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TMI Blog2019 (2) TMI 2117X X X X Extracts X X X X X X X X Extracts X X X X ..... able to be quashed. Method of serving notic e - non serving assessee notice at his proper address - as argued due to non -possibility of service of notice through ordinary means, decided to serve through affixture at the last known address of the assessee - HELD THAT:- As we have called for the record of assessment proceedings, from which it does not reflect that the said notice u/s 148 was ever served upon the assessee or received by the assessee at the address as mentioned in the notice u/s 148 and the order for affixture of notice dated 03.03.2012. Even we realized that the Assessing Officer has sent the notice u/s 148 to the assessee at the address i.e. Behind Power House, Mohalla Saingarh, Pathankot, whereas in the assessment order, the address has been written as C/o Kundan Vila, LIC Lane, Dhanu Road, Pathankot, which further strengthen the case of the assessee that no notice or any enquiry letters has ever served upon the assessee at his proper address. Therefore, non-service of notice u/s 148 of the Act, vitiate the assessment proceedings and therefore on this ground also, the assessment proceeding/order is liable to be quashed. Hence, on the aforesaid analyzations and deli ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ons but also filed the application for admission of additional grounds, contents of which for the sake of brevity and completeness are reproduced herein below. PRAYER FOR ADMISSION OF ADDITIONAL GROUND It is humbly prayed that the Hon'ble Tribunal may most kindly allow admission of the following additional grounds:- 1) The assessment order deserves to be quashed as the proceedings under section 147 have been initiated on the basis of suspicion and there was absolutely no material on record giving the AO any reason to believe that any income has escaped assessment. 2) That enquiry notices were issued without seeking approval from the CIT- 2, Amritsar and as such the assessment proceedings initiated u/s 147 were vitiated. Reliance is placed on the judgement of the Hon'ble Supreme Court in the case of National Thermal Power Corporation Ltd reported at 229 ITR 383 wherein the Hon'ble Supreme Court has held that an additional legal ground if the same emanates from the facts on the record. The aforementioned ground is explicitly a legal ground which is emanating from the Reasons recorded under section 148(2) of the Income tax Act. A copy of the Reasons Recorded is enclosed he ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... w before the ITAT also as wells settled as under. (Gkn Driveshafts (India) Ltd. vs Income Tax Officer And Ors. on 25 November, 2002) holding that when a notice under Section 148 of the Income tax Act is issued, the proper course of action for the noticee is to file return and if he so desires, to seek reasons for issuing notices. The assessing officer is bound to furnish reasons within a reasonable time. On receipt of reasons, the noticee is entitled to file objections to issuance of notice As the assessee has not raised objection during the assessment proceeding and even before CIT(Appeal), ground is not valid. (ii) The additional Grounds raised for the first time before the ITAT without any sufficient cause for not raising before the authorities below is not justified at all. Similar view has been taken as per the following case laws. M/S. Sanghvi Reconditioners Pvt. Ld vs Union Of India Ors 5-2-2010 (SC) recorded as based on more than sufficient material ( abc))) Ultratech Cement Ltd vs. ACIT (Bombay High Court) 2017 Goodfath Reconstruction Pvt LD vs ACIT (18-9-13) ITAT Amritsar (iii) Additional ground is also not valid as there is proper application of mind as the reason 2) Eve ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rial after following due procedure, it cannot be assailed, it may involve change of opinion but not at par with mere change of opinion. (Tilak raj bedi vs JCIT (2009) 319 ITR 385-P H) 7) It is well settled that even on the basis of audit objection on the on the point of fact can be a valid ground for reopening of assessment. (ii) Usha International Ltd, vs Assessee on 9 March, 2015 (ITAT Delhi)- As this tangible material, in the shape of audit objection, came into existence after the completion of the original assessment and led to the initiation of reassessment, we hold this report of the internal audit party, formed a valid foundation for the initiation of reassessment proceedings, thereby pushing the case outside the ambit of 'change of opinion. (iii) CIT PVS Beedies (P) ltd vs. 1999 237 ITR 13 SC (8) It is also well settled that even if the information be such that it could have been obtained during the previous assessment from an investigation of the materials on the record, or the facts disclosed thereby or from other enquiry or research into facts or law, but was not in fact obtained, the jurisdiction of the Income-tax Officer is not affected. (AIA firm vs CIT (1991) 189 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 33 of the Act which says: [Provided further that the power in respect of an enquiry, in a case where no proceeding is pending, shall not be exercised by any Income Tax Authority below the rank of [Principal Director or] Director or [Principal Commissioner or] Commissioner [other than the Joint Director or Deputy Director or Assistant Director] without the prior approval of the [Principal Director or ] Director or, as the case may be, the [Principal Commissioner or] Commissioner.] From the contents of the proviso, it is clear that power in respect of an enquiry, in a case where no proceeding is pending, shall not be exercised by any Income Tax Authority below the rank of Officers as specified in the proviso, without the prior approval of the higher authorities as specified, which is Commissioner in the instant case. The proviso is mandatory in nature therefore cannot be side-lined. 8.1 While coming to the order sheet of assessment proceedings, it reflects that before initiating an enquiry for framing the reasons u/s 147 of the Act, the assessee nowhere got approval of the Commissioner, hence, on this ground alone, the assessment proceedings are liable to be quashed. 9. While coming ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... records of this office, it has found that the above named person has not filed his return of income for the Assessment Year 2005-06. In second para, observed that in view of the above facts, there is reason to believe that on account of assessee s failure to make the return of income u/s 139 of the Act, income of Rs. 13,32,482/- chargeable to tax has escaped assessment i.e. unexplained investment made by the assessee on account of investment made by the assessee on account of investment made for the purchase of property at Rs. 13,32,482/- during the previous year relevant to the assessment year 2005-06 within the meaning of section 147 of the Income Tax Act 1961. 9.2 Let us to peruse the relevant provisions of law: 147. If the AO has reason to believe that any income chargeable to tax has escaped assessment for any A.Y., he may, subject to the provisions of sections 148 to 153, assess or reassess such income and also any other income chargeable to tax which has escaped assessment and which comes to his notice subsequently in the course of proceedings under this section, or recompute the loss or the depreciation allowance or any other allowance, as the case may be, for the a.y. conc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed upon relevant material on which a reasonable person could have form the requisite belief. In the present case, the first part is only information and the second paragraph of the so-called reasons is mere reason. From the reasons recorded, it nowhere reflects that the Assessing officer has ever applied his own mind and independently arrived at a belief that on the basis of the material which he had before him, income had escaped assessment and made any exercise to find out the real controversy and/or material to substantiate the initiation of process u/s 147 of the Act and ever incorporated the material before re-opening the assessment and satisfied himself before issuing the notice u/s 148 of the Act. It is clear that the Assessing Officer failed to make any exercise for reopening of the case independently and with corroborative material. The jurisdictional High Court in the case of CIT vs. Smt. Pramjit Kaur (supra) rightly held that the Assessing Officer has to act on the basis of reasons to believe and not on reasons to suspect . The decisions relied upon by the revenue department are factually dissimilar, whereas the facts of the instant case are similar and identical to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rvice of the notice on the assessee that apparently seems to be mere formality without any basis ,which creates many doubts and shrouds in the genuineness of the assessment proceeding, hence, we do not any hesitation to hold that the notice dated 20.09.2010 as well as 28.09.2010 by way of affixture never been served upon the assessee and in the absence of statutory notices, the Assessment order can not be held valid and therefore on the aforesaid reasons is liable to be set aside and pursuant thereto the appellant order which is impugned herein also liable to be set aside. 6. Even otherwise, in the affixture order it is mentioned that the notice u/s 143(2) of the Income Tax Act, 1961 are not served by ordinary means on the last known address of the assessee, however, from the IT Returns for AY.2003-04, 2004-05, 2005-06, 2006-07, 2007-08 and 2008-9 and 200910, it clearly appears that the assessee is showing address as Keshav Nagar, Mithapur Road, Jalandhar which according to our mind liable to be treated as last known address of the assessee, however from the notices, it reflects that the Assessing Officer tried to serve the notice at 2-D.C. Nagar, Cannt Road, Mithapur, Jalandhar wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... thinks fit. 7.5 The mandate of Rule-1, 17 20 of the Order -V is that attempt should be made by the Assessing Officer for serving the notice in the ordinary way and if the notice cannot be served in the ordinary way on the reason that the Assessee cannot be found, after using all due and reasonable diligence and there is no likelihood of his being found at the residence within a reasonable time and there is no agent empowered to accept service of the summons on his behalf, nor any other person on whom service can be made, and the Assessing Officer is satisfied that there is a reason to believe that the Assessee is keeping out of the way for the purpose of avoiding service, or that for any other reason the summons cannot be served in the ordinary way, then only the Assessing Officer can order for service of summons by way of affixing a copy thereof in some conspicuous place as defined under Rule 20 of order-5 of the CPC but not otherwise . 7.6 From the assessment order, it does not reflect that the Assessing Officer had ever tried to issue and serve the alleged notice(s) in ordinary way and after exhausting ordinary attempt, while recording the reasons, adopted the substituted servic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... entire proceedings. In the aforesaid analyzation, we do not have any hesitation to hold that in the instant case, no notice has ever been properly served either u/s 148 or 142(1) of the Act upon the deceased assessee or his sole legal heir. Therefore, the Assessment Order under challenge cannot be sustained and impugned order under challenge liable to be set aside under the limb of nonservice/invalid notice itself and hence, the order passed by the Ld. CIT(A) is set aside and the addition confirmed by the Ld. CIT(A) stands deleted. 8. Respectfully fowling the dictum of co-ordinate bench and even otherwise as we observed in aforesaid paras independently, we do not have hesitation to held that the service of the prescribed notice on the assessee is a condition precedent to the validity of the assessment proceedings. It is settled law that if no notice is issued or if the notice issued is shown to be invalid then proceedings initiated and carried by the Income Tax Officer without a notice or in pursuance of invalid notice would be illegal and void and shall vitiate the entire proceedings. As in the instant case, while passing the affixture order, no material qua non-service of the not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... om one Sh. Surinderjit Singh, S/o Sh. Achar Singh, R/o, H.No.196, Ward No. 15, Mohalla Mhazanchian, Gurdaspur. Despite issue of enquiry letters dated 01.02.2013 and 28.02.2013, the assessee did not file any explanation qua source of investment made for the purchase of aforesaid property, therefore after getting approval from the Addl. CIT, Range-6 Pathankot and after recording reasons for initiation of proceedings u/s 147 on 13.03.2013, notice u/s 148 of the Act was issued to the assessee on 15.03.2013 through speed post No. 8093 requiring the assessee to file its return of income on or before 28.03.3013, in response to which the assessee failed to file his return of income by the aforesaid date and thereafter, statutory notices have been issued however the assessee failed to comply. Finally a show cause notice dated 10.12.2013 was issued and served upon the assessee on 12.12.2013 requiring him to explain as to why an investment made for the purchase of above mentioned property should not be treated as an unexplained investment. Further vide notice dated 2nd January, 2014, final opportunity was given. In response to the aforesaid show cause notice, the assesse filed his return of i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ax Act. A copy of the Reasons Recorded is enclosed herewith marked as Annexure A for the kind perusal of the Hon'ble Bench. It is submitted that in the first paragraph of the Reasons Recorded, the AO has mentioned that the assessee had made investment on the purchase of a property and further that the AO's satisfaction is only a suspicion as nothing has been mentioned in the Reasons Recorded on the basis of which he may positively say that he has reason to believe that any income has escaped assessment. On the basis of mere suspicion, the provisions of section 147 cannot be invoked. Therefore, the assessment framed based on such irregular satisfaction deserves to be quashed and it is prayed accordingly. Reliance in this regard is placed on the judgment of the Hon'ble Punjab Haryana High Court in the case of Commissioner of Income tax Vs Smt. Paramjit Kaur reported at 311 ITR 38 wherein it has held by the Hon'ble High Court that there must be nexus between the material and escapement of income and the AO must record his satisfaction for reopening the assessment. Likewise, the AO could not establish nexus that the investment made by the AO represented assessee's i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... easons before 08-03-2013 (date fixed for proceedings u/s 147 of the Act) also creates doubts qua sanctity of reasons recorded and issue of notice u/s 148 of the Act in pursuance thereof. The co-ordinate bench in the case of Om Prakash Sharma Vs Income Tax Officer (supra) dealt with the situation where the assessing officer without waiting for the outcome of notice u/s 148 of the Act which was sent through speed post, perceived about the non-service of the notice by ordinary course and passed the affixture order, therefore the Bench quashed the assessment proceedings. 16.1. We have analyzed the issue under consideration and compared with the facts of the aforesaid decision rendered by the Co-ordinate Bench and therefore of the considered view that the instant case is also squarely covered by the aforesaid case. Because in the instant case, the assessing officer vide proceeding dated 05-03-2013, adjourned the assessment proceedings to 08-03-2013 for filling of reply by the assessee, however before to that date, on 06-03-2013 recorded the reasons and therefore in our considered view, the action of the assessing officer clearly seems be prenotional, pre-conceived and biased, hence we d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t the threshold. In fact, jurisdiction to frame an assessment u/s. 147 gets assumed on the basis of issue of a notice u/s. 148, and not its service (R.K. Upadhyaya v. Shanabhai B. Patel [1987] 166 ITR 163 (SC)). The time limit for completing the same is, again, with reference to service of the said notice, so that it s non-service, as contended, would only imply it being caused to be served, giving a fresh lease of life for framing the assessment after due representation! The service of notice u/s. 148 on the assessee serves to signify him that assessment proceedings in his case have been since initiated for assessing the escaped income, giving opportunity to return the same or otherwise explain the return as originally filed in the ensuing proceedings. Lack of notice, assuming so, would only imply an irregularity, i.e., of the assessment being defective for want of proper opportunity to the assessee to state its case, warranting its restoration to the stage where the irregularity had set in (Guduthur Bros. v. ITO [1960] 40 ITR 298 (SC); Supdt., Central Excise v. Pratap Rai [1978] 114 ITR 231 (SC)), decisions by the larger benches of the Apex Court). It is not a ground for quashing ..... 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