Income Tax Notice Served on Wife of Assessee is Valid: ITAT Penalty Proceedings [Read Order]

Bangalore bench of Income Tax Appellate Tribunal (ITAT) recently held that the income tax notice served on wife assessee is valid .

Assesse Ramakrishna Murali is an individual engaged in the business of wholesale trading in wines, liquor and other related products as a proprietor and under the name & style of M/s. Nanjundeshwara Wines. After filing the return assessment case was selected for scrutiny assessment order was passed under section 143(3) of the Income Tax Act 1961 declaring total  income of Rupees 19,41,200/-. It was noticed by the assessing officer that at the time of assessment, the assessee had taken an unsecured loan by way of cash. Assessing officer issued notice to the assessee but there was no reply given by the assessee .Therefore passed a penalty order. Against the order the assessee filed an appeal before the ITAT.

Raghavendra Chakravarthy counsel for the assessee contended that penalty order under section 271D of the Income Tax Act 1961 Act is not properly served on the assessee. Procedure to be followed for communication of an order, the Assessing Officer ought to have served the order on the assessee either through a registered post or in person to the assessee or through assessee’s authorized representative. In the present case, the assessee’s wife is neither the assessee nor is authorized by the assessee to receive the order.

K.R. Narayana, counsel for revenue submitted that the penalty order has been duly served to the assessee in a given address and it was evident from the acknowledgement signed by Mrs. Nethravathi, her mobile number has been recorded which has been served by N. Sashidhara,. Further, the said penalty order also served by way of Registered Post with Acknowledgement (RPAD) to the given address and the said RPAD has not been received back from the department.

After considering the contentions of both sides the ITAT bench comprising Chandra Poojari (Accountant Member) and Beena Pillai, (Judicial Member) dismiss the appeal filed by the assessee and  conclude that penalty order has been properly passed within due date and has been properly served to the assessee.

Further the bench observed that Section 27 of the General clauses Act, 1897 provides that service by post is deemed to have been affected by properly addressing, prepaying and posting by registered post, a letter containing the notice required to be served.

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