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TMI Blog2015 (7) TMI 1318X X X X Extracts X X X X X X X X Extracts X X X X ..... he ground of non service of the jurisdictional notice u/s.143(2) of the Act. Background facts 3. The assessee is a partnership firm, consisting of two partners, namely Shri Shripal Shah and Shri Sriraj Puzikunity, engaged in the business of, as per the assessment order, offset and screen printing, with its registered address at 662, Forjet Hill, 3/37, Navyug Nagar No. 1, Tardeo, Mumbai-400 036, which is also its registered address with the Income tax Department. It is an assessee with the Department (under PAN No. AADFC 7740 A), and filed its return of income for the relevant year, which was duly accompanied by audited accounts, with its jurisdictional Assessing officer (A.O.), i.e., ITO-16(2)(4), Mumbai, on 30.09.2009. The same came to be selected for verification under the verification procedure under the Act. Accordingly, notice u/s.143(2) was issued on 23.08.2010 (RPB pg. 17). It is the service of this notice which is the subject matter of dispute; the same being vital for the assumption of jurisdiction to frame an assessment u/s. 143(3), which stood finally made by the A.O. at Rs. 18.65 crores, invoking section 145(3) of the Act, and since confirmed by the first appellate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ereof. In rejoinder, the ld. Authorized Representative (AR), the assessee's counsel, relied on section 21 of the Evidence Act, defining the circumstances when an admission could be proved by and on behalf of the assessee making it. The resister of dispatch maintained by the Department is an admission by it and, therefore cannot by itself prove it. Further, the decision in the case of Milan Poddar (supra) would not apply, as in that case, making reference to para 14 of the said decision, there was no record of service with the Revenue, in which case therefore the presumption u/s.27 of the General Clauses Act and section 114 of the Indian Evidence Act would become applicable, while in the instant case the concerned recipient had denied the receipt of any notice from the IT Department. Discussion 5. We have heard the parties, and perused the material on record. 5.1 It would be appropriate to proceed by reproducing the relevant provisions, i.e., in their relevant parts, being sections 282 and 292BB of the Act: 'Service of notice generally. 282. (1) The service of a notice or summon or requisition or order or any other communication under this Act (hereafter in this sectio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , to have been effected at the time at which the letter would be delivered in the ordinary course of post.' Section 114 (of the Indian Evidence Act, 1882): 'Section 114 in The Indian Evidence Act, 1882 114. Court may presume existence of certain facts. -The Court may presume the existence of any fact which it thinks likely to have happened, regard being had to the common course of natural events, human conduct and public and private business, in their relation to the facts of the particular case. Illustrations The Court may presume- (a) That a man who is in possession of stolen goods soon after the theft is either the thief or has received the goods knowing them to be stolen, unless he can account for his possession; (b) That an accomplice is unworthy of credit, unless he is corroborated in material particulars; (c) That a bill of exchange, accepted or endorsed, was accepted or endorsed for good consideration; (d) That a thing or state of things which has been shown to be in existence within a period shorter than that within which such things or state of things usually cease to exist, is still in existence; (e) That judicial and official acts have been regula ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... taken in such proceedings, saving thereby the right of objection in its respect. Coming to the aspect of timeliness of the service, the same having been caused by the Revenue per post, the same shall have to be considered with reference to the relevant provisions of law governing the same. Section 282B of the Act clearly provides for service by post as one of the accepted modes of service of any communication (as defined therein) under the Act. Accordingly, section 27 of the General Clauses Act shall apply. What, therefore, we are required to see is if the parameters of the said section are met or not. We say so as, even though only the aspect of the timeliness of service stands objected to, invoking the deeming of section 27 of the General Clauses Act could only be where all its elements are satisfied. In the present case, the service has been made by 'speed post'. The issue as to whether the same constitutes 'registered post', the species of post referred to in section 27 of the General Clauses Act, and to which only, therefore, the said provision is applicable, stands, as noted with approval in Milan Poddar (supra), clarified by the Tribunal, whose order was under challenge b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... either prior or after 30.09.2010. The same would not, however, in any manner by itself operate to dislodge the presumption of section 27, save and except to the extent that the time of the service shall be on the basis of the evidence led. The only 'evidence' produced by the assessee is that Shri Akshay V. Shah, the person whose signature and mobile number appear on the receipt, 'denies' having received the same. In this regard, the question that arises is as to who in that case received the notice; its service being not in dispute, but only the time thereof. That is, there is no evidence or basis to test or disprove the service on 30.09.2010, which is admittedly in time in terms of section 143(2) of the Act read with proviso thereto. The fact of the service on Yamini Patil, another noticeee, on 01.09.2010, i.e., the date similarly specified on the receipt, similarly prepared by the Postal Department, lends credence to the claim of the dispatch list as prepared being genuine and authentic and, further, that the notices (communications) were actually dispatched as per the said document. The same thus bolsters the Revenue's case of the service being actually effected on the date as s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng it, considering it as documents relating to his father's business (answers to Q. Nos. 13 and 14). Yes, he also explains of not having signed any notice relating to income tax or not visiting the Income Tax Office (Q. No. 13). In this regard, visiting the income tax office is irrelevant. As to the denial of not having signed any income tax notice, the same flies in the face of his having signed on the receipt, which clearly bears the particulars, which we may reproduce for ready reference: No. ITO-16(2)(4)/U/S.143(2) A.Y. 2009-10 No.100 ________________________________ To, M/S. COLOR CRAFT Mumbai-36 Continuing further, his statement of not knowing the firm, M/s. Color Craft, which has its registered office at the same address, in terms as specific and detailed as possible, is ludicrous. This is even ignoring and de hors the signature on a receipt of a document addressed to the said firm. One is, given his educational qualification (B.Com/Q. No. 2), even otherwise hard put to explain his behaviour in accepting a document under his signature, particularly of a firm with which he claims no relation. It becomes incomprehensible and outside the bounds of credulity where ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lauses Act r/w s. 114 of the Evidence Act. Citing several decisions by the hon'ble apex court, the scope of the said provisions stands explained by the tribunal (refer paras 23 to 26, at pgs. 634-635 of the reports), whose order in the relevant part stands reproduced by the hon'ble court in Milan Poddar (supra) (and which also explains our reference to the para numbers thereof). The rebuttal of the statutory presumption, it is further explained with reference to, again, decisions by the apex court, could only be where the party denying the service proves that it was not really served and that he was not responsible for the absence of proof by the party denying the service that he has not received it or that he was not responsible for the non service (para 27/pg. 636 of the reports). No such rebuttal, or evidence to this effect, as afore-stated, has been led in the instant case. The foregoing would also show that the reliance on the said decision by the Revenue is not, as contended, misplaced, and toward which we may also refer to the substantial question of law '(a)' raised before the hon'ble court (pg. 623 of the reports). Rather, in the facts of that case, there was no proof of d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ide accordingly. 7. We may next discuss the case on its merits, i.e., of the income assessed, for which opportunity was specifically granted, and the matter finally heard after several adjournments. At the outset, the ld. AR informed the Bench that he was not in a position to furnish any bills, vouchers, etc. in support of assessee's case in-as-much as the same has been lost in fire in April, 2010. So however, it was incumbent on the assessing authority to estimate income, i.e., upon the rejection of the book results, after considering all the relevant facts/materials. The assessee has during the year traded in paper, which yields a gross profit rate of 1% to 1.5%, i.e., as disclosed. As such, adopting the profit rate of the assessee's business of offset and screen printing, which stood at 41.08 % & 48.89 % for AYs 2007-08 and 2008-09 respectively, was not valid. The AO, however, we observe, estimated the profit for the current year at 41.08 %, i.e., as returned for the immediately preceding year, being in fact the lowest of the profit rates obtaining for the past three years, relying on the decisions in the case of Action Electricals vs. Dy. CIT [2002] 258 ITR 188 (Del) an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ious deficiencies, as well as by the ld. CIT(A) (refer paras 13 - 15 of his order), which have not been rebutted by the assessee in any manner. The books were not produced under a false plea of the same having been destroyed in fire. How could the assessee, under the circumstances, we wonder, challenge the non acceptance of its book results and the invocation of the best judgement assessment by the assessing authority? Our second observation in the matter, as would also be apparent from the foregoing, is that the assessee has not brought any material on record to substantiate its claim of a change in business, in whole or in part, even as the audit report u/s.44AB of the Act; the assessee's accounts being audited, being further by an independent professional, is the most direct and pertinent material, and which would be available. On the contrary, the ld. CIT(A) clearly refers to the audit report furnished (at pg. 14 of his order), stating of it as reporting the assessee's business as: 'Off set and screen printing', i.e., as mentioned in the assessment order and as being taken by the Revenue, and of there being no change in the business during the year, vide columns 8(a) and 8(b) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ity - physical or financial, marketing resources, etc. The second aspect that draws our attention is the change in the level of indirect expenditure. The same, at 36.52% for the immediately preceding year, and at 44.67% for the year prior thereto, falls to as low as 1.28% for the current year, indicating, once again, of a change in the business profile. True, the said expenditure being largely fixed or semi fixed, tends to remain constant, but that assumption would be valid only for the same level of physical activity/output, or where it falls in the same range and, besides, would not fall to negligible levels (in terms of turnover), i.e., were it to bear the same character, as it does. In fact, holding the same constant at Rs. 25.80 lacs, i.e., as obtaining for the immediately preceding year, implies an increase of Rs. 32.21 lacs (Rs.58.01 lacs - Rs. 25.80 lacs) for the current year, and which works to 0.72% of the incremental turnover of Rs. 4468.68 lacs for the year, i.e., as against a level of 36%-37% (of the turnover for the preceding year, falling, thus, to as low as 2% of its earlier level, signifying, again, a change in the business profile. Couple this with the fact that ..... X X X X Extracts X X X X X X X X Extracts X X X X
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