SATNAM SINGH V. CIT AAYAKAR BHAWAN JALANDHAR

ITA/392/2009

AI Insights

The case involves an appeal by the assessee, Satnam Singh, against the order of the Income Tax Appellate Tribunal, Amritsar Bench, which remanded the matter to the Assessing Officer (AO) for reissuing a notice under section 148 of the Income Tax Act, 1961, and deciding the matter afresh. The Tribunal found the initial service of the notice defective as it was not affixed in the presence of two witnesses, leading to the remand. The High Court of Punjab and Haryana, however, found that the Tribunal's decision to remand without adjudicating on the merits was unjustified, especially since the CIT(A) had already upheld the assessee's plea on merits.

• Counselvise Citation: [2009] 140 COUNSELVISE.COM (IT) 671072 (HC-CHANDIGARH)
• Appeal Type: Others
• Pronouncement Date: 13-10-2009
• Assessment Year: misc
• Other Referred Cases: CIT v. Kanti Kumar Sharma, CIT, Kerala v. Thayaballi Mulla Jeevaji Kapasi
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Others
• Court: HIGH COURT
• Department Lawyers: VIVEK SETHI
• Assessee Lawyers: S K MUKHI
• Keywords: Affixation; Reassessment; Remand; Defective service of notice
• Section: 148; 144; 260A

Judgement Text

"IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH. ITA No.392 of 2009 Date of decision: 13.10.2009 Satnam Singh -----Appellants Vs. Commissioner of Income Tax, Jalandhar. ----Respondent CORAM:- HON'BLE MR JUSTICE ADARSH KUMAR GOEL HON'BLE MR. JUSTICE GURDEV SINGH Present:- Mr. S.K.Mukhi, Advocate for the appellant. Mr. Vivek Sethi, Standing Counsel for the respondent. 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 Tax Appellate Tribunal, Amritsar Bench dated 30.12.2008 in ITA No.436/ASR/2008, for the assessment year 200-01, proposing to raise following substantial questions of law:- ITA No.392 of 2009 (O&M) “Whether, on the facts and circumstances of the case, the Tribunal was justified in setting aside the matter on legal issue of service of notice under section 148 of the Income Tax Act, 1961 to the file of the AO for reissuing the same and deciding the matter afresh having held the service of impugned notice as defective by relying upon the judgment of Hon’ble Supreme Court of India which finding of the ITAT is perverse, unjustified and illegal as the same leads to extension of time limit for the issuing of notice under section 148 which having become time barred? ii) Whether, on the facts and circumstances of the case, the Tribunal was justified in setting aside the order of the CIT(A) on the legal issue of defective service of notice under section 148 of the Income tax Act, 1961 to the file of the AO for fresh action and thereby directing him to go through its order once again and thereby allowing him to play a second inning which is against the established principles of law in view of judgment of this Hon’ble Court in the case of CIT v. Kanti Kumar Sharma as reported in 179 ITR 114 (P&H)? 2 ITA No.392 of 2009 (O&M) iii) Whether the order of the Tribunal is perverse and against the provisions of law?” 2. The Assessing Officer issued notice under section 148 of the Act. Since service could not be effected in normal course, the same was served by affixation at last known address i.e. residential address of the assessee. Thereafter, re-assessment was made under section 144 of the Act and investment of Rs.7 lacs in purchase of house by the assessee was treated to be investment from undisclosed sources. On appeal, the CIT(A) accepted the explanation of the assessee, after holding that the reassessment to be valid. The Tribunal held that affixation was not in presence of two persons and thus, notice itself was bad. After recording this finding, the matter was remanded to the Assessing Officer for passing a fresh order, after giving opportunity to the assessee, after duly serving him in accordance with law. 3. Learned counsel for the appellant submits that if notice was improper, nothing survived. In any case, there was no occasion to remand the case when the CIT(A) had upheld the plea of the assessee on merits and the Tribunal 3 ITA No.392 of 2009 (O&M) 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) 66 ITR 147, to submit that absence of proper notice would vitiate all the proceedings. 4. We called upon learned Standing Counsel for the department Shri Vivek Sethi to respond to the above criticism of the impugned order. He submitted that defect in service did not vitiate the proceedings. We need not go into this question at this stage. Even if the Tribunal was to hold that defect in service of notice did not vitiate the proceedings, the CIT(A) having set aside reassessment on merits, the Tribunal was required to adjudicate upon the issue on merits one way or the other. There was no justification for remanding the matter. 5. Thus, substantial question of law whether order of remand, without adjudicating upon the issues before the Tribunal could be justified, arises for consideration and has to be decided in favour of the assessee. The impugned order cannot be sustained. 4 ITA No.392 of 2009 (O&M) 6. Accordingly, this appeal is allowed. The impugned order of the Tribunal is set aside and the matter is remanded for fresh decision in accordance with law. The parties will appear before the Tribunal for further proceedings on December 23, 2009. (Adarsh Kumar Goel) Judge October 13, 2009 (Gurdev Singh) ‘gs’ Judge 5 "