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TMI Blog2003 (8) TMI 176X X X X Extracts X X X X X X X X Extracts X X X X ..... stained because once the proper jurisdiction has not been assumed, then assessment proceedings cannot be held as valid proceedings. Since we have quashed the assessment completed by the Assessing Officer, therefore, we are not inclined to consider the aspect of validity of initiation of proceedings u/s 147/148, that whether the initiation was proper or whether the necessary approval-was validly taken or not. As stated above, the legal ground in regard to service has been allowed by us, therefore, We are not inclined to dispose off the grounds on merits since we have quashed the assessment itself. Therefore, the appeal of the assessee in case of firm is allowed. The appeal of the department in case of the firm M/s.Chandra Agencies has become infructuous, as we have already quashed the assessment order passed by the Assessing Officer. The appeals in case of both the partners are also allowed; as the assessments in these cases were completed on the basis of share of profit distributed in the hands of the partners. The assessment in the case of the firm has already been quashed, therefore, there is no question of assessing the share of profit in the hands of partners. Accordingly the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d not comply with the notice under section 148. Notice under sections 143(2) and 142(1) along with questionnaire for requisite details and particulars were issued on19-3-1998and served on Shri Kapil Khanna, partner of the firm on21-3-1997, requiring him to attend and to produce books of account of the firm along with requisite details/confirmations on26-3-1997. It is also observed in this paragraph that the present address of the assessee came to the notice of the department on19-3-1997. Summons under section 131 were also served on Shri Kapil Khanna, partner for necessary compliance. Proceedings were attended by Shri Kapil Khanna, along with Smt. Nitika Khanna, advocate and requisite requirements asked by the Assessing Officer were filed. However, the Assessing Officer was not satisfied with the reply. As per the order of the Assessing Officer, the assessee has also not offered any explanation to the suppressing of sales under the M.P. Red Cross Super Bumper Scheme, as there was some information with the Assessing Officer that assessee has suppressed its sale of lottery tickets. As on the date of hearing none appeared, accordingly, the assessment was completed under section 144/14 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... otice under section 148 is plainly to inform the assessee of the grievances of the Assessing Officer. The mode of service mentioned in section 282 of the Income-tax Act is not exhaustive. If there is a mere procedural irregularity in the service, it may not render the service invalid Where the Assessing Officer resorts to service under Code of Civil Procedure, he may resort to Order V, Rule 20(1). In such a case, the Assessing Officer has the discretion to adopt the manner of service other than by affixing a copy of the summons in the court house." By further observing that partner of the firm did appear before-the Assessing Officer, queries were raised and he promises to comply with those queries on the subsequent dates. His statement was also recorded by the Assessing Officer. Therefore, in view of the decision of the Hon'ble Madhya Pradesh High Court in the case of Kaushalya Bai v. CIT [MCC No.185/89 dated 17-3-1997, it must be held in the instant case also that the very fact that one of the partners participated in the proceedings, the defect of service of notice stood automatically cancelled. therefore, the CIT (Appeals) held that the service of notice under section 148 was as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he CIT is a senior officer, therefore, the approval is valid. Regarding the affixture of the notice, it was stated that the notices were affixed on last known address, therefore, the service is valid. It was further submitted that the notices were served on the address on which the return for the same year i.e., 1985-86 was filed. Therefore, it cannot be said that the affixture of notice is not valid. It was further stated that there was no intimation with the department that assessee firm has changed its address. The attention of the Bench was drawn on the observations of the Assessing Officer that he tried to trace the exact address of the assessee but when he failed, then only notice was served through affixture as per provisions of Section 282 of the Income-tax Act. 6. In reply it was stated by the learned counsel that all the contentions raised by the learned DR are factually incorrect. The attention of the Bench was drawn on copies of various documents placed on record and it was stated that the firm was dissolved vide Dissolution Deed dated 31-7-1986, copy of which was available on Assessing Officer's file, copy of the same is placed at pages 27 to 29 of the paper book place ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f which our attentions were drawn along with various case laws relied upon. There is no dispute that proceedings under section 147/148 were initiated after taking necessary approval from CIT-VIII and after recording reasons. Whether these proceedings are valid or not, these can be examined only after hearing the parties concerned and the parties concerned can be heard only after affording proper opportunity as provided under the statute. The department's case is that there was a reason to believe that income has escaped, therefore, the reasons were recorded and the necessary approval for initiation of proceedings under section l47/148 was taken. As stated above, whether the jurisdiction assumed under section 148 is valid or not can be examined only after examining the point of issue that whether any valid service has been made for giving opportunity to tile the return in response to notice under section 147. No return under section 147/148 was filed, as assessee is strongly agitating that there was no question of filing any return because no notice was served on the assessee. Therefore, before examining the issue of legality on account of reopening of the assessment and on account ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hen return the original to the court from which it was issued, with a report stating that he has so affixed the copy, the circumstances under which he did so and the name and address of the person by whom the house is identified and in whose presence the copy was affixed In resorting to the method of substituted service under Order V, rule 20 it is the duty of the department to discharge its onus by showing that the authority concerned had reason to believe that the assessee was keeping out of the way for the purpose of avoiding service or that there were other good reasons to come to the conclusion that the summons could not be served in the ordinary way. 10. In case of Kunj Behari , the Hon'ble Punjab Haryana High Court has held that the condition for service by affixture was not satisfied. Therefore, the service made on assessee were not valid. Hence, the appeal of the assessee was allowed. 11. In case of Gopiram Agarwalla v. Addl.ITO [1959] 37 ITR 493, the Hon'ble Calcutta High Court has held that where the officer, who has to serve a notice of re-assessment under section 34 of the Indian Income-tax Act, 1922 on the appellant, went to his address but found that he had gone out, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... edure, read with section 63 of the Income-tax Act. It was further held that the fact that the assessee had knowledge of the proceedings was not sufficient since the jurisdiction to start an assessment under section 34 depended on the very service of the notice. 16. In the light of the procedure of service laid down in sections 282 and 283 of the Income-tax Act and various decisions pronounced by the various High Courts and Supreme Court, mentioned above, now we will examine the facts of the present case vis- -vis service by affixture by the Assessing Officer that whether there was a valid service or notice under section 148 or not. 17. As mentioned above, the notices dated 27-3-1995 were affixed on three addresses i.e., 17, Hotel Continental, Regal Building, New Delhi; 167-168, Jhilmil Colony, New Delhi and C-89, NDSE, Part-II, New Delhi on 29-3-1995. These three addresses were mentioned in the Audit Report prepared by the auditor under section 44AB before filing the return for assessment year 1985-86. The return of income was filed on the address of 17, Hotel Continental,RegalBuilding,New Delhi. Thereafter, the firm was dissolved on31-7-1986and address in the dissolution deed was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... have seen these copies of the notices and found that no name of any witness is mentioned on these notices. It clearly shows that the notices were affixed on the above three addresses in absence of any witness, which is mandatory as per Order V, Rule 17 of CPC 1908. We further noted that a report was given by Inspector, one Shri K. Bhatnagar of Ward 12(2) on 18-3-1995 wherein it is stated that he visited Continental Hotel, 17, Regal Building, New Delhi and C-89, NDSE, Part-II, New Delhi and was informed that M/s. Chandra Agencies had left this address, as they have closed down their business from these premises. Once there was a report that the firm has been shifted from these addresses, then in our considered view, there was no necessity of even fixing the notices on these addresses on28-3-1995, as the report was given by the Inspector only on18-3-1995. Nothing is borne out from the records available on record that Assessing Officer has attempted to know the whereabouts of the firm as well as of its partners. The assessment records were available with the Assessing Officer and the last known address i.e., 4413, Jatavpura, Pahari Dhiraj,Delhiwas available on the record. We are surpr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... roval-was validly taken or not. As stated above, the legal ground in regard to service has been allowed by us, therefore, We are not inclined to dispose off the grounds on merits since we have quashed the assessment itself. Therefore, the appeal of the assessee in case of firm is allowed. 22. The appeal of the department in case of the firm M/s.ChandraAgencieshas become infructuous, as we have already quashed the assessment order passed by the Assessing Officer. 23. The appeals in case of both the partners are also allowed; as the assessments in these cases were completed on the basis of share of profit distributed in the hands of the partners. The assessment in the case of the firm has already been quashed, therefore, there is no question of assessing the share of profit in the hands of partners. Accordingly the appeals of the partners are also allowed. 24. The appeals of the department in case of two partners have become infructuous because they were completed on the basis of assessment order in case of firm, which has already been quashed here by us above. 25. In the result, the appeals of the assessees are allowed and the appeals of the department are dismissed. - - TaxTMI - ..... X X X X Extracts X X X X X X X X Extracts X X X X
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