Commissioner Of Income-Tax v. Madhsy Films P. Ltd.

V.B Gupta, J.:— The following substantial question of law arises in the present appeal:

“Whether the Income-tax Appellate Tribunal was correct in law in quashing the assessment framed by the Assessing Officer on the ground that notice under section 143(2) of the Income-tax Act, 1961, was not served upon the assessee within the prescribed period ?”

2. The facts in brief are that the assessee filed its return on October 31, 2001, declaring loss of Rs. 8,37,355. Notice under section 143(2) of the Act was issued by the Assessing Officer on October 23, 2002, and, thereafter, on December 18, 2002, fixing the case for hearing on October 29, 2002, and December 24, 2002. None attended in response to these notices. Accordingly, the Assessing Officer again issued notice under section 142(1) of the Act on January 29, 2003, fixing the case on February 7, 2003. This notice was also not complied with. Accordingly, the Assessing Officer framed the assessment under section 144 of the Act and disallowed the claim of the assessee with respect to advertisement and public expenses of Rs. 8,87,917, as the assessee did not furnish any evidence in support of his claim despite of it being specifically asked. Aggrieved with the assessment order passed by the Assessing Officer, the assessee filed an appeal before the Commissioner of Income-tax (Appeals) (in short as “the CIT(A)”) also challenging the assessment order on the ground that notice under section 143(2) of the Act was not served on the assessee within the prescribed period. The Commissioner of Income-tax (Appeals) held that the notice was issued by the Assessing Officer on October 23, 2002, i.e, within the prescribed period and the assessment order framed by the Assessing Officer was upheld.

3. Being dissatisfied with the order passed by the Commissioner of Income-tax (Appeals), the assessee filed an appeal before the Income-tax Appellate Tribunal (for short as “the Tribunal”) and the Tribunal, vide the impugned order dated May 31, 2005, passed in I.T.A No. 918(Del)/2005 for the assessment year 2001-02 quashed the assessment as well as the demand raised in pursuance thereto, on the ground that notice under section 143(2) of the Act was not served upon the assessee within a period of limitation as prescribed under section 143(2) of the Act.

4. Now, the Revenue has filed the present appeal challenging the impugned order passed by the Tribunal.

5. It has been contended by learned counsel for the Revenue that notice in question was issued on October 23, 2002, and the same was dispatched on October 25, 2002, and since the same has not been received back undelivered, there is a presumption under the law that notice has reached the assessee.

6. Learned counsel for the respondent has relied upon the order passed by the Tribunal and has contended that no notice has been served within the prescribed period.

7. Service of notice under section 143(2) of the Act must be affected in the manner laid down in section 282 of the Act.

8. Section 282(1) of the Act, which is relevant for deciding the present controversy, reads as under:

“282. Service of notice generally.—(1) A notice or requisition under this Act may be served on the person therein named either by post or as if it were a summons issued by a court under the Code of Civil Procedure, 1908 (5 of 1908).”

9. In the present case, the notice has been issued on October 23, 2002, and was sent through speed post from LP. Estate Post Office on October 25, 2002, at the address of the company as per the return which has been mentioned by the Assessing Officer in his remand report.

10. Section 27 of the General Clauses Act, 1897, provides that service by post is deemed to have been effected by properly addressing, pre-paying and posting by registered post, a letter containing the notice required to be served. Unless the contrary is proved the service is deemed to have been effected at the time when the letter would be delivered in the ordinary course of post.

11. Though this presumption is rebuttable but in the absence of proof to the contrary, the presumption of proper service or effective service of the notice would arise. There is nothing on record to show that the notice dated October 23, 2002, dispatched on October 25, 2002, by speed post was undelivered or received back. Under the normal circumstances, a presumption will lie that this notice has reached the assessee within ⅔ days. Since the envelope containing the notice in question has not been received back by the Income-tax Department, there is a presumption that it has reached the assessee and, this presumption has not been rebutted by the assessee at all. No affidavit has been filed by the assessee to the effect that the notice was not received by it. Under these circumstances, we hold that the notice under section 143(2) of the Act was served upon the assessee within the prescribed period and as such this finding given by the Tribunal that no notice under section 143(2) have been served upon the assessee within the prescribed period is hereby set aside and the substantial question of law is decided in the negative in favour of the Revenue and against the assessee.

12. Accordingly, the present appeal stands allowed.