Commissioner Of Income Tax-I, Ludhiana v. Sh. Avtar Singh

IN THE HIGH COURT OF PUNJAB AND HARYANA ATCHANDIGARH. I.T.A. No. 449 of 2007DATE OF DECISION : 14.02.2008 Commissioner of Income Tax-I, Ludhiana .... APPELLANT Versus Sh. Avtar Singh ..... RESPONDENT CORAM :- HON'BLE MR. JUSTICE SATISH KUMAR MITTALHON'BLE MR. JUSTICE RAKESH KUMAR GARGHON'BLE MR. JUSTICE RAKESH KUMAR GARG Present:Mr. Sanjiv Bansal, Advocate, for the appellant-revenue.for the appellant-revenue. * * * SATISH KUMAR MITTAL, J. The instant appeal filed by the revenue under Section 260-A of the Income Tax Act, 1961 (hereinafter referred to as `the Act') is directedagainst the order dated 13.4.2007 passed by the Income Tax AppellateTribunal, Chandigarh Bench `A' Chandigarh (hereinafter referred to as `theTribunal') in ITA No. 181/CHANDI/2006 in case of the respondent for theAssessment Year 1998-99, by raising the following substantial questions oflaw :- (i) Whether on the facts and in the law, the Tribunal wasjustified in holding that reassessment has been madewithout mandatory requirement of service of notice underSection 148 of the Act, by ignoring the fact that noticejustified in holding that reassessment has been madewithout mandatory requirement of service of notice underSection 148 of the Act, by ignoring the fact that notice issued on 30.3.2001 within the limitation under Section 149(1) of the Act was sent through Registered Post, whichtantamount to valid service as per section 27 of the GeneralClauses Act, 1897? In the present case, during the course of a search operation atthe business premises of M/s Damini Resorts & Builders Pvt. Ltd., a copy ofagreement of sale of land, allegedly entered into by the assessee, respondentherein, with said M/s Damini Resorts & Builders Pvt. Ltd., was found.According to that agreement of sale, the assessee had agreed to sell hisshare of land situated in village Dhandra for a sum of Rs. 16,42,522/-.However, subsequently the registered sale deed with regard to the said landwas executed only for Rs. 5,22,641/- by suppressing sale consideration tothe tune of Rs. 11,19,920/-. It is the case of the revenue that the assessee did not file returnof income in respect of capital gain arising from the aforesaid saletransaction. With the object to bring the said capital gain to tax, theAssessing Officer issued notice under Section 148 of the Act to the assesseeon 30.3.2001. Subsequently, notices under Section 142 (1) of the act wereissued, but no return of income was filed by the assessee in response tothose notices. Consequently, the Assessing Officer completed theassessment to the best of his judgment under Section 144 of the Act andassessed the long term capital gain at Rs. 13,70,680/-. Aggrieved against the said order, the assessee filed an appeal before the Commissioner of Income Tax (Appeals)-I, Ludhiana [hereinafterreferred to as `the CIT (A)']. Since nobody attended the proceedings, therefore, the said appeal was dismissed, and the order of the AssessingOfficer was confirmed. Subsequently, the assessee filed application for re-calling the said order. The application was also dismissed by the CIT (A).Against the said order, the assessee approached the Tribunal, who videorder dated 22.9.2005 allowed the appeal of the assessee and directed theCIT (A) to decide the appeal filed by the assessee on merits. Consequently,the CIT (A) allowed the appeal of the assessee holding that the assumptionof jurisdiction by the Assessing Officer was wrong as there was no serviceof notice under Section 148 of the Act. before the Commissioner of Income Tax (Appeals)-I, Ludhiana [hereinafterreferred to as `the CIT (A)']. Since nobody attended the proceedings, therefore, the said appeal was dismissed, and the order of the AssessingOfficer was confirmed. Subsequently, the assessee filed application for re-calling the said order. The application was also dismissed by the CIT (A).Against the said order, the assessee approached the Tribunal, who videorder dated 22.9.2005 allowed the appeal of the assessee and directed theCIT (A) to decide the appeal filed by the assessee on merits. Consequently,the CIT (A) allowed the appeal of the assessee holding that the assumptionof jurisdiction by the Assessing Officer was wrong as there was no serviceof notice under Section 148 of the Act. Not satisfied with the order of the CIT (A), the revenuepreferred appeal before the Tribunal, who vide the impugned order dated13.4.2007 has dismissed the appeal, while holding that Section 148 of theAct makes it mandatory for the Assessing Officer to serve a notice beforemaking re-assessment or recomputation under Section 147 of the Act. It hasbeen held that valid service of notice under Section 148 is conditionprecedent for validity of proceedings under Section 147 of the Act. It hasbeen further held that mere issuance of notice under Section 148 within thetime allowed under Section 149 of the Act was not enough, but it has to beproved that notice under Section 148 of the Act was served upon theassessee. We have heard learned counsel for the appellant-revenue andgone through the impugned order passed by the Tribunal. Counsel for the appellant-revenue submits that in the instantcase, notice under section 148 of the Act was sent to the assessee throughRegistered Post on 30.3.2001. Therefore, the same tantamounts to a valid service as per Section 27 of the General Clauses Act, 1897. We are not inclined to accept the submission made by learnedcounsel for the appellant-revenue, as in the present case, no evidence in theshape of postal receipt was produced by the revenue before the Authoritythat actually, the said notice was sent by registered post and was servedupon the assessee. The Tribunal has affirmed the categoric finding recordedby the CIT (A) that in the present case, the revenue has not led any evidenceto show that notice under Section 148 of the Act was actually served uponthe assessee. In our view, the CIT (A) as well as the Tribunal have recordeda pure finding of fact, after considering the material available on record tothe effect that notice under Section 148 of the Act was actually not servedupon the assessee, which was a condition precedent for making re-assessment or recomputation under Section 147 of the Act. We do not findany ground to interfere in the said finding of fact, and in our view nosubstantial question of law is arising from the order of the Tribunal. Dismissed. ( SATISH KUMAR MITTAL )JUDGE February 14, 2008 ndj ( RAKESH KUMAR GARG )JUDGE