Notice under Section 148 of the Income Tax Act must be served personally; speed post is insufficient, emphasizing strict procedural adherence in tax law.

JUDGMENT :

ARUN KUMAR SINGH DESHWAL, J.

1. Heard Sri Ankur Agarwal, Advocate, holding brief of Sri Rahul Agarwal, learned counsel for the appellant and Sri Manu Ghildiyal, learned counsel for the respondents.

2. Present income tax appeal has been filed u/s 260A of INCOME TAX ACT , 1961 (hereinafter referred to as 'the Act, 1961') against the order dated 16.11.2011 passed by Income Tax Appellate Tribunal, Agra Bench, Agra for the A.Y. 2002-03.

3. Present appeal was admitted on 27.03.2012 on the following substantial questions of law:

"1. Whether the finding of the Tribunal that the notice under Section 148 of the INCOME TAX ACT had been validly served on the appellant, by holding that the findings recorded in the Assessment Order and in the first appellate order were incorrect only because the envelope containing the unserved notice could not be found in the original records, is perverse and liable to be set aside?

2. Whether in view of the report of the Inspector (sent by the Assessing Officer to effect service of notice on the appellant) that the whereabouts of the appellant could not be ascertained and in absence of the Assessing Officer acting on that report by taking steps to serve the appellant through affixture, etc. on his last known address, the procedure prescribed for service of notice under Section 282 of the INCOME TAX ACT stood complied with and the Tribunal is justified in holding that the notice was validly served on the appellant?"

4. Appellant filed his return of income for A.Y. 2002-03 on 23.10.2002, declaring an income of Rs.3,90,860/-. Thereafter, on the information received from the Central Excise Department, the Assessing Officer, after taking the required approval, issued notice u/s 148 of the Act, 1961, to the appellant for the A.Ys. 2001-02, 2002-03 and 2003-04. These notices were sent via speed post to appellant's address, but no return was filed by the appellant. Thereafter, notice u/s 142(i) of the Act, 1961 was also issued for the above assessment years, requiring the appellant to furnish some information and details, and a date was fixed for hearing on 20.08.2008, but in response to the same, neither the appellant nor his authorized representative appeared nor filed any application for adjournment. Thereafter, another notice was also sent to the appellant fixing the date for hearing on 02.12.2008 at two addresses available on record. Still the appellant failed to appear before the Assessing Officer. Thereafter, the Assessing Officer sent the Income Tax Inspector to deliver a notice to the address on record. However, the Income Tax Inspector reported that the whereabouts of the appellant could not be ascertained. Therefore, Assessing Officer continued with the re-assessment proceeding and passed ex parte order u/s 147 read with Section 144 of the Act, 1961, assessing the total income of appellant as Rs.11,87,980/- for the A.Y. 2003-04. This order was sent to the appellant's address in Khandaar Swai Madhopur, Rajasthan, which was duly received by him.

5. The appellant filed an appeal against the order dated 15.12.2008 passed by Assessing Officer before Commissioner of Income Tax (Appeal)-II, Agra which was registered as Appeal No.CIT(A)-II/268, 269 & 270/DCIT (CC)/AGR/08-09. The appeal of the appellant was allowed on the ground that the notice u/s 148 of the Act, 1961, sent to the appellant was returned back. Therefore, in the absence of service of notice issued u/s 148 of the Act, 1961, the process of initiating re-assessment proceedings u/s 142 of the Act, 1961, was erroneous. However, the Income Tax Department (Revenue), feeling aggrieved by the order passed in appeal by the Commissioner of Income Tax, challenged the same before the Income Tax Tribunal, Agra Bench, Agra.

6. The Income Tax Appellate Tribunal vide judgement dated 16.11.2011 allowed the appeal of the Income Tax Department (Revenue) so far as the A.Y.s 2002-03, 2003-04 are concerned and dismissed the appeal for the A.Y. 2001-02. The reason