Notice u/s 143 (2) received after limitation period could not be held against assessee

• Whether in absence of proper service of notice u/s 143 (2) assessment proceedings for relevant Assessment year can be validated.

Brief facts:

• Assessee filed its return for AY 2006-07 which was selected under scrutiny. Notice u/s 143 (2) was issued on 28.06.2007 which was served on CA of the assessee after 31.07.2007 i.e. after the expiry of 12 months from the end of relevant month in which return is filed. After receipt of notice assessee participated in assessment proceedings.
• The Assessing Officer nevertheless proceeded to frame and finalize the assessment.
• The assessee preferred appeal before CIT (A) who confirmed additions and rejected the plea of assessee that notice u/s 143 (2) was served beyond prescribed time limit. On further appeal ITAT also decided against the assessee.

Contention of the revenue:

• Notice u/s 143 (2) was issued in time and served upon the authorised representative of the assessee which took participate in the assessment proceeding later on and produce material called upon.

Contention of the assessee:

• Notice u/s 143(2) should be served on the assessee latest by 31.07.2007 i.e. within 12 months of the end of the month in which return was furnished.
• Assessee never received notice in time, nor was it proved to the satisfaction of the Tribunal that such service could be deemed to have been served in a manner known to law, the findings rendered by the ITAT are in error of law.
• The learned counsel stressed upon the fact that participation in the assessment proceedings was under-protest and could not have been taken as adverse fact against the claim for not receiving notice.

Held by the Court:

• After examining the record produced by revenue it was found that carbon copies of notice are on record and it was shown that notice u/s 143 (2) was issued before 31.07.2007 but it was not proved that they were dispatched.
• Another important aspect is that the notice was not sent through registered post nor affixed at the assessee’s address known to the revenue so as to allow presumption enacted under Section 7 of the General Clauses Act to operate.
• In these circumstances the notice issued beyond prescribed time limit could held against assessee as done by CIT (A).
• The revenue did not discharge the burden of proving due service of notice which was caused by law upon it.

Conclusion:

It is prescribed under the language of section 143 (2) that notice shall be served upon the assessee. In this particular case court find that notice was issued on time but did not served in time.