9911796707
TMI Blog2017 (4) TMI 348X X X X Extracts X X X X X X X X Extracts X X X X ..... was any refusal of notice by the assessee. In the report of Inspector, names of two witnesses are referred. The addresses of the witnesses are far away from the premises of the assessee. The report of the Inspector does not state that witnesses have identified the place or was known to them personally. As a matter of fact despite assessee’s repeated submission that notice has not been served properly, the AO has not bothered to serve the notice upon the assessee or his agent even though there was adequate time for the said service of notice through the ordinary means for subsequent years. It is settled law including that from the Hon’ble Apex Court in the case of CIT vs. Ramendra Nath Ghosh (1971 (8) TMI 26 - SUPREME Court ) that in absence of proper service of notice the assessment procedure lose their validity. - assessment orders in these cases are void abinitio. - Decided in favour of assessee - I.T.A. Nos. 516, 517 & 518/Nag/2014 - - - Dated:- 27-3-2017 - Shri Shamim Yahya, Accountant Member And Shri Ram Lal Negi, Judicial Member Appellant by : Shri K.P. Dewani Respondent by : Shri A.R. Ninawe ORDER Per Bench At the outset we note that there is a de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ector, Land Acquisition vs. Mst. Katiji Ors. 6. The assessee encloses herewith letter received from Shri Mahavir Atal delivering appellate orders on 03/12/2014 and also explaining the reason for delay in communication of appellate orders to assess. 7. In view of above, it is humbaly submitted that delay occurred due to demise of counsel nd failure on the part of staff in the office of the deceased counsel to communicate about the fate of appeals and to take action for filing appeals. It is sufficient cause for condonation of delay in filing appeals. 8. Considering the above factual position, it is humbly prayed that the delay in filing the above appeals be condoned and appeals be admitted for adjudication on merits. 2. We have heard both the counsel on the issue of condonation of delay. We find that the reasonable cause has been attributed to the illness and death of the earlier Advocate Shri M. Mani. Considering the overall facts and circumstances of the case, we condone the delay and hence the appeals are admitted. 3. At the outset we note that one common issue raised in all these appeals is the assessee s challenge to the validity of reopening. The commo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se for the below mentioned A.Ys. were issued by the ITO Ward 4(2), Nagpur, and served by way of affixture, on the below mentioned dates. Name of assessee. A.Y. Date of service of notice. Sh. Arun A. Moundekar 2003-04 26.3.2009 Sh. Arun A. Moundekar 2004-05 26.3.2009 Sh. Arun A. Moundekar 2005-06 26.3.2009 Sh. Arun A. Moundekar 2006-07 26.3.2009 Sh. Arun A. Moundekar 2007-08 26.3.2009 M/s Laxmi Anand Builders Developers. 2003-04 26.3.2009 M/s Laxmi Anand Builders Developers 2004-05 26.3.2009 Smt. Vandana Moundekar. 2007-08 26.3.2009 3. The notices were sent for service through a notice server but the assessee refused to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o 2007 -08. A copy of bank a/ c statement for the A. Vs. 2003-04 to 2007 -08. 5 However instead of filing these basic documents, the assessee again objected to the service of notices. On 17.8.2009, the Counsel of the assessee appeared and filed letter of authority The counsel was told that the Department has all the necessary evidence to prove that the notices U/s 148 have been properly served. The Inspectors report. do clarify that the assessee refused to accept the notices and the notices were also teared off when affixed. In fact, the ITO Ward 4(2), Nagpur, in his remarks has also noted that after the notices were served by affixture, the assessee as well as his Counsel was very well informed that the notices U/s 148 were served by affixture and to accept the same. Annexure 1 , 2 does settle the contention of the assessee that notices were not served. Even the counsel of the assessee was shown Inspectors report and also a notice U/s 148 to justify that the notices have been properly served. In fact, the conduct of the assessee do indicate the intentions of the assessee not to cooperate with the Department and to create unnecessary litigation without any base' or truth, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... with documentary evidence by 16.11.2009. On 16.11.2009, the assessee submitted a letter that he has made an application under RTI for supply of Inspectors report and a copy of notice U/s 148. The assessee vide this Office letter 16.11.2009, was categorically made aware that the proceedings under the Income Tax Act and RTI are separate and I. T. proceedings cannot be stalled. He was also made aware that the assessee can very' well come and peruse the records of the Department in respect of service of notices and was also informed that the Department is not willing to complete the proceedings without giving you an opportunity of being heard. He was also informed that the reasons for reopening cannot be given to you as you have not filed any return of in response to notice U/s 148 and the Department is bound by the decision of the Apex Court reported in 259 ITR 19. The final opportunity was granted to the assessee for 20.11.2009. None attended on 20.11.2009 but the Counsel of the assessee appeared on 23.11.2009 and again reiterated that notices have not been served. 10. Upon assessee s appeal learned CIT(Appeals) affirmed the AO s order in this regard by making following obse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Act. Notice u/s 148 was issued and served on the appellant on 26.03.2009. The notices were first time sent simultaneously for AYs 2003-04, 2004-05, 2005-06, 2006-07 2007-08 through the Notice Server. The AO in Para 3 of the assessment order has recorded a finding that since the assessee denied to accept the notice from the Notice Server, an Inspector of Income Tax was deputed to effect the service on the assessee by way of affixture. The proof of service of notice and the copy of Inspector s Report are forming the part of the assessment order as Annexure 1 2, respectively. Subsequently, a notice u/s 142(1) dated 18.07.2009 was issued calling for explanation of the assessee on the impounded documents. Notice was sent by RPAD to the assessee but the assessee choose not to reply to the notice and objected to the service of notice u/s 148 made by affixture. Subsequently, there was a change in the jurisdiction of the case to the ITO Ward 4(1), Nagpur in the month of July, 2009. On 05.08.2009 Notice u/s 142 was again issued to the assessee calling for the details asked for vide notice dated 26.03.2009 which remained un-complied. Once again instead of filing the relevant details, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was specifically asked to produce all the documents latest by 6.11.2009. The assessee assured to explain all the impounded documents on 6.11.2009 but neither the assessee nor the Counsel for the assessee attended nor any explanation/documents were filed, except for adjournment letter. 6.2 Since the assessee failed to comply with the statutory notices issued by the AO during the assessment proceedings and also failed to file the explanation on the impounded material found during the survey action, the AO, therefore proceeded to complete the best judgement assessment u/s 144 of the I.T. Act, 1961. The AO, after having analysed the material available on record including the impounded material, made the additions of ₹ 6,80,690/- under the head Income from Business and ₹ 14,61,900/- under the head Income from other sources , ₹ 28,000/- under the head Income from House Property , ₹ 25,000/- under the head Income from documentation work and ₹ 1,30,000/- under the head Income from other sources as it is unexplained investment. The AO has discussed the issues on the basis of which the additions were made in Para Nos. 10 to 18 of the assessment or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . It is, therefore, immaterial from the point of view of assessee whether notice is served on him through Notice Server or by Post. What is material is that a valid notice should b served upon the assessee. Since there was a Survey action conducted at the business premises of the assessee, which has resulted into impounding of certain incrimination papers and documents, onus therefore, was on the appellant to explain the contents of such impounded material, which he has failed to discharge by not accepting a valid notice issued and served on him by the AO. The appellant, thus, has refrained from availing an opportunity conferred upon him in the interest of principles of natural justice due to which AO was constrained to pass exparte order u/s 144 of the Act. I, therefore, hold that the service of notice u/s 148 was a valid service through affixture, in the facts and circumstances of the case, therefore, the AO has assumed a valid jurisdiction to pass order u/s 144 r.w.s. 147 of the Act. 11. Against the above order the assessee is in appeal before the ITAT. 12. The contentions of the learned counsel of the assessee are summarized as under : A) AO has observed that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ived by assessee and responded to in assessment proceedings. Nothing on record that assessee is avoiding service of notice of department. I) In the case of assessee service of notice u/s 148 of I.T. Act, 1961 is observed to be by A.O. by way of affixture. The valid service of notice by affixture can be only by following Provisions of Order V of Civil Procedure Code 1908. J) In the case of assessee it was submitted that there is no valid service of notice by affixture and thus notice u/s 148 cannot be said to have been served on assessee. K) Provisions of sec. 282 of I.T. Act 1961 provide for manner of service of notice. Undisputed fact that notice has not been served in person on assessee nor it has been served by post. L) Provisions of Rule 17 to 20 of Order V of Civil Procedure Code 1908 provide for procedure of service of notice by affixture. Evidence on record would show that provisions of rules of Order V of Civil Procedure Code 1908 are not complied to conduct that valid service of notice u/s 148 has taken place. M) A.O. has not made reasonable attempts to service notice in regular manner and was not justified to resort to make substituted service of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... information of notice issued u/s 148 is not sufficient to assume jurisdiction to assess u/s 148 of I.T. Act 1961. Reliance on: i) (1977) 107 ITR 0409 Johar Forest Works vs. CIT. T) Observation of CIT(A) that no procedural lapse in service of notice u/s 148 is contrary to evidence on record. Ratio of decision relied upon before CIT(A) are clearly applicable to the facts in the case of assessee. U) Reasons recorded not provided to assessee. Non providing of reasons recorded before completion of assessment results into assessment framed as bad in law and deserves to be quashed. 13. Per contra learned D.R. relied upon the orders of the authorities below. 14. I have carefully considered the submissions and perused the records. I find that notice u/s 148 issued in this case is dated 26-03-2009. It has been claimed that the assessee has refused to accept the notice and hence affixture was made on 26-03-2009 itself. In this regard before proceeding further I may gainfully refer to the relevant laws relating to service of notice in this regard as under : [Service of notice generally, 282.(1) The service of notice or summon or requisition or order or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r plaintiff to appear in person (1) Where the Court sees reason to require the personal appearance of the defendant, the summons shall order him to appear in person in Court on the day therein specified. (2) Where the Court sees reason to require the personal appearance of the plaintiff on the same day, it shall make an order for such appearance. 4. No party to be ordered to appear in person unless resident within certain limits No party shall be ordered to appear in person unless he resides- (a) within the local limits of the Court's ordinary original jurisdiction, or (b) without such limits but at place less than fifty or (where there is railway or steamer communication or other established public conveyance for five-sixths of the distance between the place where he resides and the place where the Court is situate) less than two hundred miles distance from the court-house. 5. Summons to be either to settle issues or for final disposal The Court shall determine, at the time of issuing the summons, whether it shall be for the settlement of issues only, or for the final disposal of the suit; and the summons shall contain a direction accord ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 13. Service on agent by whom defendant carries on business (1) In a suit relating to any business or work against a person who does not reside within the local limits of the jurisdiction of the Court from which the summons is issued, service on any manager or agent, who, at the time of serves, personally carries on such business or work for such person within such limits, shall be deemed good service, (2) For the purpose of this rule the master of a ship shall be deemed to be the agent of the owner or chartered . 14. Service on agent in charge in suits for immovable property Where in a suit to obtain relief respecting, or compensation for wrong to, immovable property, service cannot be made on the defendant in person, and the defendant has no agent empowered to accent the service, it may be made on any agent of the defendant in charge of the property. 23[15. Where service may be on an adult member of defendant's family Where in any suit the defendant is absent Prom his residence at the time when the service of summons is sought to be effected on his at his residence and there is no likelihood of his being found at the residence within a reasonable ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the affidavit of the serving officer, and may, if it has been so verified, examine the serving officer on oath, or cause him to be so examined by another Court, touching his proceedings, and may make such further enquiry in the matter as it thinks fit; and shall either declare that the summons has been duly served or order such service as it thinks fit. 22[19A. Simultaneous issue of summons for service by post in addition to personal service (1) The Court shall, in addition to, and simultaneously with, the issue of summons for service in the manner provided in rules 9 to 19 (both inclusive), also direct the summons to be served by registered post, acknowledgement due, addressed to the defendant, or his agent empowered to accept the service, at the place where the defendant, or his agent, actually and voluntarily resides or carries on business or personally works for gain: Provided that nothing in this sub-rule shall require the Court to issue a summons for service by registered post, where, in the circumstances of the case, the Court considers it unnecessary. (2) When an acknowledgement purporting to be signed by the defendant or his agent is received by the Co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ees was that at the relevant time they had no place of business. The report of the serving officer does not mention the names and addresses of the person who identified the place of business of assessees. That officer does not mention in his report nor in the affidavit filed by him that he personally knew the place of business of the assessees. Hence, the service of notice must be held to be not in accordance with the law. The possibility of his having gone to a wrong place cannot be ruled out. The High Court after going into the facts of the case very elaborately, after examining several witnesses, has come to the conclusion that the service made was not a proper service. Hence, it is not possible to hold that the assessees had been given a proper opportunity to put forward their case as required by s. 33B. Ramendra Nath Ghosh vs. CIT (1967) 66 ITR 414 (Cal) : TC57R affirmed. Notice Service by affixture-Validity-Name of person who identified assessee s business premises not mentioned in the report of Inspector- Inspector also did not claim personal knowledge of assessee s premises Service of Notice by affixture is invalid. 2) CIT vs. Kishan Chand. 328 ITR 173 (P H): ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d by no stretch of imagination can be said to be the agent of the assessee and admittedly no notice was tendered either to the assessee or his agent nor the same was refused either by the assessee or his agent. Under order 5, r. 17 of the CPC, the affixation can be done only when the assessee or his agent refuses to sign the acknowledgement or could not be found. Here, in the present case, no effort was made by the IT Department to serve the notice upon the assessee, since the company of the assessee was closed due to Holi festival holidays, and admittedly no effort was made by the serving officer to locate the assessee. Even otherwise, as per order 5, r. 19A of the CPC, the notice sent by registered post ought to have been sent along with acknowledgement due, but admittedly, it was not sent with acknowledgement due. So, from the entire material available on record there is no hesitation in holding that there has been no valid service of notice under s. 148 upon the assessee as the same was neither tendered to the assessee or his agent, nor the same was refused by either of them. Since there has been no proper service of notice on the assessee, the reassessment proceedings, resulti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... regard on the part of the assessee to the legal procedures. It is settled law including that from the Hon ble Apex Court in the case of CIT vs. Ramendra Nath Ghosh (supra) that in absence of proper service of notice the assessment procedure lose their validity. 18. In these circumstances on the conspectus of above factual scenario and the and case laws, I am of the considered opinion that in this case notice dated 26-03-2009 claimed to have been served by affixture is not at all a valid notice as mandated by law. In these circumstances I have no hesitation in holding that the said affixture is in utter disregard of the Rules of Law and hence I hold that in absence of proper notice the assessment order is void ab initio. Since I have already quashed the assessment for lack of service of notice, adjudication and other limbs of learned counsel s submission on jurisdiction as well as on merits are now only of academic interest. Hence I am not engaging into the same. 7. Since it is undisputed that the facts are identical and it is also not the case that Hon ble jurisdictional High Court has reversed the above decision of this Tribunal, following the precedent, we hold that in ..... X X X X Extracts X X X X X X X X Extracts X X X X
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