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TMI Blog2004 (6) TMI 287X X X X Extracts X X X X X X X X Extracts X X X X ..... furnishing of the return, the assessment made on the basis of such invalid notice cannot be treated to be a valid assessment and hence such assessment order was to be treated as null and void ab initio and was liable to be quashed and annulled. Hence, we conclude that the service mode adopted by the department through affixation was neither initiated in accordance with the relevant rules nor the service by such mode was done as per the rules referred to above and hence such service cannot be accepted to be a legally valid service of notice u/s 143(2) of the Income-tax Act. We, therefore, hold that there was no valid service of notice by affixation. In view of our discussions, we also hold that there was no service by a Registered Post before 1-11-1995. Thus, in our view, the notice u/s 143(2) was not served within 12 months of the filing of the return. Thus, we are unable to concur with the findings recorded by the learned CIT(A) for rejecting the additional ground taken before him. Hence we set aside his finding and hold that there was no valid and proper service of notice within the period prescribed i.e. before the expiry of 12 months from the date of filing of the return and, t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tten submissions of the assessee before the CIT(A) were as below: "12 months, therefore, expired on 31-10-1995. Hence service of notice on 20-11-1995, i.e. after the notice issued and the registered envelope and can also be verified from office record of the ITO, Coy. Ward 3(2), New Delhi. (ii) This fact of late serving of the notice was also brought to the knowledge of the learned ITO. (iii) Even at a later stage, the fact was brought to the notice of the learned ITO, Coy. Ward 3(2) on 26-4-1996. (iv) It is most improbable that a notice prepared on the 30-10-1995, even if dispatched by Registered Post on the very day could have reached the assessee before 1-11-1995, i.e. within 12 months." 7. On this written submission of the assessee which has been incorporated in para 2 by the learned CIT(A), the Assessing Officer was required to file comments. The Assessing Officer submitted that notice under section 143(2) was issued on 30-10-1995 and one copy of the notice was sent on that date by registered post and another notice was served by affixture on the last known address of the assessee at C-408, Defence Colony, New Delhi. Thus, the contention of the Assessing Off ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rabad Deccan Liquor Syndicate [1974] 95 ITR 130 (AP) (Page 139, Para 4, at page 143 Para 5) 4. CIT v. Satya Narain Poddar [1973] 89 ITR 136 (All.) 5. Jagannath Prasad v. CIT [1977] 110 ITR 27 (All.) (Pages 28-30) 6. Gopi Ram Agarwalla v. First Addl. ITO [1959] 37 ITR 493 (Cal.) (Pages 497 to 498) and 7. Punjab & Expeller Co. v. Mad. Lab. 1967 (56) DLT 56 Paras 6, 7. 9. On the other hand, the learned CIT, DR Shri Lav Saxena supported the order of the learned CIT(A). He specifically averred that the service effected by affixture upon the assessee was sufficient service and, therefore, the additional ground taken before the learned CIT(A) was correctly rejected. The other contention of the learned CIT, DR was that the AR of the assessee attended on 12-11-1995 and stated that he could not appear on 8-11-1995 and he received a notice under section 143(2) from the assessee late. On this basis, it was argued by him that the assessee had notice of the said date and had appeared subsequently and, therefore, the service should be deemed to be sufficient. 10. We have carefully considered the entire material on record. The photo-copy of the order sheet has been filed on record by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee appeared and, therefore, it cannot be said that the assessee had changed the address. 12. In the present case, the assessee is a company and, therefore, for the purpose of service of notice etc. the provisions contained under section 282 are to be followed: "S. 282 Service of notice generally. (1) A notice or requisition under this Act may be served on the person therein named either by post or as if it were a summons issued by a Court under the Code of Civil Procedure, 1908 (5 of 1908). (2) Any such notice of requisition may be addressed- (a) in the case of a firm or a HUF, to any member of the firm or to the manager or any adult member of the family; (b) in case of a local authority or company, to the principal officer thereof; (c) in case of any other association or body of individuals to the principal officer or any member thereof; (d) in the case of any other person (not being an individual), to the person who manages or controls his affairs" In view of clause (b) of clause 2 in the case of company, the notice is to be addressed to Principal Officer of the company. As per clause (1) of section 282, the notice is to be served on the person nam ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... house, and also upon some conspicuous part of the house (if any) in which the defendant is known to have last resided or carried on business or personally worked for gain, or in such other manner as the Court thinks fit." 14. The above rules lay down the procedure for service of summons/notice and, therefore, the procedure laid down therein cannot be surpassed because the intention of the legislature behind these provisions is that strict compliance of the procedure laid down therein has to be made. 15. The expression 'after using all due and reasonable diligence' appearing the rule 17 has been considered in many cases and it has been held that unless a real and substantial effort has been made to find the defendant after proper enquiries, the Serving Officer cannot be deemed to have exercised 'due and reasonable diligence'. Before taking advantage of rule 17, he must make diligent search for the person to be served. He therefore, must take pain to find him and also to make mention of his efforts in the report. 16. Another requirement of rule 17 is that the Serving Officer should state that he has affixed the copy of summons as per this rule. The circumstanc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and without stating the reasons for doing so, the adoption of the mode of substituted service cannot be legally justified. 18. In view of the above facts, it is obvious that neither the procedure laid down under Order V, Rule 17 has been followed nor that laid down under Order V, Rules 19 and 20 has been adhered to. Neither before taking recourse to service by affixture, the Assessing Officer or the concerned officer has recorded the finding to justify the service by this mode nor afterwards called for the affidavit or certificate of service by affixture from the Serving Officer. He has not certified that the service has been effected by adopting this course. In the case of Dr. K.C. Verma v. Asstt. CIT [2003] 84 ITD 33 (Delhi) SMC Bench-I, has considered similar matter and held that since the compliance of Rules 17 and 20 was not ensured before effecting service by affixture, the service cannot be treated to be a valid service and thus the assumption of jurisdiction was not justified. On this basis, the assessment made under section 144 in that case was held to be void ab initio. On the facts and circumstances of the instant matter which has been discussed above, the decision in t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e service by way of affixtution from the very beginning but neither the learned CIT(A) called report from the Assessing Officer nor took his affidavit nor recorded his statement to the effect that the affixture was done by him under the circumstances required under Rule 17 of Order V of C.P.C. 22. In the case of Sri Krishan v. CIT, the Hon'ble Delhi High Court has held that the service of the notice by affixture was bad in law, as it was not in conformity with the order V, Rule 17 of Code of Civil Procedure, 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 notice. 23. Another submission of the learned DR was that the registered notice was sent on 30-10-1995 and the same should have been served on the same day or on the next day i.e. on 31-10-1995, There is no force in the submission too. Firstly because, it is not the stand of the department that service was effected by the registered post upon the assessee. Neither the Assessing Officer nor the Commissioner (Appeals) has recorded such ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... riod of one year provided under proviso to section 143(3). The issue was not decided by the Tribunal. Therefore, the matter was restored to it for deciding the same. However, the Hon'ble Court observed as under: "It must be noted here that under the proviso to section 143(3) of the Act, the notice is required to be served on the assessee within a period of 12 months from the end of the month in which the return is filed." From the above observations of the Hon'ble Court, it is clear that the notice has to be served upon the assessee and mere issuance of notice within a period of 12 months is not sufficient. It may be pointed out here that in the order sheet entry dated 22-11-1995 itself it has been mentioned that the notice under section 143(2) was received from the assessee late and not that the assessee had received the notice before 1-11-1995. In any case, from this entry it is not established that any notice was served upon the assessee on 31-10-1995 on which date 12 months expired from the date of filing return. Thus, this argument of the ld. CIT, DR cannot be accepted. As the department has not been able to demonstrate that the notice under section 143(2) ..... X X X X Extracts X X X X X X X X Extracts X X X X
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