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2022 (2) TMI 1140 - AT - Income TaxValidity of Reopening of assessment u/s 147 - Mandation of valid service on the assessee of a notice issued under Sec.148 - service of Notice u/s 148 by affixture on the main gate of house of assessee who is residing abroad - HELD THAT:- Though it is observed by the A.O that the whereabouts of the assessee were not available, but then, neither there is anything discernible from the records nor brought to our notice during the course of the hearing of the appeal, which would reveal that the A.O despite using all reasonable and due diligence could not get the foreign address of the assessee. On the contrary, the reason for ordering substituted serve, as per the A.O, was that he had a reason to believe that the assessee was avoiding the service of notice u/s 148 of the Act, which as observed by us hereinabove is an observation beyond comprehension. In sum and substance, it is not the case of the A.O that he had taken recourse to substituted service as contemplated in Order V- Rule 20 of the Code of Civil Procedure, 1908 (5 of 1908), for the reason, that the whereabouts of the assessee in Canada, despite using all reasonable and due diligence could not be gathered by him. We are of the considered view, that the A.O despite being in knowledge of the fact that the assessee had shifted and was residing abroad, i.e, in Canada, had however grossly erred in taking recourse to substituted service of the Notice u/s 148, i.e, by getting the same affixed at his old residential house in India, which residential house he had himself observed in the assessment order was sold by the assessee prior to his shifting abroad, i.e, to Canada. The observations of the A.O, as recorded in the assessment order, therein revealing beyond doubt his knowledge that the assessee had sold his old residential house at Village Bhaika Dayalpura, Tehsil Rampura Phul, District : Bathinda. We are unable to comprehend that as to what purpose the service of Notice u/s 148 by affixture on the main gate of the assessee’s residential house (which as observed by the A.O was no more owned by the assessee and had been sold by him prior to shifting abroad) would have served. The service of Notice u/s 148 by ordering a substituted service, as contemplated in Order V-Rule 20 of the Code of Civil Procedure, 1908 (5 of 1908), in the absence of using of all reasonable and due diligence for locating the whereabouts of the assessee, not being as per the mandate of law cannot be subscribed on our part. Our aforesaid view that service of notice in case of an assessee residing abroad, by affixing the same on the main door of his local residence in India is not a valid service, is supported by the judgment of the Hon’ble High Court of Allahabad in the case of CIT Vs. Habibullah [1985 (1) TMI 346 - ALLAHABAD HIGH COURT] A.O had framed the impugned assessment u/s 144 r.w.s 147, dated 18.03.2014 without effecting a valid service of Notice u/s 148 upon the assessee prior to the framing of the assessment, therefore, the same cannot be sustained and is liable to be vacated - Decided in favour of assessee. Penalty u/s 271(1)(c) - HELD THAT:- As the quantum assessment order passed by the A.O u/s 144 r.w.s 147, dated 18.03.2014 had been quashed by us for want of valid assumption of jurisdiction by the A.O for framing the impugned assessment, therefore, the penalty imposed on the assessee u/s 271(1)(c) cannot survive on a standalone basis and has to meet the same fate. As such, the penalty imposed on the assessee u/s 271(1)(c) of the Act is vacated.
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