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2005 (5) TMI 262 - AT - Income TaxService Of Notice - Ex parte assessment made u/s 144 - limitation to issue statutory notice - Whether service of notice through affixture was made in accordance with law - HELD THAT:- It is evident from above observations of learned CIT(A) that notices mentioned at Sl. Nos. 1 to 6 were received back with postal comments such as "unserved", "No person is ready to receive", "left". These postal remarks lend support to the assessee's claim that firm and its partners had suffered heavy losses and were running away from the creditors. They were not available at place of their business. At any rate, Assessing Officer did not treat notices at Sl. Nos. 1 to 6 as proper service and thought it necessary to serve notice on the assessee through affixture dated 5-3-2001. The said notice is claimed to have been served on the assessee by notice server Shri Satya Singh and witnessed by Ms. Indu Rani, Inspector of Income-tax Department. As there was no response to above notice, the Assessing Officer decided to proceed ex parte against the assessee. 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 [1971 (8) TMI 26 - SUPREME COURT], 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 that names and addresses of the persons, if any, by whom the house was identified and in whose presence the copy was affixed has to be stated in the report. If above is not done and the officer does not mention in his report nor in his affidavit that he had personally knew the place of the business of the assessee, the substituted service cannot be treated as "valid" and effected in accordance with law. Their Lordships in the decision emphasized that a service without following the procedure as laid down in the rule is not valid. Their Lordships added "The possibility of his (processor) having gone to a wrong place cannot be ruled out". Local persons of area where the place (house) of the person to be served is situated are to be associated for two obvious reasons. First, that the place is properly identified. Secondly, such report may not be prepared by the process server and other persons sitting in their office. Thus, we are unable to hold that service in this case was effected in accordance with statutory provisions. The report of the Process Server is witnessed by Ms. Indu Rani, the Income-tax Inspector. There is no evidence of any independent person having been associated with identification of place of business of the assessee. There is no evidence that the process server or Ms. Indu Rani had personal knowledge of place of business of the assessee and was, thus, in a position to identify the same. In the absence of above material evidence, notice dated 5-3-2001 cannot be accepted as served on the assessee in accordance with law. Constructive knowledge of the above notice cannot be attributed to the assessee. Thus, we hold that assessment made u/s 144 was bad in law. The same is required to be set aside. The Assessing Officer can issue fresh notice if so authorized under the law. The matter is restored to his file. In the result, all the three appeals are allowed in the terms stated above.
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