TMI Blog2010 (8) TMI 66X X X X Extracts X X X X X X X X Extracts X X X X ..... in this batch of appeals being similar, it was heard analogously and is disposed of by a common order. Be it noted, the appeals that are directed against the common order passed by the Income Tax Appellate Tribunal, Delhi Bench F, New Delhi on 19.6.2009 (for short „the tribunal) which disposed of ITA Nos.1779 to 1783/Del/2009 pertaining to the Assessment Years 1990-91 to 1992-93 and 1995-96 1996-97, have been admitted on the following substantial questions of law: "(i) Whether in the facts and in the circumstances of the case, the impugned order of the Income Tax Appellate Tribunal in not acknowledging the jurisdictional infirmity in respect of the returns having never been regularised on account of non service of (jurisdictional) notice under Section 148 of the Act has caused the impugned order to be ridden with perversity and liable to be set aside by this Court? (ii) Whether in the facts and in the circumstances of the present case, the order of the tribunal having been passed in contravention to the settled judicial principles and binding judicial authorities of the Supreme Court as well as those of various High Court is perverse? (iii) Whether in the facts and in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt by registered post. This has also been stated by the ITO, Ward 15(2), New Delhi in her report dated 28.8.2002 and postal receipt for issue of notices under Section 148 by registered post is pasted on the office copy of the notice. Hence there is a presumption regarding service of notices under Section 148 upon the assessee. The assessee has failed to rebut the presumption regarding service of notices. Apart from a mere averment that the notices had not been received, no evidence has been adduced by the assessee. Hon'ble Punjab Haryana High Court in Ramesh Khosla v. ITO 154 ITR 556 has held that mere averment by the assessee that notice of demand was not served while the assessee had responded to notices under Section 143(2) sent by registered post showed that presumption of service of notice of demand was not rebutted and recovery proceedings were valid. In the facts of the present case, also notices under Section 148 were sent by registered post and the Managing Director of the assessee company had duly attended the reassessment proceedings in compliance of notices under Section 143(2) 142(1). Hence there is no valid ground to challenge the service of notices under Section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... no addition/ disallowances could be made over and above the figure returned and which was also the figure shown in the VDIS declaration. 8. In pursuance of the order of remit, the assessing officer framed an order of assessment in respect of all the assessment years on 28.3.2005. He determined the taxable income at Rs.2,98,840/-, Rs.3,88,390/-, Rs.1,09,490/-, Rs.6,54,670/- and Rs.3,69,750 in respect of the assessment years 1990-91, 1991-92, 1992-93, 1995-96 and 1996-97 respectively. 9. The assessee, being dissatisfied, assailed the said orders before the CIT(A). The first appellate authority, as is evincible from his order, instead of dwelling upon the merits of the additions, investigated the issue whether reopening of assessment by issuance of a notice under Section 148 is in accordance with law or not. He arrived at the conclusion that notice under Section 148 of the Act had not been served on the assessee. Being of this view, he opined that the returns submitted were invalid and, hence, no assessment could be framed on the basis of invalid returns. 10. Grieved with the aforesaid order of the CIT(A), the revenue preferred appeals before the tribunal and in appeal, it was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in compliance with the directions of the tribunal passed on the earlier occasion. 13. We have heard Mr. Kaanan Kapur, learned counsel for the assessee - appellant, and Ms. Sonia Mathur, learned counsel for the revenue - respondent. 14. Calling in question the vulnerability and legal acceptability of the order of the tribunal, Mr. Kapur has raised the following proponements: A. When there is non-service of notice under Section 148 of the Act within the time stipulated therein, the same renders the entire proceeding a nullity and makes the whole action ab initio void. B. The finding recorded by the first appellate authority goes to the heart of the matter, i.e., non-service of the notice dated 24.12.1999 and the same being a jurisdictional issue, it could have been addressed to by the CIT(A) irrespective of the scope of remand by the order of the tribunal on 25.2.2003. C. The Commissioner has appositely expressed the view that when there has been no notice, the assessment proceedings have been initiated without there being a jurisdictional foundation. The assessing officer had erroneously assumed that the jurisdiction to reassess the assessee cannot be found fault with as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l while passing the earlier order had taken note of the fact that the assessee had asked the assessing officer to regularise the return which was filed on the basis of issuance of notice under Section 148 of the Act and, thereafter, had participated in the assessment and, hence, the service of notice under Section 148 was not available. (b) The assumption of jurisdiction by the CIT(A) on the second occasion is totally uncalled for since the issue pertaining to service of notice under Section 148 had attained finality at the level of the tribunal. (c) Service of notice on the assessee is a question of fact which had been put to rest by the tribunal and it could not have been delved into by the CIT(A) as if the same related to the sphere of inherent jurisdiction. To bolster the aforesaid submissions, the learned counsel for the revenue has placed reliance on Bhupinder Singh Bharti v. Commissioner of Gift-tax, (2001) 117 TAXMAN 234 (Delhi). 16. At the very outset, it is obligatory on our part to state that though the appeal was admitted on the three substantial questions of law, yet basically it relates to one singular question, i.e., whether the CIT(A), after the remand by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in law is when a Court entertains a suit or an appeal over which it has no jurisdiction, and what the effect of section 11 of the Suits Valuation Act is on that position. It is a fundamental principle well-established that a decree passed by a Court without jurisdiction is a nullity, and that its invalidity could be set up whenever and wherever it is sought to be enforced or relied upon, even at the stage of execution and even in collateral proceedings. A defect of jurisdiction, whether it is pecuniary or territorial, or whether it is in respect of the subject-matter of the action, strikes at the very authority of the Court to pass any decree and such a defect cannot be cured even by consent of parties. If the question now under consideration fell to be determined only on the application of general principles governing the matter, there can be no doubt that the District Court of Monghyr was „coram non-judice, and that its judgment and decree would be nullities. The question is what is the effect of section 11 of the Suits Valuation Act on this position." 19. It is worth noting that in the said decision, their Lordships took note of Section 11 of the Suits Valuation Act and held ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .978/2010 and connected matters Page 16 of 36 22. In Y. Narayana Chetty and Anr. (supra), the Apex Court was considering the exercise of jurisdiction under Article 226 where the assail pertained to the order of illegal assessment and in that context, it was held that the service of requisite notice on the assessee is a condition precedent to the validity of any re-assessment and if valid notice is not issued, as required, the proceedings taken by the Income Tax Officer in pursuance of an invalid notice and the consequent order of re-assessment passed by him would be void and inoperative. While laying down the principle, their Lordships have expressed thus: "It is then urged that the Income-tax Officer was bound to issue notices to individual partners of the firms because at the material time all the firms had been dissolved. Mr. Sastri concedes that under section 63(2) a notice or requisition under the Act may in the case of a firm be addressed to any member of the firm but his contention is that this applies to a firm in existence and not to a firm dissolved. If the appellants' case is that as a result of dissolution of the firms the firms had discontinued their business as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 47/148." 25. There can be no cavil about the said proposition of law. It is a well settled principle of law that absence of jurisdiction would vitiate the proceedings and, accordingly, the proceeding was quashed as the condition precedent was not satisfied. 26. In Hotline International Pvt. Ltd. (supra), this Court came to hold that when there is no proper service of notice on the assessee, the reassessment proceeding is bad in law. 27. In Shitalal Prasad Kharag Prasad (supra), the High Court of Allahabad was dealing with service of notice on the assessee. On behalf of the department, a contention was advanced that if no notice is issued or if the notice is invalid or is not in accordance with law or is not served on the proper person in accordance with law, the assessment could be illegal and without jurisdiction. It was opined by the Court that a notice contemplated under Section 148 of the Act is a jurisdictional notice for initiating proceedings for making an assessment under Section 147 of the Act and any defect in that notice cannot be cured by anything done by the assessing officer subsequently. The Bench opined that the vagueness cannot be removed by reference to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nded the matter to the first appellate authority. After the remand, the first appellate authority set aside the orders passed by the income tax officer in reassessment proceedings on the ground that they were bad in law and the assessing officer was directed to make fresh reassessment. One of the contentions that was canvassed before the first appellate authority was that the notice under Section 34 was illegal and invalid inasmuch as the income tax officer had not got relevant material before him and had not considered the explanation proferred by the assessee before he came to issue notice under Section 34 of the Act. The appellate authority opined that the action under Section 34 was fully justified and was quite legal and proper on the basis of facts before the assessing officer. After remand, it was contended that the notices issued under Section 34 were invalid because the time given for filing the returns in each of the three cases fell short of the statutory period of 30 days. The assessing officer rejected the plea on the ground that the said issue along with the several points which were urged before him in the hearing after the remand by the appellate authority were not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... its order dated January 16, 1958, it was not necessary that the assessee should have been given an opportunity of being heard before initiating action under section 34. In my opinion, the action under section 34 was fully justified and was quite legal and proper on the basis of facts before the Income-tax Officer. The notices under section 34 issued by him were, therefore, perfectly legal and valid. The contention in respect of the legality and the validity of the notices is, therefore, rejected." 33. On a reading of the said paragraph of the first appellate authority and the view expressed by the Bench, it is crystal clear that the Bench opined that a contention was not raised with regard to the period of limitation and further the same being a jurisdictional fact could have been left to the assessing officer. The submission of Mr. Kapur is that the said decision gets squarely attracted to the case at hand inasmuch as the CIT(A) had found that there was no service of notice. The subtle distinction in the Gujarat case and the present one is that the issue that was urged before the CIT(A) on an earlier occasion who had addressed itself to a great extent and further the same was r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... up the same before the first appellate authority on earlier occasion and the tribunal though had not dealt with this aspect in the first round of litigation yet the matter had become final as it was settled by the first appellate authority and not agitated before the tribunal and it was not carried to the High Court. After noting the facts, the Bench scanned the anatomy of Sections 147 to 149 of the Act and placed reliance on the passage in Ashutosh Sikdar v. Bihari Lal Kirtania, [1907] ILR 35 Cal 61 and took note of the facts. Thereafter, the Bench referred to a passage wherein Justice Coleridge has stated thus: "10. Thereafter, their Lordships pointed out that whether a provision fell under one category or the other was not easy of discernment, as in the ultimate analysis, it depended upon the nature, scope and object of the particular provision. Their Lordships in terms approved a workable test laid down by Justice Coleridge in Holmes v. Russel [1841] 9 Dowl 487 as under: "It is difficult sometimes to distinguish between an irregularity and a nullity; but the safest rule to determine what is an irregularity and what is a nullity is to see whether the party can waive the obj ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as abandoned and it related to conferment of jurisdiction. The Bench opined that the doctrine of waiver would not be applicable as it was a pure question of law. In the case at hand, the issue was raised on an earlier occasion before the CIT(A) who after scanning the factual matrix in detail, expressed the view that the notice was served on the assessee. The said finding was affirmed by the tribunal. Service of notice or non-service of notice is in the realm of facts and as a matter of fact it was put to rest. Thus, it does not give rise to a total pure question of law. Thus, the said decision is distinguishable. 37. In this context, we may refer with profit to a three-Judge Bench decision of the Apex Court in Mathura Prasad Sarjoo Jaiswal and others v. Dossibai N. B. Jeejeebhoy, AIR 1971 SC 2355 wherein their Lordships have expressed thus:- "9. A question of jurisdiction of the Court, or of procedure, or a pure question of law unrelated to the right of the parties to a previous suit, is not res judicata in the subsequent suit. Rankin, C.J., observed in Tarini Charan Bhattacharjee's case, ILR 56 Cal 723 = (AIR 1928 Cal 777). "The object of the doctrine of res judicata is not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at he had no jurisdiction to entertain the application for determination of standard rent, is, in view of the judgment of this Court, plainly erroneous, see (1962) 3 SCR 928 = (AIR 1966 SC 1939). If the decision in the previous proceeding be regarded as conclusive it will assume the status of a special rule of law applicable to the parties relating to the jurisdiction of the Court in derogation of the rule declared by the Legislature."[Emphasis supplied] 38. In Mahila Bajrangi v. Badribai, (2003) 2 SCC 464, the Apex Court has opined that the principle of res judicata would be applicable when an issue arose directly and substantially in an earlier suit but a finding regarding an incident or collateral question reached for the purpose of arriving at the final decision would not constitute res judicata. 39. In Union of India v. Pramod Gupta, (2005) 12 SCC 1, it has been held thus:- "29[28]. The principle of res judicata would apply only when the lis was inter partes and had attained finality in respect of the issues involved. The said principle will, however, have no application inter alia in a case where the judgment and/or order had been passed by a court having no jurisdictio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t to put in appearance on their behalf, the counsel did not pursue this contention further. Moreover, this is a pure question of law depending upon the interpretation of Article 371-D. If the argument holds good, it will make the decision of the Tribunal as having been given by an authority suffering from inherent lack of jurisdiction. Such a decision cannot be sustained merely by the doctrine of res judicata or estoppel as urged in the case." [Underlining is ours] 42. In Dwarka Prasad Agarwal v. B.D. Agarwal, (2003) 6 SCC 230, it has been held thus: "37. It is now well settled that an order passed by a court without jurisdiction is a nullity. Any order passed or action taken pursuant thereto or in furtherance thereof would also be nullities. In the instant case, as the High Court did not have any jurisdiction to record the compromise for the reasons stated hereinbefore and in particular as no writ was required to be issued having regard to the fact that public law remedy could not have been resorted to, the impugned orders must be held to be illegal and without jurisdiction and are liable to be set aside. All orders and actions taken pursuant to or in furtherance thereof must ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cording of satisfaction of conditions precedent. The latter would be the determination of a jurisdictional fact and that would operate as res judicata parties inter se. 45. If the obtaining factual matrix is tested on the aforesaid enunciation of law, it is quite vivid that a pure question of law is not involved which could be agitated at any time. It relates to service of notice. As a matter of fact, a categorical finding was recorded by the CIT(A) on an earlier occasion that the notice was served. The same was concurred with by the tribunal. When a fact finding authority had recorded as a matter of fact, as regards the service of notice, in our considered opinion, the same could not have been agitated before the first appellate authority again. There is no quarrel over the proposition that service of notice is a condition precedent but the said issue was put to rest on the previous round of litigation. Therefore, the assessee was not entitled in law to raise the said issue again. 46. The controversy can be looked into from another angle. The tribunal has dealt with the issue and directed a remand on a limited score. The said order of remand was not assailed before the superi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d has added that the trial Court may also consider his prayer for allowing any other amendments. On the face of it, those other amendments, which could be allowed, must relate to this very plea of res judicata. It cannot be interpreted as giving liberty to the appellant to raise any new pleas altogether which were not raised at the initial stage. The other amendments have to be those which are consequential to the amendment in respect of the plea of res judicata." 49. We have quoted in extenso only to highlight that an order passed by the superior court has to be understood in a proper perspective and when the appellate court directs a remand with a direction to consider a particular plea, a new plea cannot be raised. 50. In view of the aforesaid enunciation of law, the CIT(A) could not have ventured to address itself with regard to service of notice as if the matter was in the realm of total open remand. In fact, such reopening of issue was totally unwarranted. 51. We will be failing in our duty if we do not note a submission of the learned counsel for the revenue. Learned counsel has urged that if the CIT(A) would traverse beyond the orders passed by the tribunal that would ..... X X X X Extracts X X X X X X X X Extracts X X X X
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