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TMI Blog2025 (1) TMI 373X X X X Extracts X X X X X X X X Extracts X X X X ..... o ITO, Ward 9(3), Kolkata with a request to intimate the concerned assessee and send compliance report to the CIT(A), Kolkata-III, Kolkata, after physical transfer of records are completed. This even makes it questionable as to how even without the communication of the letter dated 26.11.2013, the ITO, Ward 9(3), Kolkata may have forwarded the record with the Central Circle-14, New Delhi for issuance of statutory notice u/s 143(2) on 18.09.2013. Coming to the alleged fact of service of a notice dated 19.08.2013 by JAO by affixation, the affixation report dated 09.09.2013 is first of all silent with regard to the fact that the notice were actually affixed as no expression in that context is used. Now the said officer has merely mentioned Therefore, I served the notice . The report is silent of the exact places where the notice was allegedly affixed. There is no independent witness. There is no order sheet supporting the conclusion of the AO of any denial on the part of the assessee to receive the notices or that the assessee was in any way avoiding the personal service so as to order for service by affixation. In fact without specific direction to the serving inspector to serve by w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o have submitted details / documents / explanation as required by the learned assessing officer for the purpose of assessment in the case of the appellant under section 143(3) of the Income Tax Act, 1961 during the course of assessment proceedings. However, the learned assessing officer has completed the assessment proceedings under section 143(3) of the Income Tax Act, 1961 vide order dated 31.03.2015 at an income of Rs 2,72,85,750/- thereby making an addition of Rs 2,71,50,000/- on account share premium treated as unexplained under section 68 of the Income Tax Act, 1961 and Rs. 1,35,750/- on account of estimated brokerage as unexplained and undisclosed income. The assessee succeeded before the ld.CIT(A) against which the Revenue is in appeal, raising following grounds; 1. On the facts and in the circumstances of the case, the Ld. CIT(A) has erred in deleting the addition made u/s 68 of the Act, amounting to Rs. 2,71,50,000/- in respect of share capital/ premium/application money introduced by holding that the onus on the part of the assessee stands discharged. 2. On the facts and in the circumstances of the case, the Ld. CIT(A) has erred in not appreciating the fact that the asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the orders of the Commissioner (Appeals), based on the ground that the jurisdictional parameters prescribed under section 153C of the I.T. Act were not fulfilled, even without the necessity of filing any cross objections ? 4.1 We find that while deciding the aforesaid question, the Hon ble High Court analysed the provisions of Rule 27 of the ITAT Rules and held that an issue, which was not raised before the CIT(A) and which goes to the root of the jurisdiction of the Assessing Officer to initiate the proceedings, can be raised by way of a petition under Rule 27 of the ITAT Rules and the Tribunal should allow the assessee to raise such an issue in the appeal instituted by the Revenue, even without the necessity of filing any cross objections. Accordingly, the ld. representatives of both the sides were heard on the legal ground. 5. On behalf of the assessee, the ld. Counsel has submitted that to initiate valid proceedings under section 143(3) of the Act, mandatory notice u/s 143(2) must have been issued by the jurisdictional Assessing Officer of the assessee before 30.09.2013. It was submitted that in this case, the Assistant Commissioner of Income Tax (ACIT), Central Circle 14, New ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Only one witness of department is self-serving. It was also submitted that in the absence of report of postal authority that notice is returned unserved there as no justification to serve by affixation. Revenue failed to produce any material on record that at the initial stage the notice u/s 143(2) of the Act was ever tried to be served through ordinary course/mode. He submitted that there is onus on AO to have recorded reason to believe that Assessee is intentionally hiding to avoid service or other reasons. Then the report should state names of persons who pointed to Assessee's place of business. The officer does not mention in his report that he knew the place of business of the Assessee or that the address at which he affixed the notice was the place of business of the Assessee. The officer made no effort to find out whether the Assessee was available at the given address. Report says affixed at a conspicuous place but there is no mention of which conspicuous place did he affix at and the officer has not stated in his report that that he has affixed notice as per rule. 9. To support the aforesaid submissions about invalid affixation the ld. Counsel has relied the following ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the notice was duly issued and served by way of affixation by the jurisdictional AO. Thus, to defend the case of the AO on the basis of the judgement in the case of Ashok Chaddha (supra) cannot be appreciated. 12. To consider the question of service of notice u/s 143(2) of the Act was legal, it will be appropriate to reproduce the case which the AO has tried to make out and we consider it appropriate to reproduce the submissions received from the Office of the PCIT in response to the specific query of the earlier Bench to verify as to the date of issue of notice u/s 143(2) vis- -vis the date of centralization of this case. The ld. DR had accordingly filed the written submissions and the same are reproduced below:- Sub: Written Submission in the above case-reg. In continuation to written submission dated 05.07.2021, 08.07.2021 it is humbly submitted that on the last date of hearing, the Hon'ble bench had directed to verify as to the date of issue of notice u/s 143(2) vis-a-vis the date of centralisation of this case Accordingly, AO, was asked for the details along with copy of the order sheets The copy of reply of the A.O. dated 29.10.2021 is enclosed herewith (Annexure-1, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessee filed return of income originally u/s 139(1) vide acknowledgment по. 498720381280912 for the relevant year 2012-13 on 28.09.2012 declaring total Income at Rs. NIL. Later, the case was selected for scrutiny. The case was duly centralized with the Central circle-14, New Delhi. Accordingly, statutory notices u/s 143(2) was issued on 18/09/2013. 14. Thus, admitted case of the assessing officer is that only one statutory notice u/s 143(2) was issued on 18.09.2013. There is no mention in the assessment order that the service was by postal mode or by substituted service. The narration of facts in assessment order only indicate that after the centralization notice was issued on 18.09.2013. Admittedly, the case was centralized by order dated 26.11.2013 from ITO, Ward 9(3), Kolkata to DCIT, Central Circle-14, New Delhi. Furthermore, if the copy of this letter dated 26.11.2013 is examined which is also made available on record with the report of the Department, this order was passed on 26.11.2013 and the endorsement was forwarded to the concerned authorities for giving effect to the order was signed on 03.12.2013. It can be observed that at Sl.No.4 a direction is issued to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (Manish Kaga) Inspector, attached to the O/o the I.T.O. Ward-9(3), Kol. Witness: A Adak Dated: 09.09.2013 17. Now the said officer has merely mentioned Therefore, I served the notice.. . The report is silent of the exact places where the notice was allegedly affixed. There is no independent witness. There is no order sheet supporting the conclusion of the AO of any denial on the part of the assessee to receive the notices or that the assessee was in any way avoiding the personal service so as to order for service by affixation. In fact without specific direction to the serving inspector to serve by way of affixation there was no right with serving inspector to serve by affixation, without endorsing in report as what compelled to serve by substituted service instead of personal service. 18. The settled proposition of law with regard to validity of service of mandatory a notice issued under the Act, by way of affixation, is taken note of by a coordinate bench in the case of Shuaib Ahmed, New Delhi vs Ito Ward - 65(2), New Delhi decided on 16 January, 2023 vide I.T.A. No. 7782/Del/2019, wherein reliance was placed on the decision of Ess Aar Exports Vs. I.T.A. No. 7782/Del/2019 Income ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er of his family is not possible, statutes authorize substituted service and such service attributes constructive knowledge of the assessee. To I.T.A. No. 7782/Del/2019 attribute such constructive knowledge, the substituted service must be in accordance with the prescribed procedure, that is, by Section 64 of the Agricultural Income-tax Act, 1950, in this case, which provides that a notice can be served as if it were a summons issued by a court, that is, as provided in Order V Rules 17, 18 and 19 of the Code of Civil Procedure, 1908. In the absence of proof of service as required, in the said Rule 17, such service could not be treated as valid service. A mere statement that service was effected by affixture would not be enough. 13. It is clear from above that constructive knowledge of notice can be attributed to the assessee if service, has been effected as provided by the Statute. All the requirements of substituted service must be shown to be fully satisfied, In the case of Ramendra Nath Ghosh (supra), their Lordships also noted provisions of rule 17 Order V of the Civil Procedure Code and reproduced the same at pages 890/891 of the report. It is seen that the provision requires ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on of area. For obvious reasons it is very much necessary that local persons of the area are to be associated in the process of service of notice by affixture. This process of law has not been followed in serving the notice by way of affixture and the decision squarely applied to the assessee's case. 9. The Hon'ble Punjab Haryana High Court in the case of CIT Vs. Kishan Chand (supra) affirmed the decision of the Tribunal in holding that resort to affixture could not be straight away taken without taking other modes of service. The Hon'ble High Court while holding so, observed as under:- 2. The assessee is individual and as a sequel to the search and seizure operation was conducted on his premises, he filed revised return. The Assessing Officer framed assessment under section 144 of the Act on the basis of best judgement. The Commissioner of Income Tax (Appeals) accepted the appeal mainly on the ground that the assessee had not been served. Evidence with regard to service by affixture was rejected on the ground that resort to affixture could not be straightaway taken without first taking other modes of service. The Tribunal affirmed the said finding. It was observed: Fro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... one by way of affixture whereas order V, rule 12 of CPC provides that wherever it is practicable, service has to be effected on the defendant in person or on his agent. Order V, rule 17 of CPC further provides that the affixture can be done only when the assessee or his agent refuses to sign the acknowledgement or cannot be found. Thus, for resorting to affixture, efforts have to be made to serve the notice upon the assessee and only after reaching a finding that the notice cannot be served upon the assessee, the mode of affixture can be resorted to. Further rule 17 of order V of CPC mandates that an independent local person be the witness of service through affixture and for the purpose of having been associated with the identification of the place. However a perusal of the affixture report shows that there was no independent local person as a witness and there is no evidence that anyone identified the place as belonging to the assessee before such affixture. It is seen that the Income Tax Inspector has signed as the local independent person but such witness cannot be considered to be a local independent person for the purposes of rule 17 of order V of CPC. The Hon'ble Punjab ..... X X X X Extracts X X X X X X X X Extracts X X X X
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