TMI Blog2003 (8) TMI 176X X X X Extracts X X X X X X X X Extracts X X X X ..... completed originally under section 143(1) of the Income-tax Act on10-6-1987on the returned income in the status of RF. On a later stage notice under section 148 was issued on 27-3-1995 after obtaining approval from the Commissioner of Income-tax-VIII, New Delhi and as per order of the Assessing Officer, the same was served through Notice Server/Inspector by affixture at the last known address of the firm at 17, Hotel Continental, Regal Building, New Delhi; 167-168, Jhilmil Colony, Delhi and at 389, NDSE, Part-II, New Delhi on 29-3-1995. It is also mentioned in the order of the Assessing Officer that the service of notice under section 148 was got served by affixture due to the reason that the assessee and its partners vacated the business/residential premises and all efforts to trace them had failed. Copies of the notices under section 148 were also affixed on the notice board and held as a valid service. Thereafter in second paragraph at page 2 of the order of the Assessing Officer, it is stated that assessee did not comply with the notice under section 148. Notice under sections 143(2) and 142(1) along with questionnaire for requisite details and particulars were issued on19-3-1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... red before the CIT (Appeals) on the date of hearing. 3.1 After perusing the submissions and considering the submissions of the counsel of the assessee, the CIT (Appeals) held that initiation of proceedings under section 147/148 were valid, as reasons for reopening of the assessment was duly recorded and the Assessing Officer issued notices on the firm as well, as on partners through affixture by Notice Server/Inspector at the last known address of the firm described, in the return of income filed by assessee. It was also observed by the CIT (Appeals) that notice had been displayed on the notice board of the Assessing Officer, which is a public office and display of such notice has to be held as proper issue of notice. It was further observed that moreover the appellant did appear before the Assessing Officer in response to subsequent notice under sections 142(1) and 143(2) of the Income-tax Act and was aware of the fact that the notice under section 148 had been issued. By further observing that the purpose of the notice under section 148 is plainly to inform the assessee of the grievances of the Assessing Officer. The mode of service mentioned in section 282 of the Income-tax Ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hra v. High Court of Orissa AIR 1976 SC 1899 and in case of Krishan v. CIT [IT Reference No.15 (Delhi) of 1963 dated 11-7-1967]. The assessee has also placed reliance on the decisions in Kunj Behari v. ITO [1983] 139 ITR 73 (Punj. Har.); 68 ITR 540 (sic), Jagannath Prasad v. CIT [1977] 110 ITR 27 (All.), 37 ITR 249 (sic), 60 ITR 147 (sic), CIT v. Ramendra Nath Ghosh [1977] 82 ITR 888 (SC) and Champalal Binani v. CIT [1970] 76 ITR 692 (SC). 5. In reply, the learned DR firstly strongly placed reliance on the orders of the Assessing Officer and CIT (Appeals) and it was further submitted that substantial income was escaped and valid reasons were recorded and then only proceedings under section 147/148 were initiated. The proceedings under section 147/148 were initiated after due approval from CIT-VIII,New Delhi. Accordingly it was submitted that the plea of the counsel that the approval is not correct because the approval should have been taken from the joint Commissioner of Income-tax and not from CIT. It was stated that the CIT is a senior officer, therefore, the approval is valid. Regarding the affixture of the notice, it was stated that the notices were affixed on last known ad ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the assessee for assessment year 1987-88, wherein the address of the firm M/s.ChandraAgencieswas mentioned as 4413, Gali Jatav, Pahari Dhiraj,Delhi. A copy of the same is placed at page 133. It was also submitted that an order under section 154 of the Income-tax Act dated15-3-1988was passed for assessment year 1987-88 and the same was communicated to the assessee on this new address, copy of which is placed at page 134 of the paper book. Therefore, it was submitted that it is factually incorrect that the notice affixed by affixture were affixed on the last known address. It was also submitted that even notice affixed on the addresses mentioned in the notices are not valid in law, because these notices are without any independent witness, which are mandatory as per provisions of the law. The attention of the Bench was drawn on various copies of the notices affixed by the department, which are placed on record. 7. We have, heard rival submissions and considered them carefully. We have also considered the relevant material of which our attentions were drawn along with various case laws relied upon. There is no dispute that proceedings under section 147/148 were initiated after t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ctions, we noted that where the firm has been dissolved, then notice has to be served on its partners. If the whereabouts is not traceable, then notice has to be served by affixture as per Order V of 1908 of CPC. As per order of the Assessing Officer, the address of the firm or address of the partners were not traceable, therefore, he made service through affixture by his Inspector/ Notice Server. After going through the material such as comments of Commentator of Sampath Iyengar and other cases decided by various courts, we find that the service through affixture is to be invoked only in exceptional cases. Order V, Rule 17 of CPC states that where the defendant refuses to sign the acknowledgement, or where the serving officer, after using all due and reasonable diligence, cannot find the defendant and there is no agent empowered to accept service, 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 and shall then return the original to the court from which it was issued, with a report stating that he has so affixed the copy, the circumstances under which ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Commissioner pursuant thereto could not be sustained. 13. In the case of Champalal Binani, the Hon'ble Supreme Court has held that so long as the place at which the notice was served was one where the assessee was carrying on business, the service would be valid and proper. Failure to do so would render the substituted service by affixture bad in law. In case of CIT v. Daulat Ram Khanna [1967] 65 ITR 603, the Hon'ble Supreme Court has held that a copy of the notice need not be affixed on the notice board of the income-tax office for a valid service, as the notice has to be affixed on the premises of the assessee. 14. In the case of B. Johar Forest Works, the Hon'ble Jammu Kashmir High Court has held that a notice must be served in one of the modes provided in section 63 of the Income-tax Act, 1922 before an assessee could be considered to be in default. 15. In case of Krishan the Hon'ble Delhi High Court has held that the service of notice by affixture was bad in law, as it was not in conformity with Order V, Rule 17 of the Code of Civil Procedure, read with section 63 of the Income-tax Act. It was further held that the fact that the assessee had knowledge of the proceed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f which is placed at page 146 of the paper book. From all these details, it is clearly emerged and established that last known address of the firm was 4413, Mohalla Jatav, Pahari Dhiraj, New Delhi and not 17, Hotel Continental, Regal Building, Connaught Place, New Delhi or 167-168, Jhilmil Colony, New Delhi or C-89, NDSE, Part-II, New Delhi, means thereby that the notice by affixture was not affixed on the last known address. We further noted that the notices under section 148 earlier were prepared on20-3-1995and they were given to the Inspector for making service on the assessee and the report was given that he went on the address given and found that nobody lives on the address given in the notice. Copies of these notices are placed at pages 45, 46 and 47. Thereafter notices under section 148 were prepared on27-3-1995and they were directed by the Assessing Officer to be affixed on the addresses mentioned in the notices and accordingly the notices were affixed on three addresses, as mentioned above. Copies of these notices are placed at pages 141 to 143. We have seen these copies of the notices and found that no name of any witness is mentioned on these notices. It clearly shows t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n order of the appellate authority cannot make it valid. Similar view has been taken by the Hon'ble Delhi High Court in the case of S. Krishan, wherein it is held that since the jurisdiction to start assessment under section 34 depended on very service of the notice. These two ratios are squarely applicable on the facts of the present case. Jurisdiction to start assessment in response to notice under section 148 depends upon valid service of notice under section 148. It has been already held that no valid service of notice under section 148 has been made on the assessee, therefore, the assessment completed cannot be held as valid assessment. In view of all these facts and circumstances, we hold that the assessment completed under section 144/148 was not a valid assessment. Accordingly the same is quashed. 21. Since we have quashed the assessment completed by the Assessing Officer, therefore, we are not inclined to consider the aspect of validity of initiation of proceedings under section 147/148, that whether the initiation was proper or whether the necessary approval-was validly taken or not. As stated above, the legal ground in regard to service has been allowed by us, therefor ..... X X X X Extracts X X X X X X X X Extracts X X X X
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