The section 148 notice was served on somebody at my old business premises, not on me. My accountant then wrote in objecting. Is the reassessment good?
No. The Delhi High Court held that issue and service of the section 148 notice on the assessee, or on an agent he has empowered in writing to receive it, are jurisdictional requirements, not procedure. Service on an accountant at premises the assessee had not given as his address, whose authority the Revenue could not establish, was no service. Objecting through chartered accountants and taking part in the proceedings is not a waiver. Section 292BB is prospective from 1 April 2008 and, since the assessee objected before the reassessment was completed, its proviso applies anyway. The reassessment was quashed.
Decided by the High Court (High Court of Delhi - Dr Justice S. Muralidhar and Mr Justice Vibhu Bakhru (judgment by Dr S. Muralidhar, J)) on 2015-09-15, reported as ITA No. 72 of 2014 (Delhi High Court), reserved 9 September 2015, decided 15 September 2015. It bears on section 148, section 282(1), section 292BB, section 147, section 153(2) of the Income Tax Act 1961, in Reassessment & Reopening and Appeals matters.
This is the judgment that pulls together, in seven numbered conclusions, everything a practitioner needs on defective service of a reopening notice - and its conclusions are quoted rather than re-argued. It fixes the burden on the Revenue to prove service on the assessee or a written agent, imports Order V Rule 12 and Order III Rules 2 and 6 of the Civil Procedure Code into section 282(1), and shuts off the two escape routes the department usually takes: apparent authority, and waiver by participation. It also disposes of section 292BB in two ways at once, so a client who objected in time does not need to win the prospectivity argument. Note the limit: it protects the assessee who objects before the reassessment is finalised, not one who takes the point for the first time in appeal.
Binding within that High Court's jurisdiction. Persuasive elsewhere.
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For assessment year 2001-02 the assessee filed his return at Chandigarh on 11 October 2001 showing his address as "C/o Jagat Theatre, Chandigarh" and declaring Rs.6,47,425; it was processed under section 143(1). In February 2008 the Additional Director of Income Tax (Investigation) forwarded print outs from a pen drive said to have been recovered from the assessee after his arrest in the Ludhiana City Centre matter. Tabulated, they showed credits of Rs.40.49 crore with interest of Rs.7.35 crore, of which Rs.84,86,363 related to the year in question. The Assessing Officer concluded that income had escaped assessment. A notice under section 148 was issued on 28 March 2008 addressed to the assessee "C/o Kiran Cinema, Sector-22, Chandigarh" and served the same day on one Ved Prakash, who endorsed it describing himself only as "Accountant, Kiran Cinema". After jurisdiction moved to Delhi a second notice issued on 28 November 2008. The assessee's chartered accountants wrote on 12 December and again on 19 December 2008 saying no section 148 notice had been received and asking for a copy and the reasons. The officer replied that service on Ved Prakash, who received notices for other group concerns, was valid, and completed the reassessment before limitation expired on 31 December 2008. The Tribunal quashed it on 21 June 2013 and the Revenue appealed.
The appeal was dismissed and the question answered in favour of the assessee. The Court set out seven conclusions. Issue and service of the section 148 notice are mandatory jurisdictional requirements, not mere procedure. The officer cannot complete a reassessment without service in accordance with section 282(1) read with Order V Rule 12 and Order III Rule 6 of the Civil Procedure Code. Notwithstanding the change from section 34 of the 1922 Act, service remains a jurisdictional pre-condition to finalising the reassessment, and section 153(2) itself runs from the date the notice was served. The onus is on the Revenue to prove service on the assessee or an agent he has empowered, and here it failed. Participation in the proceedings by the assessee or by someone on his behalf who is not duly authorised is not a waiver. A reassessment finalised without proper service is invalid and liable to be quashed. Section 292BB is prospective from 1 April 2008, and in any event, the assessee having objected to non-service before completion, its proviso applies and the main part cannot help the Revenue.
The Court read section 282(1) as importing the Civil Procedure Code modes of service, so that service on a person other than the addressee is good only if that person is empowered to receive it, and Order III Rules 2 and 6 require such appointment to be in writing. The Revenue could point to nothing of the kind for Ved Prakash. Its fallback of apparent authority failed on Harshad J. Shah v LIC, which explains that apparent authority arises from a manifestation by the principal to third parties; here the Revenue could not show the assessee had held Ved Prakash out as his employee or agent. The Court noted that no attempt had ever been made to serve the assessee at the Jagat Theatre address he had given, so this was not a case of a genuine attempt at the known address followed by service elsewhere, and that receipt of notices for other group concerns at Kiran Cinema proves nothing about this assessee. On waiver, it followed B. Johar Forest Works, where service on an unauthorised employee was held bad despite the general manager seeking time, the Court there distinguishing knowledge of a notice from service of it, and the Allahabad Full Bench in Laxmi Narain Anand Prakash, that consent, acquiescence or waiver cannot create jurisdiction. It distinguished Venad Properties as concerning procedure rather than jurisdiction, and held Mayawati no longer good law on section 143(2) after Hotel Blue Moon. Finally it emphasised that the department had been told twice, in writing, that the notice had not reached the assessee and had made no attempt to serve it afresh.
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.
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Handle my notice → Ask a CA on WhatsAppNo. The Delhi High Court held that issue and service of the section 148 notice on the assessee, or on an agent he has empowered in writing to receive it, are jurisdictional requirements, not procedure. Service on an accountant at premises the assessee had not given as his address, whose authority the Revenue could not establish, was no service. Objecting through chartered accountants and taking part in the proceedings is not a waiver. Section 292BB is prospective from 1 April 2008 and, since the assessee objected before the reassessment was completed, its proviso applies anyway. The reassessment was quashed. This was decided by the High Court (High Court of Delhi - Dr Justice S. Muralidhar and Mr Justice Vibhu Bakhru (judgment by Dr S. Muralidhar, J)) and bears on section 148, section 282(1), section 292BB, section 147, section 153(2) of the Income Tax Act 1961. It is reported as ITA No. 72 of 2014 (Delhi High Court), reserved 9 September 2015, decided 15 September 2015. This is the judgment that pulls together, in seven numbered conclusions, everything a practitioner needs on defective service of a reopening notice - and its conclusions are quoted rather than re-argued. It fixes the burden on the Revenue to prove service on the assessee or a written agent, imports Order V Rule 12 and Order III Rules 2 and 6 of the Civil Procedure Code into section 282(1), and shuts off the two escape routes the department usually takes: apparent authority, and waiver by participation. It also disposes of section 292BB in two ways at once, so a client who objected in time does not need to win the prospectivity argument. Note the limit: it protects the assessee who objects before the reassessment is finalised, not one who takes the point for the first time in appeal. If it applies to you, the first step is this: Object to non-service in writing before the reassessment is completed - that is what brings the proviso to section 292BB into play and keeps the point alive.
For assessment year 2001-02 the assessee filed his return at Chandigarh on 11 October 2001 showing his address as "C/o Jagat Theatre, Chandigarh" and declaring Rs.6,47,425; it was processed under section 143(1). In February 2008 the Additional Director of Income Tax (Investigation) forwarded print outs from a pen drive said to have been recovered from the assessee after his arrest in the Ludhiana City Centre matter. Tabulated, they showed credits of Rs.40.49 crore with interest of Rs.7.35 crore, of which Rs.84,86,363 related to the year in question. The Assessing Officer concluded that income had escaped assessment. A notice under section 148 was issued on 28 March 2008 addressed to the assessee "C/o Kiran Cinema, Sector-22, Chandigarh" and served the same day on one Ved Prakash, who endorsed it describing himself only as "Accountant, Kiran Cinema". After jurisdiction moved to Delhi a second notice issued on 28 November 2008. The assessee's chartered accountants wrote on 12 December and again on 19 December 2008 saying no section 148 notice had been received and asking for a copy and the reasons. The officer replied that service on Ved Prakash, who received notices for other group concerns, was valid, and completed the reassessment before limitation expired on 31 December 2008. The Tribunal quashed it on 21 June 2013 and the Revenue appealed. The matter was decided on 2015-09-15 by the High Court (High Court of Delhi - Dr Justice S. Muralidhar and Mr Justice Vibhu Bakhru (judgment by Dr S. Muralidhar, J)). On those facts the High Court held as follows. The appeal was dismissed and the question answered in favour of the assessee. The Court set out seven conclusions. Issue and service of the section 148 notice are mandatory jurisdictional requirements, not mere procedure. The officer cannot complete a reassessment without service in accordance with section 282(1) read with Order V Rule 12 and Order III Rule 6 of the Civil Procedure Code. Notwithstanding the change from section 34 of the 1922 Act, service remains a jurisdictional pre-condition to finalising the reassessment, and section 153(2) itself runs from the date the notice was served. The onus is on the Revenue to prove service on the assessee or an agent he has empowered, and here it failed. Participation in the proceedings by the assessee or by someone on his behalf who is not duly authorised is not a waiver. A reassessment finalised without proper service is invalid and liable to be quashed. Section 292BB is prospective from 1 April 2008, and in any event, the assessee having objected to non-service before completion, its proviso applies and the main part cannot help the Revenue.
The Court read section 282(1) as importing the Civil Procedure Code modes of service, so that service on a person other than the addressee is good only if that person is empowered to receive it, and Order III Rules 2 and 6 require such appointment to be in writing. The Revenue could point to nothing of the kind for Ved Prakash. Its fallback of apparent authority failed on Harshad J. Shah v LIC, which explains that apparent authority arises from a manifestation by the principal to third parties; here the Revenue could not show the assessee had held Ved Prakash out as his employee or agent. The Court noted that no attempt had ever been made to serve the assessee at the Jagat Theatre address he had given, so this was not a case of a genuine attempt at the known address followed by service elsewhere, and that receipt of notices for other group concerns at Kiran Cinema proves nothing about this assessee. On waiver, it followed B. Johar Forest Works, where service on an unauthorised employee was held bad despite the general manager seeking time, the Court there distinguishing knowledge of a notice from service of it, and the Allahabad Full Bench in Laxmi Narain Anand Prakash, that consent, acquiescence or waiver cannot create jurisdiction. It distinguished Venad Properties as concerning procedure rather than jurisdiction, and held Mayawati no longer good law on section 143(2) after Hotel Blue Moon. Finally it emphasised that the department had been told twice, in writing, that the notice had not reached the assessee and had made no attempt to serve it afresh. In the words reproduced by the source cited on this page: "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."
It was decided by the High Court on 2015-09-15 and is reported as ITA No. 72 of 2014 (Delhi High Court), reserved 9 September 2015, decided 15 September 2015. Binding within that High Court's jurisdiction. Persuasive elsewhere. A High Court decision binds the assessing officer, the Commissioner (Appeals) and the Income Tax Appellate Tribunal within that state, and is persuasive elsewhere. If your assessment is in a different jurisdiction, check whether your own High Court has taken the same view before relying on it. On section 148, section 282(1), section 292BB, section 147, section 153(2), the practical question is whether the facts of your own notice match the facts of this case closely enough for the same rule to apply.
It helps the taxpayer. The appeal was dismissed and the question answered in favour of the assessee. The Court set out seven conclusions. Issue and service of the section 148 notice are mandatory jurisdictional requirements, not mere procedure. The officer cannot complete a reassessment without service in accordance with section 282(1) read with Order V Rule 12 and Order III Rule 6 of the Civil Procedure Code. Notwithstanding the change from section 34 of the 1922 Act, service remains a jurisdictional pre-condition to finalising the reassessment, and section 153(2) itself runs from the date the notice was served. The onus is on the Revenue to prove service on the assessee or an agent he has empowered, and here it failed. Participation in the proceedings by the assessee or by someone on his behalf who is not duly authorised is not a waiver. A reassessment finalised without proper service is invalid and liable to be quashed. Section 292BB is prospective from 1 April 2008, and in any event, the assessee having objected to non-service before completion, its proviso applies and the main part cannot help the Revenue. It arises in Reassessment & Reopening and Appeals matters, on section 148, section 282(1), section 292BB, section 147, section 153(2) of the Income Tax Act 1961, and was decided by High Court of Delhi - Dr Justice S. Muralidhar and Mr Justice Vibhu Bakhru (judgment by Dr S. Muralidhar, J). Before relying on it, read the source linked on this page and check whether it has since been distinguished, overruled or overtaken by an amendment to the Income Tax Act. In practice the steps that follow from it are these. Put the Revenue to proof of who was served, at what address, and under what written authority; check the endorsement on the notice for how the recipient described himself. Compare the address on the notice with the address given in the return - service at a group concern's premises does not establish that it is the assessee's place of business. Do not assume replying to the officer forfeits the point; participation is not a waiver, but say expressly that the reply is without prejudice and under protest.
Still good law. I read the judgment through to its numbered conclusions and the operative dismissal. I could not check separately whether the Revenue took it to the Supreme Court. Note that the reassessment machinery was replaced from 1 April 2021, so the statutory setting for later years differs, though sections 282 and 292BB remain. No source could be cited for that finding. Checking whether an authority still stands matters as much as knowing what it held: a decision may be overruled on one point and survive on another, or the provision it interprets may have been amended since. Read the source and the editor's note on this page before relying on it in a reply to an Assessing Officer or in an appeal.
The batch line listed section 147; the appeal was decided entirely on service of the section 148 notice and the Court never reached the merits of the reopening or the pen drive material. Sections 282(1) and 153(2) are added from the judgment. The judgment records at paragraph 4 that the officer proceeded under "section 147(b)", which was the pre-1989 clause lettering; nothing turns on it in the reasoning. The source page carried no reporter citations, so the case number is given instead. This library shows the verification state of every entry openly. This entry has not yet been read in full by a chartered accountant. The summary reflects the sources listed on this page. Read the source before you rely on it in a reply to an Assessing Officer or in an appeal before the Commissioner (Appeals) or the Income Tax Appellate Tribunal.
The appeal was dismissed and the question answered in favour of the assessee. The Court set out seven conclusions. Issue and service of the section 148 notice are mandatory jurisdictional requirements, not mere procedure. The officer cannot complete a reassessment without service in accordance with section 282(1) read with Order V Rule 12 and Order III Rule 6 of the Civil Procedure Code. Notwithstanding the change from section 34 of the 1922 Act, service remains a jurisdictional pre-condition to finalising the reassessment, and section 153(2) itself runs from the date the notice was served. The onus is on the Revenue to prove service on the assessee or an agent he has empowered, and here it failed. Participation in the proceedings by the assessee or by someone on his behalf who is not duly authorised is not a waiver. A reassessment finalised without proper service is invalid and liable to be quashed. Section 292BB is prospective from 1 April 2008, and in any event, the assessee having objected to non-service before completion, its proviso applies and the main part cannot help the Revenue.
Every entry in this library links to where it was found, so you can check it yourself rather than take our word for it.
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How much am I actually required to disclose — and can they reopen because the officer drew the wrong conclusion?
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A reassessment was done in between. Does the two-year clock for s.263 restart from it?