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TMI Blog2019 (9) TMI 151X X X X Extracts X X X X X X X X Extracts X X X X ..... r dt.06-01-2015 along with notice u/s.142(1) of the Act was issued to assessee, asking him to furnish the required information. Finally, a show cause letter dt.17-02-2015 was issued to the assessee as a final opportunity. 2.1. In response to the said notice, the assessee's representative appeared and requested to furnish the reasons for reopening and permission for examination of the assessment record. As requested by the assessee, the reasons for reopening were communicated to him vide letter dt.24-02- 2015 and the assessee was also permitted to inspect the records on 25-03-2015. Thereafter, the assessee was directed to produce the books of account, copies of purchase deed and sale deeds and development agreements with land lords and also the copy of the return of income, including Trading and Profit and Loss Account, Form No.3CD and 3CB and vouchers for expenses. In response to the same, assessee filed the copy of the return along with computation of income, audited reports in Form 3CB & 3CD and copies of unregistered development agreement cum GPA dt.27-03-2006. No books of accounts along with supporting vouchers were submitted. The AO, thereafter, based on the material availabl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... recorded that the assessee has not filed the return of income and also that assessee has not admitted the capital gains on the said property. He submitted that these reasons themselves show that there is no application of mind by the AO to the documents on record since the assessee has filed the return of income. Further, he submitted that the alleged notice u/s.148 of the Act dt.26-03- 2014 was never served on the assessee. He referred to Page 32 of the Paper Book, wherein the tracking record of the notice sent to the assessee is placed and brought to our notice that the delivery was un-successful due to insufficient address. Therefore, it is submitted that notice u/s.148 of the Act was not served on the assessee. As regards the findings of AO that the notice was served by affixture also, he pointed out that the AO has neither taken any initiative to find out the correct address of the assessee nor the notice by affixture witnessed by any independent witnesses. He also referred to the docket order of the assessment proceedings, wherein there is no noting that the notice u/s.148 of the Act has been served by way of affixture. Therefore, according to him, this notice has never bee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 48 of the Act, he prayed that the assessment may be set aside and addition may be deleted. 4. Ld.DR, on the other hand, supported the orders of authorities below, submitted that the notice u/s.148 of the Act was within time and final notice was also served by affixture at the assessee's premises and therefore, there is a valid notice. In support of this contention, he placed reliance upon the following case law: i. Sudev Industries Ltd., Vs. CIT (2018) [99 taxmann.com 109] (SC); ii. CIT Vs. Sudev Industries Ltd., (2018) [94 taxmann.com 373] (Delhi); 5. Having regard to the rival contentions and material on record, we find that for the relevant assessment year before us is AY.2007-08 for which, notice u/s.148 could be issued on or before 31-03-2014. In the case before us, the AO has issued notice u/s.148 of the Act on 26-03-2014. Therefore, it is within the period of six years from the end of relevant assessment year. However, it is clear that assessee has not been served notice u/s.148 of the Act and even the notice by affixture was also served on 04-04-2014. But as rightly pointed out by the Ld.Counsel for the assessee, there is no report of the AO, which contains the names ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... notice u/s.143(2) dated 08-09-2010 which was issued but returned by the postal authorities with remarks recorded on 27-09-2010 that the addressee is not living at the given address and the further address is not known. On a perusal of such envelope, it is observed that the notice was sent to the assessee at the address 39/11, Budhwar Peth, Solapur, Maharashtra 413002. As against this, the assessee filed his return with Pune address of F-304, Vrundawan Apartments, Model Colony, Shivajinagar, Pune - 411 016. The AO has also recorded the Pune address of the assessee in the assessment order passed on 30-12-2011. On a pertinent query, the ld. DR admitted that the address given in the return is the same which has been mentioned in the assessment order. On a further question as to how the notice was sent at the Solapur address of the assessee when the return of income contained Pune address, the ld. DR submitted that the Solapur address has been given by the assessee in his PAN details and the system generating notice u/s. 143(2) took up such address from the PAN database. The ld.DR took us through Rule 127 which provides that notice etc. may be delivered on any of the addresses which, in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on'ble Supreme Court in Banarasi Devi Vs. ITO (1964) 53 ITR 100 (SC) and dissented with its own judgment in CIT Vs. Avi- oil India Pvt. Ltd. (2010) 323 ITR 242 (P&H) in which it was held that notice u/s.143(2) should not only be issued but also served within the stipulated period and in the absence of such a valid service, the assessment is vitiated. 21.3. Similarly, the Hon'ble Gujarat High Court in Shanabhai P. Patel vs. R. K. Upadhyaya, ITO (1974) 96 ITR 141 (Guj) dealt with a situation in which reassessment notice was issued within time-limit but served beyond the prescribed period of four years. The Hon'ble High Court held that sec. 149 enjoins that a notice should be issued within prescribed period. It held that the words "service of notice" or "issuance of notice" have no fixed connotation but are interchangeable and same meaning should be given to both the words used in ss. 148 and 149. In reaching this conclusion, their Lordships also relied on Banarsi Debi vs. ITO (1964) 53 ITR 100 (SC). The Revenue carried the matter before the Hon'ble Summit Court. In R. K. Upadhyaya, ITO vs. Shanabhai P. Patel (1987) 166 ITR 163 (SC), their Lordships highlighted the difference in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... find any relevance of the judgment in Madan & Co. (supra) to the facts of the instant case. That was a case involving interpretation of section 11 of the Jammu & Kashmir Houses and Shops Rent Control Act, 1966 in which the respondent issued a notice to the petitioner calling upon him to pay the arrears of rent and also terminate tenancy. The notice could not be served through postmaster who tried to serve the same on the addressee but eventually returned with the endorsement "left without address, returned to sender". The question arose before the Hon'ble Supreme Court as to whether it should be considered as a proper service. Considering the section 11(1) of the Jammu & Kashmir Houses and Shops Rent Control Act, the Hon'ble Supreme Court observed that if the addressee refuses or declines to accept the notice, then it can be considered as a proper service. When a postman calls at the address mentioned and fails to contact the addressee and the same is returned to the sender because the tenant is away from the premises for considerable time, then such delay should be attributed to the tenant's own conduct and should be considered as "served". We do not find any applicability of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lation made after the commencement of this Act authorizes of requires any document to be served by post, where the expression "serve" or either of the expressions "give" or "send" or any other expression in used, then, unless a different intention appears, the service shall be deemed to be effected by properly addressing prepaying and posting by registered post, a letter containing the document, and unless the contrary is proved, to have been effected at the time at which the letter would be delivered in the ordinary course of post'. It is manifest from the mandate of section 282 of the Act read with section 27 of the General Clauses Act that these provisions deal with the service of notice and more particularly the service of notice by post. Section 27 provides that service by post shall be deemed to be effected by properly addressing, pre-paying and posting by registered post. It means that when a letter containing the document is properly addressed, pre-paid and posted by a registered post, it will be considered as a valid service. It is not the end of the provision. There is a specific mention of the words `unless the contrary is proved'. It means that the presumption of vali ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... en in the PAN, which may be different from the address given in the return of income, the assessee cannot assail the valid service of such a notice. But the fact of the matter is that the notice etc. must be delivered at the one of addresses given in the rule. Simply issuing a notice at the address given in PAN etc., which is not delivered to the assessee, may satisfy the requirement of the initial issue of notice at the correct address but not that of service of such notice until such notice is actually delivered or served. It can be seen from the discussion made above that no notice u/s 143(2) was delivered or served upon the assessee. Thus rule 127 does not assist the case of the Revenue in any manner. Before parting with this issue, we want to make it clear that the question as to whether or not the rule 127 will have retrospective effect is left open as adjudication on this issue is not warranted in the facts of the instant case since the notice was not delivered or served upon the assessee at any address. iv. Whether the notice u/s 143(2) was deemed to have been issued/served ? 23.1. The ld. DR invoked the provisions of section 292BB to contend that since the assessment p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Since the proviso to section 143(2) talk of service of notice and not issue of notice, let us examine if the notice u/s 143(2) was served on the assessee in terms of section 292BB on his attending the assessment proceedings. 23.5. The assessee has placed on record a copy of his letter dated 28-11-2011 addressed to the DCIT, Circle-3, PMT Building, Pune objecting to the service of notice dated 08-09-2010 purportedly issued u/s. 143(2) and served upon him. The assessee categorically stated that "I would like to state that the said notice 08-09-2010 has not been received by me". It has also been mentioned in para 4 of the assessee's aforesaid letter that "hence, this notice is not a valid notice and bad in law. I request you to please quash the assessment proceedings". This letter of the assessee bears the stamp of the office of ACIT, Circle-3, Pune with the date of 28-11-2011. On examination of the assessment folder produced before us by the ld. DR, it is found that the original of this letter bearing the date of receipt by the office of ACIT, Circle-3 as 28-11-2011, is available there. The assessment order in this case was passed on 30-12-2011. Thus, it is proved that the assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pment of the said land, in consideration of which, it has received a portion of the land. This transaction of transfer of land in favour of assessee has to be taxed in the hands of the land owners as there is transfer of land. As far as the assessee is concerned, he is liable to capital gain, when it sells its share of land. The assessee had filed the sale deed dt.15-11-2006 before the CIT(A) to demonstrate that the it had purchased land on 15-11-2006 in acres and had immediately sold the plots on 16-11-2006 i.e., the very next day. This shows that assessee has developed the land and sold the same to the land owners. Therefore, the assessee's contention that - there is no transaction of any transfer by the assessee to the land owners, is to be accepted. Further, both the AO and the CIT(A) have failed to consider the transaction as a whole and failed to allow the cost of acquisition of the land to the assessee while computing the income from the transaction of sale. As rightly pointed out by the Ld.Counsel for the assessee, if the transaction was to be considered as transfer, then the AO and the CIT(A) ought to have taken the transaction of sale dt.15-11-2006 also into consideration ..... X X X X Extracts X X X X X X X X Extracts X X X X
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