Income Tax Officer, Etawah v. Dharam Narain ., Supreme Court Of India, Judgment, Law, casemine.com

Factual and Procedural Background

The Income Tax Department (“Revenue”) issued a notice dated 16-10-2006 under Section 143(2) of the Income Tax Act, 1961 to the respondent–assessee. The notice was dispatched by registered post on 18-10-2006. Delivery attempts were made twice but the assessee was not available; ultimately, the notice was served on 19-10-2006 upon an individual described as the authorised representative of the assessee.

The assessee challenged the validity of the notice before the Allahabad High Court in a writ petition. The High Court, by its order reported as 2012 SCC OnLine All 4518, quashed the notice, holding that Section 143(2) requires actual service on the assessee within the statutory time-limit (30-10-2006), not merely issuance or dispatch. The Revenue appealed to the Supreme Court of India. The Supreme Court granted special leave and rendered the present decision.

Legal Issues Presented

Whether, on the facts of this case, the statutory requirement under Section 143(2) of the Income Tax Act, 1961—mandating service of notice within the prescribed period—is satisfied when the notice was issued and dispatched in time but reached only the assessee’s purported authorised representative before the deadline, the assessee himself having been unavailable for personal service.

Court's Reasoning and Analysis

The Supreme Court declined to settle, in the abstract, whether Section 143(2) requires actual service versus mere issuance of notice—leaving that broader legal question open for resolution in a future case. Instead, it decided the appeal on the “peculiar facts” of the matter.

Key points in the Court’s analysis:

The assessee was unavailable on two separate occasions when postal authorities attempted delivery.

The notice was actually received on 19-10-2006 by a person presented as the assessee’s authorised representative. Although the assessee later disowned that representative, the Court treated the circumstances as establishing “deemed service.”

Given these facts, the Court held that there was “sufficient compliance” with the statutory requirement of Section 143(2).

Consequently, the High Court’s conclusion—that only actual service on the assessee himself within the limitation period would suffice—was deemed erroneous in the present factual matrix.

Holding and Implications

APPEAL ALLOWED; HIGH COURT ORDER SET ASIDE.

Immediate effect: The notice dated 16-10-2006 under Section 143(2) is reinstated, and the Revenue may proceed with assessment proceedings against the assessee. Broader impact: The judgment does not definitively resolve the larger legal controversy regarding “issuance” versus “service” of Section 143(2) notices; the Supreme Court expressly kept that question open for decision in an appropriate future case. Hence, no new binding precedent on that doctrinal point was established.

Income Tax Officer, Etawah v. Dharam Narain .

Order

1. Leave granted. By the impugned order 2012 SCC OnLine All 4518, the High Court has quashed the notice dated 16-10-2006 issued under Section 143(2) of the Income Tax Act, 1961 to the respondent assessee by allowing the writ petition filed by the said assessee. Aggrieved, the Revenue is in appeal before this Court.

2. Admittedly, under the provisions of Section 143(2) of the Income Tax Act, 1961 (as then in force) the notice has to be served on the respondent assessee latest by 30-10-2006. In the present case, notice was issued on 16-10-2006 which was dispatched on 18-10-2006 by registered post. The materials on record indicate that on two occasions the notice sent by registered post could not be served on the respondent assessee as he was not available and that it was served on the authorised representative of the respondent assessee on 19-10-2006. The question, therefore, that arises in the writ petition was whether in such circumstances the requirement under Section 143(2) of the Income Tax Act, 1961 was met by the Revenue. The High Court answered the question in the negative taking the view that what is required to be satisfied by the Revenue is service of notice and not mere issuance thereof.

3. It will not be necessary for us to decide the aforesaid question in the present case which is being kept open for decision in an appropriate case. We have taken the aforesaid view as the present case is capable of being resolved on its own peculiar facts.

4. The non-availability of the respondent assessee to receive the notice sent by registered post as many as on two occasions and service of notice on 19-10-2006 on the authorised representative of the respondent assessee whom the respondent assessee now disowns, in our considered view, is sufficient to draw an inference of deemed service of notice on the respondent assessee and sufficient compliance with the requirement of Section 143(2) of the Income Tax Act, 1961.

5. On the aforesaid view that we have taken we are of the opinion that the High Court was not right in coming to the impugned conclusion in the facts of the instant matter. We, accordingly, allow this appeal and set aside the order of the High Court.

Civil Appeal No. 2262 of 2018†, decided on February 19, 2018

Income Tax Officer, Etawah v. Dharam Narain .

Factual and Procedural Background

Legal Issues Presented

Arguments of the Parties

Table of Precedents Cited

Court's Reasoning and Analysis

Holding and Implications

Income Tax Officer, Etawah v. Dharam Narain .

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