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TMI Blog2019 (7) TMI 2059X X X X Extracts X X X X X X X X Extracts X X X X ..... turnover and further erred in holding the net profit @5% of the alleged undisclosed turnover simply following the order of the predecessor for the AY 2005-06. 4. That the appellant craves liberty to add, alter, vary or amend any ground of appeal. 2. The brief facts of the case are that the Assessee Company was incorporated on 21.3.1990 and was engaged in the business of providing engineering consultancy and contract work. Assessee filed its return of income on 30.10.2017 declaring income of Rs. 36,895/-. The AO issued notices u/s. 143(2) of the Income Tax Act, 1961 (in short "Act") and u/s. 142(1) of the Act and served unto the assessee. In response to the same, the AR of the Assessee has not accepted the contention of the Assessee and held that the assessee was not in a position to rebuild the books of accounts and requested that the best judgement u/s. 144 of the Act may be resorted to. The AO has also given the notice to the assessee asking why the best judgment assessment u/s. 144 of the Act should be not be completed by presuming 5% of the total turnover. In response to the same, Assessee contended that the return of income of the assessee be accepted and the presumpt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... see on 10.11.2008 and copy of letter dated 10.11.2008 and order sheet of the assessment record for the AY 2006-07 evidencing that the Power of Attorney was submitted on 20.11.2008 which is attached with Paper Book at page no. 26-27. It was further submitted that, all the communications addressed to the company, including service of notices from CIT (A) office are regularly served upon the company at this very address. In view of this conclusive evidences the service of notice dated 24.9.2009 which is claimed to be served on 25.9.2008 when address when the address itself was furnished on 10.11.2008 prima facie appears to be is a concocted piece of evidence which can be relied upon. It was further submitted that the service of the third notice dated 25.9.2008 of hearing dated 29.9.2018 which is claimed to be served by affixture on 25.9.2008 at 311, D-5, Avadh Complex Laxmi Nagar, Delhi - 110 092 (ITR address) is also unreliable piece of evidence for the reason that once the service of the second notice dated 24.9.2008 was completed by affixture on 25.9.2008 at the address WB-12B, Gali No. 1, School Block, Shakar Pur, Delhi - 110 092' provided by the assessee, what was the reason ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Counsel for the assessee and stated that AO has served the assessee according to law and stated that the case law cited by the Ld. Counsel for the Assessee are not applicable in the case of the assessee. Therefore, he requested that the appeal of the assessee may be dismissed. 5. We have heard both the parties and perused the records especially the orders passed by the revenue authorities alongwith the arguments advanced by both the parties and the case laws cited before us and the Paper Book filed by the Assessee. We find considerable cogency in the contention of the Ld. Counsel of the assessee that the assessment was completed without service of statutory notice issued u/s. 143(2) of the At within the limitation period because the first notice u/s. 143(2) of the Act dated 16.9.2018 of hearing dated 22.9.2018 which was earlier sent by speed post and returned undelivered and is claimed to be served by affixture on 24.9.2008 at E-82, Mayur Vihar, Phase-II, Delhi - 110 091 is an invalid service as the company as per its return of income specified its address as 311 D-5, Avadh Complex, Laxmi Nagar, Delhi - 110 092; because the service of the second notice dated 24.9.2008 of hearing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was any refusal of the assessee to accept service. On the other hand, the Tribunal had categorically held that no other mode was adopted and steps for service of notice were taken about a week before the time was expiring. In view of the finding of the Tribunal, there was no proper service. ii) ITAT, Delhi decision in the case of Ess Aar Exports vs. ITO reported in 94 ITD 484 wherein it has been held that while affecting the service through affixture, local witness ought to have been associated in order to identify the address of affixture. iii) CIT vs. Chandra Agencies (Delhi) 202 Taxman 106 wherein it has been held that the service of notice through affixture was not proper when the correct address was available with the AO. iv) CIT vs. Ramendra Nath Ghosh (SC) (1971) 82 ITR 888 (SC) wherein the Hon'ble Supreme Court of India has held that service of notice must be in accordance of law. Otherwise assessee could not be said to have given proper opportunity to put forward the case. v) ACIT vs. Hotel Blue Moon (SC) 324 ITR 372 (2010) wherein it has been held that it is mandatory to issue notice u/s. 143(2). vi) ITAT, Delhi decision in Mico Steels (P) Ltd. Vs. ITO in ITA N ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dated 16-09-2002 served through affixture on 26-09-2002 & notice dated 28-10-2002 served through affixture on 28-10-2002. These notices have been served through affixture at address G4A, Gupta Apartments, 138, Kalkaji New Delhi-19, and these. have duly been served through process server. Service of these notices have duly been confirmed by the Inspector of the ward and the service through affixture if has also been duly validated by the then AO. Therefore, I do not find that there was any default in service of notice u/s 143(2)(ii) by the AO which was validly served on the assessee. 4.6.3 It is also observed that similar ground was raised by the appellant in appeal filled before my predecessor which was disposed by him vide order dated 21-10-2004 observing as under: "5.4 I have considered the submission of the Appellant and have perused the assessment record. I find the submissions of the Appellant are devoid of merits. The Income Tax Officer sent the notice by registered post, which is a permissible mode of service. The Appellant has not denied the fact of dispatch of notice by registered post; rather the Appellant has accepted this fact. The Income Tax Officer, through not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hich the communication referred to in sub-section (1) may be delivered or transmitted to the person therein named. 7.2 We further reproduce here below the Order V Rule 17 of the CPC: 17. Procedure when defendant refuses to accept service, or cannot be found.- Where the defendant or his agent or such other person as aforesaid refuses to sign the acknowledgment, or where the serving officer, after using all due and reasonable diligence, cannot find the defendant, who is absent from his residence at the time when service is sought to be effected on him at his residence 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, the serving officer shall affix a copy of the summons on the outer door or some other conspicuous part of the house in which the defendant ordinarily resides or carries on business or personally works for gain, and shall then return the original to the court from which it was issued, with a report endorsed thereon or annexed thereto stating that he has so affixed the copy, the circumstances under whic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... another notice was issued and served through Process Server and Inspector on 26.9.2002; but there is no entry in the order sheet to this effect. According to A.O., another notice was issued and served through process server and inspector on 28.10.2002; but there is no entry in the order sheet to this effect also; the next notice was dated 7.7.2003 which is beyond statutory period. In view of the above discussions, we are of the considered view that Revenue has failed to establish that it has followed the procedure as laid down under Section 282 of the Income Tax Act, 1961; under order V Rule 17 & 20 of the CPC, hence, the Service of Notice is illegal and void ab initio. Our view is fully supported by the following judgments:- a) CIT vs. Ramendra Nath Ghosh 82 ITR 888 SC - the Hon'ble Supreme Court held as under:- "The contention of the assesses was that at the relevant time they had no place of business. The report of the serving office did not mention the names and addresses of the person who identified the place of business of the assesses. That officer did not mention in his report nor in the affidavit filed by him that he personally knew the place of business of the assesse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... otice server dated July 23, 2001, the notice was affixed on the main door of shop No. 33, Anajmandi, Mullanpur. There was no evidence of any local person having been associated with in identifying the place of business of the assessee-respondent and the report is not witnessed by any person at all. It has been found to be flagrant violation of rule 17 of Order V of the Code which lays down a procedure to serve notice by affixture. The conclusion is recorded in paragraphs 13 and 14 of the order which reads thus: "13. So, however, in the report of the inspector/notice server, who claimed to have affixed the notice, there is no evidence of any independent local person having been associated with the identification of the place of business of the assessee. in fact such report is not witnessed by any person at all. Evidently, it is in clear violation of the mandate of rule 17 of Order V of the Civil Procedure Code, which lays down the procedure to serve notice by affixture. It mandates that the serving officer shall affix the notice on the outer door or some other conspicuous part of the house in which the person ordinarily resides or carries on business or personally works for ..... X X X X Extracts X X X X X X X X Extracts X X X X
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