TMI Blog2013 (12) TMI 16X X X X Extracts X X X X X X X X Extracts X X X X ..... ssible to contend that the servicee was an agent of the assessee company - Not only has the alleged servicee not been identified, the person identifying such servicee has also not been even named, thereby violating the provisions of Order V, Rule 18, CPC, as has correctly been taken into consideration by the Ld. CIT (A) – The service of notice u/s 148 of the IT Act was invalid and cannot be said to be merely a procedural defect and it cannot be cured by the participation of the assessee in the re-assessment proceedings – Decided in favour of assessee. - ITA Nos. 910 to 912/Del/2010 - - - Dated:- 25-10-2013 - Shri A. D. Jain And Shri Shamim Yahya,JJ. For the Petitioner : Shri Ajay Wadhwa, Advocate Ms Megha Mittal, CA For the Respondent : Shri Sameer Sharma, DR ORDER Per A. D. Jain, Judicial Member These are department s appeals for Assessment Years 1998-98, 1999-2000 2003-04 against the orders of the CIT (A)-VII, New Delhi, dated 16.12.2009, 16.12.2009 07.12.2009, respectively. 2. The parties contend that the issue is the same in all the three years. The appeal for Assessment Year 2003-04 has, as such, been argued before us and it is from this Appeal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ew Delhi and the same was duly acknowledged. The above address was the declared address of the company, however, a change in address was intimated to this office by letter dated 13.07.2005. At the time of service, the above was the address of the company where the notice was caused to be served. Accordingly, the stand taken of non-receipt of notice is unsubstantiated. 5. Vide letter dated 23.03.2006 (Assessment order pages 6-9), the Assessing Officer asked the assessee to furnish evidence. 6. The assessee, vide letter dated 27.03.2006, inter alia, again stated that no notice u/s 148 of the IT Act was served on it. Thereafter, re-assessment order dated 29.03.2006 was passed, with the following observations regarding the assessee s objection concerning nonservice u/s 148 of the Act:- 2. Notice u/s 148:- The assessee is harping on non-receipt fo the Notice u/s 148. The fact has already been discussed while passing speaking order in regard to the objections raised to issue of notice u/s 148. The reply simply is an attempt to deviate and to avoid the real issue of investment made over and above the disclosed amount declared in the books of accounts of purchase of the imported ho ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g Officer can proceed to complete assessment only after proper service of notice in accordance with law and unless such no ice had duly been served, the Assessing Officer cannot be said to have been duly clothed with the jurisdiction to pass the assessment order. 6.4 Now, reference is to be made to the relevant statutory provisions in this regard. Firstly, I refer to sub-section (1) of section 148 Which reads as under: "148(1) Before making the assessment, reassessment or recomputation under section 147 the Assessing Officer shall serve on the assessee a notice requiring him to furnish within such period, as may be specified in the notice a return of his income or he income of any other person in respect of which he is assessable under this Act during the previous year corresponding to the relevant assessment year, in the prescribed form and verified in the prescribed manner and setting forth such other particulars as may be prescribed, and the provisions of this Act shall, so far as may be apply accordingly as if such return were a return required to be furnished section 139." Thus, the mandate of section 148 is that notice should be served on the assessee. 6.5 In regard t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Court from which the summons is issued, service on any manager or e of service, personally carries on such business or work for such Its, shall be deemed good service. 15 Where service may be on an adult member of defendant s family Where in any suit the defendant is absent from his residence at the time when the service of summons is sought to his residence and there is no likelihood of his being found at the reasonable time and he has no agent empowered to accept service of the if service may be made on any adult member of the family, whether residing with him. 16. Person served to sign the acknowledgement - Where the service officer serves or tenders a copy of the summon to the defendant personally, or to an agent or to other person on his behalf he shall require the signature of the person to whom the copy is so delivered or tendered to an acknowledgement of service endorsed on the original summons. 18. Endorsement of time and manner of service - The serving officer shall, in all cases in which the summons has been served under Rule 16, endorse or annex, or cause to be endorsed or annexed, on or to the original summons, a return stating the time when and the manner in w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... notice. In Paparruna Rao v. Revenue Divisional Officer AIR 1918 Mad. 589, a Division Bench of Madras High court while dealing with the manner of service contemplated by section 45(2) of the Land Acquisition Act, which also attracts the provisions of the Code of Civil Procedure, in 1-hp, matter of service of notices, expressed the view that unless a person is appointed as agent o accept service of processes by an instrument in writing signed by the principal, the service on him cannot be said to be valid. The view taken in that case was that an oral authority is not sufficient but there should be a written authority. Similar view has been taken in CIT V. Baxirarn Rodmal [1934] 2 ITR 438 (Nag.), CIT v. Dey Brothers [1935] 3 ITR 213 (Rang.) and C.N. Nataraj v. Fifth ITO [1965] 56 ITR 250 (Mys.). In CIT v. Baxiram Rodmal [194] 2 ITR 438 (Nag.) it has been held that the mere fact that a person had accepted notices on behalf of the assessee on previous occasions and appeared for the assessee would not constitute him an agent on whom a notice or requisition under the Act would be validly served nor would any statement made by him bind the assessee. In C.N. Nataraj v. Fifth ITO ([1965] 56 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... also observed that in the instant case, the notice under section 148 of the Act was issued on 22-03-2005 which implies that it was issued within the time-limit permissible in accordance with the provisions of section 149 of the Act. But the notice was not served on the assessee or on anyone authorized by it even after it was pointed out by it that the notice was not served on it on anyone authorized by it, Had it been done by the Assessing Officer, jurisdictional defect could have been cured. Respectfully following the above decision is, it has to be held that the participation of the assessee in the reassessment proceedings can not cure the defect in the notice under section 148 of the Act, i.e. the notice under section 148 is a jurisdictional notice. Therefore, invalid issuance or service of notice under section 148 can not be said to be a procedural defect and it can not b cured by the participation of the assessee in the re-assessment proceedings. Therefore, it is held that there was no valid service of notice under section 148 of the Act and the re-assessment proceedings are void ab initio thus liable to be quashed. As a result, Ground No. 2 raised by the appellant is allowe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... regards Commissioner of Income-tax v. Rajesh Kumar Sharma , [2009] 311 ITR 235 (Del), it was the case of an individual, whereas the assessee in the present case is a company. 10. The ld. counsel for the assessee, placing reliance on the impugned order, has contended that issuance of the notice u/s 148 of the Act was much after the assessment proceedings. Attention has been drawn to APB 59, which is a copy of the assessee s reply before the Assessing Officer to notice u/s 142 (1) of the Act, APB 63-69, which is a copy of the submissions dated 02.12.2005 filed by the assessee before the Assessing Officer, and APB 81-82, which is a copy of the submissions dated 21.02.2006 filed by the assessee before the Assessing Officer. It has been contended that the objection with regard to non-service of notice u/s 148 of the Act was duly taken promptly before the Assessing Officer. It has been submitted that the servicee of the notice was never identified by the process server; that it is incorrect to say that the address at which the notice was allegedly served was the residential address of the Director of the assessee company; and that there is nothing on record to show that the notice wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erved on 24.03.2005 by the process server (Sh. S.C. Dogra) at the address of the company at D-7/6, Vasant Vihar, New Delhi and the same was duly acknowledged. ii) Not only the signature, of the person receiving the notice was taken but telephone number 26145991 was also noted by the process server while serving the notice. iii) The assessee did not raise any objection of non-service before passing the assessment order u/s 143(3)/147 of the Income-tax Act, 1961 iv) There is nothing on record which it can be concluded that the notice was not served. Even in its letter dated 08.07.2008 on page-3 under the head 'Submissions' (vide point No. 3), the assessee itself admitted the proper service of notice by stating that "the notice has tough a process server". From this, it is clear that the assessee is raising technical issues to escape from taxes levied on higher income u/s 143(3)1/147. 15. In its rejoinder dated 25.02.2009 to the aforesaid remand report of the Assessing Officer (APB 29-47), the assessee submitted as follows:- 5.1 A copy of the remand report was handed over to the A.R. of the appellant in response to which a rejoinder was submitted by the A.R. of the appellan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tice server. (d) Mere saying that process server noted down the telephone number does not mean that the service is valid. (e) As per the AO 's report, the telephone number is in the name of one Mr. Ram Lal Mehra who is no way connected with the appellant company. This itself proves that notice was not served on proper person and hence invalid. The notice does not bear neither the name of the person to whom it was served nor stamp of the appellant company which means that the notice was not served on the proper person in the manner prescribed u/s 282 of the Income-tax Act, 1961. The various Courts have held that it is not enough that a notice issued u/s 148 some how found its way to the proper assessee or that proper assessee appeared and filed an objection to the proceedings. Unless the notice is served on the proper person in the manner prescribed u/s 282 of the Income-tax Act, 1961, the same is invalid and the AO cannot assume jurisdiction to reassess the escaped income. The appellant company has placed reliance of the following judgements: (i) C.N. Natraj v. Fifty ITO (1965) 56 ITR 250 (Mysore) (ii) Thaigam Textiles v, First ITO (1973) 90 ITR 412 (Mad) (iii) Lakshmib ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . from D-7/6, Vasant Vihar, New Delhi 110 057 to KHASARA NO.22/2,2,4,4/1,7/1,8,9,12,13,14, NEAR 21A, PALAM FARMS, SHALAPUR, BIJWASAN, NEW DELHI. Henceforth, you may kindly direct all the correspondence at the above said new address and oblige. The correspondence address of Usha Stud Agricultural Farm Pvt. Ltd. has changed from D-7/6, Vasant Vihar, New Delhi 110 057 to KHASARA NO.22/2,2,4,4/1,7/1,8,9,12,13,14, NEAR 21A, PALAM FARMS, SHALAPUR, BIJWASAN, NEW DELHI. This fact was bought to your kind notice vide the assessee s letter Dt. 25th January 2005 as well. (Copy enclosed). Henceforth, you may kindly direct all the correspondence at the above said new address and oblige. 18. The question up for determination is, as to whether the notice u/s 148 of the Act was served on the assessee or not. In this regard, first off, the emphasis of the Assessing Officer, as evident from the correspondence between the Assessing Officer and the assessee and the remand report filed by the Assessing Officer before the CIT (A), has been that the notice was duly served at the address of the assessee company and it was duly acknowledged, and that not only the signature of the person recei ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n appointed as an agent of the assessee to accept service of notices on behalf of the assessee. This, as correctly noted by the Ld. CIT (A) stands long back settled, inter alia, in the following case laws:- i) CIT vs. Baxiram Rodmall , 2 ITR 438 (Nagpur); ii) CIT vs. Dey Brothers , 3 ITR 213 (Rang); and iii) C.N. Nataraj vs. Fifth ITO , 56 ITR 250 (Mys). 22. It cannot be gainsaid that the provisions of the CPC, in keeping with those of Section 282 of the IT Act, as relevant herein, are not a mere formality. Fulfillment of the requirements therein is the sine qua non for a proper and valid service of notice. Herein, not only has the alleged servicee not been identified, the person identifying such servicee has also not been even named, thereby violating the provisions of Order V, Rule 18, CPC, as has duly correctly been taken into consideration by the Ld. CIT (A). Therefore, the Ld. CIT (A), in our considered opinion, is correct in holding that the invalid service of notice u/s 148 of the IT Act, cannot be said to be merely a procedural defect and it cannot be cured by the participation of the assessee in the re-assessment proceedings. The Ld. CIT (A), in this view of th ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
