1. Issue here is whether notice under Section 148(1) of the IT Act was served to the petitioner, as service of notice is the condition precedent for reopening assessment under Section 148(1).
2. It is the case of the Revenue that the petitioner has participated in the assessment proceedings after service of notice through Chartered Accountant and filed return and also raised objections and objections were decided on 18-7-2016, therefore, the petitioner is deemed to have waived the service of notice under Section 149(1) of the IT Act relying upon Section 292BB of the IT Act which provides as under: –
“Notice deemed to be valid in certain circumstances.
292BB. Where an assessee has appeared in any proceeding or co-operated in any inquiry relating to an assessment or reassessment, it shall be deemed that any notice under any provision of this Act, which is required to be served upon him, has been duly served upon him in time in accordance with the provisions of this Act and such assessee shall be precluded from taking any objection in any proceeding or inquiry under this Act that the notice was—
(a) not served upon him; or
(b) not served upon him in time; or
(c) served upon him in an improper manner:
Provided that nothing contained in this section shall apply where the assessee has raised such objection before the completion of such assessment or reassessment.”
3. A careful perusal of the aforesaid provision would show that a proviso is appended to the main provision which provides that the aforesaid provision would not apply where the assessee has raised such objection before the completion of such assessment or reassessment. In the instant case, the petitioner has raised objections while submitting its reply to the reasons for reassessment on 18-7-2016 which are as under: –
“3. In our case, we re-iterate that no notice u/s 148 was served on the company. We may bring to your kind notice the fact that all our returns of income are up-to-date and have been filed till the AY 2015-16 (Copies of the acknowledgements for the last three assessment years are enclosed). The address of the company has been clearly mentioned in our tax returns and even the data for issuance of PAN also reflect the said address. We are unable to understand why the notice u/s 148 was not served even though the correct address is available with the Department.
4. We request you to take judicial cognizance of our objection regarding the non issuance and service of notice as per the requirement of the proviso to section 292BB of the Act.
5. We most respectfully submit that in view of the factum of the non service of the notice, the re-opening of assessment for the AY 2009-10 ought to be dropped and the notice u/s 148 withdrawn.”
4. The objections have been replied by the Revenue as under: –
“I. You have contended that the notice u/s 148 of the Act was not served through the correct address and in view of the factum of the non-issuance and service of notice as per the requirement of the provision to section 292BB of the Act, the re-opening of assessment for A.Y. 2009-10 ought to be dropped and the notice u/s 148 withdrawn. In this connection, it is to inform you that this office had issued notice u/s 148 of the Income tax Act, 1961 dated 15.03.2016 to the address of your company as mentioned on PAN and in tax returns of M/s Ardent Steel Ltd. Any notice sent through speed post by Indian Postal Department is a valid service of notice as per the manner and procedures provided in the Act. The sad notice was returned back to this office by the Indian Postal Department citing the reasons “Left” on 28.03.2016.
II. It is also to inform you that the notice u/s 148 of the Act in your case was issued only after taking necessary approval from the competent authority. Further, the notice u/s 148 of the Act was issued only after the Assessing Officer had a reason to believe on the basis of facts and information available in his possession that the income had escaped assessment.
III. During the course of search and seizure operation in the case of Hira Group, Shri B.L. Agrawal, CMD of Hira Group in his statement given on oath has accepted the findings of the search team. In his reply to the Question No. 24 in which the name of your company M/s Ardent Steel Ltd. is categorically mentioned alongwith the names other concerns of the Hira Group of Companies, Shri B.L. Agrawal has clearly stated that various companies of Hira Group which includes M/s Ardent Steel Ltd. had introduced undisclosed share application/capital money through Kolkata based paper concerns. …”
5. The aforesaid narration of facts would show that no notice was served to the petitioner. The plea of Section 292BB of the IT Act would not be available to the petitioner as the petitioner has submitted its objection on 18-7-2016 to the assessing officer prior to the completion of assessment proceeding. Law in this regard is well settled which may be noticed herein profitably.
6. A Full Bench of the Allahabad High Court in the matter of Laxmi Narain Anand Prakash v. Commissioner of Sales Tax16 has held that the notice of initiation proceeding under Section 21 of the U.P. Sales Tax Act, 1947 was a condition precedent and not only a procedural requirement. The mere fact that the assessee had obtained knowledge of the proceeding and participated could not validate the proceeding being initiated without jurisdiction. It has been subsequently held that “it is firmly established that where a Court or Tribunal has no jurisdiction, no amount of consent, acquiescence of waiver can create it.”
7. A Division Bench of the Delhi High Court in Chetan Gupta’s case (supra) speaking through Dr. S. Muralidhar, J, has clearly held that merely because an assessee may have participated in the proceedings, the requirement of service of proper notice upon the person in accordance with the legal requirement under Section 148 of the Act is not dispensed with and reassessment proceedings finalized by the Assessing Officer without effecting service of notice on the assessee under Section 148(1) of the IT Act are invalid and laid down the principles in this regard as under: –
“(i) to (iv) xxx xxx xxx
(v) The mere fact that an Assessee or some other person on his behalf not duly authorised participated in the reassessment proceedings after coming to know of it will not constitute a waiver of the requirement of effecting proper service of notice on the Assessee under Section 148 of the Act.
(vi) Reassessment proceedings finalised by an AO without effecting proper service of notice on the Assessee under Section 148 (1) of the Act are invalid and liable to be quashed.
(vi) Section 292 BB is prospective. In any event the Assessee in the present case, having raised an objection regarding the failure by the Revenue to effect service of notice upon him, the main part of Section 292 BB is not attracted.”
8 Similar is the proposition laid down by the Gauhati High Court in Mintu Kalita’s case (supra) holding that service of notice is condition precedent for exercise of power under Section 148 of the IT Act.
9. Thus, on the basis of above-stated legal analysis, I have no hesitation to hold that no notice was served to the petitioner under Section 148(1) of the IT Act and service of notice to the Chartered Accountant of the petitioner Company is not service at all and participation of the petitioner Company by filing return and filing objection to the notice to the reasons to believe cannot be held to be a valid service of notice as held by the Delhi High Court in Chetan Gupta’s case (supra) and, therefore, it cannot be held that the petitioner was served with notice under Section 148(1) of the IT Act. Thus, having answered both the questions in favour of the assessee and against the Revenue, I hold that neither notice under Section 148(1) of the IT Act within the period of limitation as prescribed in Section 149(1)(b) of the IT Act was issued to the petitioner nor it was served in terms of Section 148(1) of the IT Act, therefore, the reassessment proceedings initiated by the said notice and the order deciding objection dated 5-8-2016 are without jurisdiction and without authority of law.
10. As a fallout and consequence of the aforesaid discussion, the notices dated 15-3-2016 and 13-4-2016 and the order dated 5-82016 deserve to be and are hereby quashed. The petitioner would also be entitled for a cost of ₹ 25,000/- which will be paid by the respondents within two weeks from today.