On a reference to the Third Member, HELD:

The Act makes a clear distinction between "issue of notice" and "service of notice". S. 149 which prescribes the period of limitation provides that no notice u/s 148 shall be "issued" after the expiry of the limitation period. The "service" of the notice is necessary u/s 148 only to make the order of assessment. Once a notice is "issued" within the period of limitation, the AO has jurisdiction to make the assessment. A notice is considered to have been "issued" if it is placed in the hands of a person authorized to serve it, and with a bona fide intent to have it served. Service of the notice is not a condition precedent to conferment of jurisdiction on the AO but it is a condition precedent to the making of the order of assessment. On facts, as the AO had issued the notice within the period of limitation, he had jurisdiction to reopen the assessment (R.K.Upadhyay vs. Patel 166 ITR 163 (SC) followed)

See also Kanubhai M. Patel HUF 334 ITR 25 (Guj) ("issue" not complete till handed over to P.O) & Sanjay Kumar Garg vs. ACIT (ITAT Delhi)

Related Judgements
Balwant Rai Wadhwa vs. ITO (ITAT Delhi) U/s 149(1)(b) a notice u/s 148 cannot be issued after the issue of 6 years from the end of the AY. In Haryana Acrylic vs. CIT 308 ITR 38 it was held that a notice u/s 148 without the communication of the reasons there for is meaningless inasmuch as…
Mayawati vs. CIT (Delhi High Court) S. 149, which imposes the limitation period, requires the notice to be "issued" but not "served" within the limitation period. Once a notice is issued within the period of limitation, jurisdiction becomes vested in the AO to proceed to reassess. Service is not a condition precedent to conferment of…
Sanjay Kumar Garg vs. ACIT (ITAT Delhi) There is a difference between "issue" and "service". To obtain jurisdiction to assess/reassess the escaped income, the s. 148 notice has to be "issued" but need not be "served". Service is not a condition precedent to conferment of jurisdiction on the AO but a condition precedent only to the….
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latest one is

[2016] 73 taxmann.com 325 (SC)

IT: Where Assessing Officer had reopened assessment of assessee and sent notice to him through postal department at address contained in his PAN card, which was returned back with remark 'left', and assessee challenged reopening of assessment contending that remark 'left' was totally incorrect, since assessee had not joined postal department to question why remark 'left' was made, only on ground of non service of notice, reassessment proceedings could not be terminated SLP was dismissed

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[2016] 73 taxmann.com 325 (SC)

SUPREME COURT OF INDIA

Atulbhai Hiralal Shah

v.

Deputy Commissioner of Income-tax*

Kurian Joseph AND Rohinton Fali Nariman, JJ.

Special Leave to Appeal (C) No. 22988 of 2016†

AUGUST  12, 2016

Section 148 of the Income-tax Act, 1961 - Income escaping assessment - Issue of notice for (Service of notice) - Assessment year 2008-09 - Assessing Officer had reopened assessment of assessee and sent notice for service to him through postal department at address contained in his PAN Card, which was returned back by postal department with remark 'left' - Assessee challenged process of reopening of assessment contending that remark of postal department 'left' was totally incorrect, since he had received various communications from Income Tax Department at address contained in PAN card - High Court held that since assessee had not joined postal department to question why remark 'left' was made and Assessing Officer was entitled to proceed on basis of remark of postal department, only on ground of non service of notice, reassessment proceedings could not be terminated - Whether since assessee did not press SLP, same was to be dismissed as not pressed - Held, yes [Para 2] [In favour of revenue]

CASE REVIEW

Atulbhai Hiralal Shah v. C.P. Meena, Dy. CIT [2016] 73 taxmann.com 320 (Guj.) [SLP dismissed].

Ms. Manisha T. Karia and Ms. Srishti Rani, Advs. for the Petitioner.

ORDER

1. The learned counsel for the petitioner submits that she does not want to press the petitions.

2. Accordingly, the special leave petitions are dismissed as not pressed.