Satnam Singh v. Commissioner Of Income Tax, Jalandhar

IN THE HIGH COURT OF PUNJAB AND HARYANAAT CHANDIGARH. ITA No.392 of 2009Date of decision: 13.10.2009 Satnam Singh -----Appellants Vs. Commissioner of Income Tax, Jalandhar. ----Respondent CORAM:- HON'BLE MR JUSTICE ADARSH KUMAR GOELHON'BLE MR. JUSTICE GURDEV SINGH Present:- Mr. S.K.Mukhi, Advocate for the appellant. Mr. Vivek Sethi, Standing Counsel for therespondent. Adarsh Kumar Goel,J. 1. This appeal has been preferred by the assessee under section 260A of the Income Tax Act, 1961 (in short,‘the Act’) against the order passed by Income TaxAppellate Tribunal, Amritsar Bench dated 30.12.2008 inITA No.436/ASR/2008, for the assessment year 200-01,proposing to raise following substantial questions of law:- “Whether, on the facts and circumstances ofthe case, the Tribunal was justified in settingaside the matter on legal issue of service ofnotice under section 148 of the Income TaxAct, 1961 to the file of the AO for reissuingthe same and deciding the matter afreshhaving held the service of impugned notice asdefective by relying upon the judgment ofHon’ble Supreme Court of India whichfinding of the ITAT is perverse, unjustifiedand illegal as the same leads to extension oftime limit for the issuing of notice undersection 148 which having become timebarred? ii) Whether, on the facts and circumstances ofthe case, the Tribunal was justified in settingaside the order of the CIT(A) on the legalissue of defective service of notice undersection 148 of the Income tax Act, 1961 to thefile of the AO for fresh action and therebydirecting him to go through its order onceagain and thereby allowing him to play asecond inning which is against the establishedprinciples of law in view of judgment of thisHon’ble Court in the case of CIT v. KantiKumar Sharma as reported in 179 ITR 114(P&H)? iii) Whether the order of the Tribunal isperverse and against the provisions of law?” 2.The Assessing Officer issued notice under section 148 of the Act. Since service could not be effectedin normal course, the same was served by affixation at lastknown address i.e. residential address of the assessee.Thereafter, re-assessment was made under section 144 ofthe Act and investment of Rs.7 lacs in purchase of houseby the assessee was treated to be investment fromundisclosed sources. On appeal, the CIT(A) accepted theexplanation of the assessee, after holding that thereassessment to be valid. The Tribunal held that affixationwas not in presence of two persons and thus, notice itselfwas bad. After recording this finding, the matter wasremanded to the Assessing Officer for passing a freshorder, after giving opportunity to the assessee, after dulyserving him in accordance with law.3.Learned counsel for the appellant submits that ifnotice was improper, nothing survived. In any case, therewas no occasion to remand the case when the CIT(A) hadupheld the plea of the assessee on merits and the Tribunal did not set aside the said finding. Reliance has been placed upon judgment of the Hon’ble Supreme Court in CIT,Kerala v. Thayaballi Mulla Jeevaji Kapasi, (1967) 66ITR 147, to submit that absence of proper notice wouldvitiate all the proceedings. 4.We called upon learned Standing Counsel for the department Shri Vivek Sethi to respond to the abovecriticism of the impugned order. He submitted that defectin service did not vitiate the proceedings. We need not gointo this question at this stage. Even if the Tribunal was tohold that defect in service of notice did not vitiate theproceedings, the CIT(A) having set aside reassessment onmerits, the Tribunal was required to adjudicate upon theissue on merits one way or the other. There was nojustification for remanding the matter. did not set aside the said finding. Reliance has been placed upon judgment of the Hon’ble Supreme Court in CIT,Kerala v. Thayaballi Mulla Jeevaji Kapasi, (1967) 66ITR 147, to submit that absence of proper notice wouldvitiate all the proceedings. 4.We called upon learned Standing Counsel for the department Shri Vivek Sethi to respond to the abovecriticism of the impugned order. He submitted that defectin service did not vitiate the proceedings. We need not gointo this question at this stage. Even if the Tribunal was tohold that defect in service of notice did not vitiate theproceedings, the CIT(A) having set aside reassessment onmerits, the Tribunal was required to adjudicate upon theissue on merits one way or the other. There was nojustification for remanding the matter. 5.Thus, substantial question of law whether orderof remand, without adjudicating upon the issues before theTribunal could be justified, arises for consideration and hasto be decided in favour of the assessee. The impugnedorder cannot be sustained. 6.Accordingly, this appeal is allowed. Theimpugned order of the Tribunal is set aside and the matteris remanded for fresh decision in accordance with law. The parties will appear before the Tribunalfor further proceedings on December 23, 2009. (Adarsh Kumar Goel)Judge October 13, 2009‘gs’ (Gurdev Singh)Judge