Commissioner of Income Tax vs Sh. Laxmi Narain

M.M. Kumar, J.—This order shall dispose of ITA Nos. 205, 206 and 207 of 2004 because common questions of law have been raised in all these appeals. The necessary details of all these appeals along with related number of the appeal in this Court and before The Income Tax Appellate Tribunal, New Delhi (for brevity ''the Tribunal) are as under:

Tribunal

ITA No. 205/2004 ITA No. 1538 (Del) 1998 Asstt. Year 1987-88 Dated 23.9.2003

ITA No. 206/2004 ITA No. 1539 (Del) 1998 Asstt. Year 1988-89 Dated 23.9.2003

ITA No. 207/2004 ITANo. 1540 (Del) 1998 Asstt. Year 1989-90 Dated 23.9.2003

The revenue has claimed that the following substantial questions of law would arise for consideration of this Court:

Whether in the facts and circumstances of the case the ITAT was justified in annulling the assessment for the assessment year under consideration holding that after dropping the proceedings u/s 147/148 no fresh notice u/s 148 was issued to the assessee and without issuance of fresh notice u/s 148 assessment cannot withhold the test of validity ignoring that there was no order dropping the proceedings initiated with the issue of notice u/s 148 which was served upon the assessee''s brother in 27.9.1991.

Whether in the facts and circumstances of the case the ITAT was justified in holding that there was no proper service of notice issued u/s 148 upon the assessee even when the notice was served upon Sh. Janardhan, real brother of the assessee on 27.9.1991 in accordance with Rule 15 Order V of the first schedule of Civil Procedure Code.

Whether in the facts and circumstances of the case the ITAT was justified in holding that the return of income was filed in response to notices issued u/s 142(1) and not in response to notice u/s 148 ignoring that while submitting the return of income the assessee has himself stated that no notice u/s 148 was received by the assessee and return of income was filed under protest.

Whether in the facts and circumstances of the case the ITAT was justified in holding that the assessment order made u/s 144 was not assessment order made on the basis of return filed u/s 148 ignoring that the return of income was filed in response to notice issued u/s 148 though under protest.

Whether in the facts and circumstances of the case the ITAT was justified in holding that the proceedings initiated with the issue of notice u/s 148 were dropped by the A.O. Vide order sheet entries dated 31.3.1992 ignoring that no judgment was pronounced on 31.3.1992 as there was no order u/s 143/3/147 regarding the dropping of proceedings and there was no corresponding entry in the D&CR recording dropping of such proceedings and accordingly proceedings remained alive in the absence of any valid order under the relevant provisions of law.

Whether in the facts and circumstances of the case the ITAT was justified in holding that no notice u/s 148 was issued after dropping proceedings on 31.3.1992 ignoring that in the absence of any order u/s 147/143(3) the proceedings initiated with the issue of notice u/s 148 dated 27.9.1991 remained alive and pending and there was no requirement of law for issue of fresh notice u/s 148.

Whether in the facts and in the circumstances of the case, the ITAT was justified in ignoring the intention and conduct of the assessee in continuously avoiding the service of notices sent by the Department in connection with various proceedings.

After hearing learned Counsel for the revenue we find that one question which permeats all the questions claimed by the revenue is whether notice u/s 148 of the Act was issued and served on the assessee before framing assessment which is a condition precedent. Non service of such a notice on the proper person would go to the roots and cannot be condoned. There are categorical findings of fact recorded by the Tribunal that the revenue has not been able to produce any material to show that any notices u/s 148 of the Income Tax Act, 1961 (for brevity ''the Act'') was served upon the assessee in respect of the Assessment years under consideration. The Tribunal has also noticed that the matter was time and again sent back to the Assessing Officer by the CIT (Appeals) and no authority could record positive and categoric finding that notice u/s 148 of the Act was served upon the assessee. It appears that there is no proof with regard to the service on the assessee u/s 148 of the Act. The Tribunal has further noticed that proceedings in respect of assessment year under consideration were dropped on 31.9.2002 with specific findings by the Assessing Officer that notice u/s 148 could not be served. These are pure findings of fact which would not give rise to any question of law much less a substantive question of law. It is well settled that issuance of a notice u/s 148 of the Act is a condition precedent for framing assessment order u/s 147 of the Act. It is equally well settled that if no such notice is issued or notice issued is invalid and not in accordance with law or notice is not served on the proper person then assessment framed would be illegal and without jurisdiction. Therefore, we find that the Tribunal has taken correct view in these appeals. Accordingly, the appeals are dismissed.

A photocopy of this order be placed on the files of connected cases.