Notice U/S 148 Income Tax Act Must Be Delivered To Addressee Personally By Post To Complete Service U/S 27: Allahabad High Court

It held that presumption of sufficient service arises only when the notice is sent by registered post as in registered post the notice is delivered to the person it is addressed to. Highlighting the difference between registered post and speed post, the Court held that service will be deemed sufficient when sent through speed post only if it has been delivered to the addressee him/herself and not upon the address to a different person.

Section 148 provides for issuance of notice where income has escaped assessment before making reassessment. It provides that “the Assessing Officer shall serve on the assessee a notice” requiring the assesee to furnish his return of income in prescribed format. Section 282 of the Act is a general provision regarding service of notice under the Act. It provides that the notices or requisitions under the Act may be served upon the assesee either by post or as if it were a summons issued by a court under the Code of Civil Procedure, 1908.

The bench of Justice Saral Srivastava and Justice Arun Kumar Singh Deshwal held

“Section 148 as well as Section 282 of the Act, 1961 clearly state that a notice through post must be delivered to the addressee personally, not simply to his address. Consequently, in the absence of personal service on the assessee, the legal presumption of service u/s 27 of the Act, 1897 and Section 114(f) of the Act, 1872, can only be applied when notice is sent via registered post, not by speed post. Therefore, for the purpose of deemed service u/s 27 of the Act, 1897 for the notice u/s 148 of the Act, 1961, speed post cannot be considered equivalent to registered post. It is appropriate to reiterate that notice sent by speed post, if personally served upon the assessee, then the same is sufficient service as per Section 148 read with Section 282 of the Act, 1961.”

Appellant was issued notices under Section 148 of the Income Tax Act for the A.Ys. 2001-02, 2002-03 and 2003-04 through speed post. Since no return was filed by the appellant, notice under Section 142(i) of the Act was also issued where date and time of personal hearing was fixed but the appellant did not appear. When the Income Tax Inspector was sent to deliver the notices, he stated that the assesee was not traceable. The assessment proceedings were concluded ex-parte and the order was sent to appellant's Rajasthan address, where it was received by him.

In appeal, Commissioner of Income Tax (Appeal)-II, Agra quashed the assessment proceedings holding that the notice was not served on the petitioner. Department filed an appeal before the Income Tax Appellate Tribunal, Agra Bench, Agra wherein it was held that since no envelope had returned back, the notices were served upon the petitioner. This order of the ITAT was challenged before the High Court.

Perusing the original records, the Court observed that the notices sent to the petitioner had not returned back as recorded by the assessing officer as well as first appellate authority and were not available on record.

Referring to Section 148, the Court held that issuance and service of notice under Section 148 of the Act is a precondition for initiating reassessment proceedings.

“From perusal of Section 148 of the Act, 1961, it is clear that notice has to be served on the assessee personally and as per Section 282 of the Act, 1961, notice required under the Act, 1961 may be served on a person either by post or as a summon issued by the court under the Code of Civil Procedure, 1908.”

The Court observed that both registered and speed post come under the definition of 'Post' under Section 2(1)(k) of the Post Office Regulation, 2024. It further observed that under CPC, summons not only have to be sent through registered post at the address but delivered personally, and in absence of personal delivery, be affixed.

It held that in registered post, service can be presumed even if there is no proof of service by invoking Section 27 of the General Clauses Act, 1897 provided the conditions stated therein are met.

“The phrase 'registered post' are mentioned in Section 27 of the Act, 1897 cannot be interpreted liberally for the purpose of the income tax act. It is established law that taxing statute has to be interpreted strictly. Thus, the term 'registered post' in Section 27 of the Act, 1897 should be understood in reference to the registered post services provided by the Indian Postal department which were initially covered by the Indian Post Office Rules, 1933 (hereinafter referred to as 'the Rules, 1933') and is now regulated under the Indian Post Office Rules, 2024 and the Post Office Regulations, 2024,” held the Court.

Referring to aforementioned statutes, the Court held that registered post is addressee specific whereas speed post is address specific as in the speed post can be handed to any person at the address but a registered post must be handed to the person it is addressed to.

The Court observed that in case of the assesee, the notice was sent through speed post instead of registered post as required by the Act. Therefore, the presumption under Section 27 of General Clauses Act regarding service without return of post could not be made. It held that the ITAT had also failed to see the record before returning a finding that notice was served. Further, it was noted that the Income Tax Inspector had not affixed the notice at the address of the assesee. Accordingly, the Court held that the service was not sufficient and set aside the order of the Income Tax Appellate Tribunal.

Case Title: Mahesh Gautam v. Commissioner Of Income Tax [INCOME TAX APPEAL No. - 436 of 2012 ]

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