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TMI Blog2006 (3) TMI 219X X X X Extracts X X X X X X X X Extracts X X X X ..... material the learned CIT (Appeals) was not justified in holding that the proceedings were validly initiated and the assessment framed was in accordance with law. 4. The facts, as emerging out from the assessment order, are that the Assessing Officer issued first notice on 16-10-2002 which was not complied. Hence he issued second notice on 21-1-2003 fixing the case for 31-1-2003. Third notice under section 143(2) was issued by him fixing the case for 27-8-2003 and fourth notice was issued on 17-11-2003. Shri Navin, C.A. appeared and objected to the validity of the notice. The Assessing Officer rejected this plea after observing that the assessee was shown all the record including the first notice and after that AR attended the case from time to time and submitted details. 4.1 The finding of the Assessing Officer was challenged before the learned CIT (Appeals). It was submitted that the notice was not served upon the assessee within the statutory period. The learned CIT (Appeals) rejected the pleas of the assessee by observing as under: "Perusal of the record shows that the first notice under section 143(2)(i) of the Act was issued by the Assessing Officer on 16-10-2002 and the s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rvice of the notice, it was on the department to specifically prove on which date the notice was served and upon whom served. In support of this argument, reliance was placed on the ratio of decisions in CIT v. Chaman Lal & Bros. [1970] 77 ITR 383 (All.) and CIT v. Mahalaxmi Sugar Mills Co. Ltd. [1986] 160 ITR 920. The assessee also placed reliance on the decision in the case of Hind Book House v. ITO [2005] 92 ITD 415 (Delhi); and CIT v. Lunar Diamonds Ltd. [2005] 146 Taxman 691 (Delhi). 6. The learned DR on the other hand, submitted that as observed by the Assessing Officer, the AR of the assessee was shown the entire record including the service of first notice and thereafter the assessee did not raise any further objection regarding service of notices which shows that the assessee was fully convinced that the first notice was properly served within time. According to learned DR the assessee did not take any specific plea to deny the service of notice nor filed any affidavit before any of the authorities in this regard. 7. We have carefully considered the facts and circumstances relating to this matter and the rival submissions. Certain facts remained undisputed in this case: ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tained in section 282(1) of the Income-tax Act. The service of notice by registered post/speed post is through a validly recognized mode. It may be mentioned that Order V Rule 9 of the CPC deals with the delivery of summons by Court. As per amendment introduced w.e.f. 1-7-2002, Order V Rule 9 runs as under: "Delivery of summons by Court.-(1) Where the defendant resides within the jurisdiction of the Court in which the suit is instituted, or as an agent resident within that jurisdiction who is empowered to accept the service of the summons, the summons shall, unless the Court otherwise directs, be delivered or sent either to the proper officer to be served by him or one of his subordinates or to such courier services as are approved by the court." (2) (3) The services of summons may be made by delivering or transmitting a copy thereof by registered post acknowledgement due, addressed to the defendant or his agent empowered to accept the service or by speed post or by such courier services as are approved by the High Court or by the Court referred to in sub-rule (1) of by any other means of transmission of documents (including fax message or electronic mail service) provided by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e amendment introduced by Hon'ble Allahabad High Court may not be applicable, but a guidance may be taken from this amendment for drawing the inference that the summons sent may be deemed to have been delivered to the addressee at the time when it should have reached him in the ordinary course. In the present case, the notice was sent through speed post. The learned CIT (Appeals) has recorded the finding that the summons that was issued on 16-10-2002 was served upon the assessee on 20-10-2002. The assessee is a local resident of Delhi and therefore, it is quite reasonable to observe and infer that the notice sent through speed post must have been served upon the addressee (assessee) at least within 3-4 days. Otherwise also, the findings recorded by the learned CIT (Appeals) have not been rebutted or controverted by the assessee by making any positive statement regarding the notice sent on 16-10-2002 through speed post. Thus, in view of the amended provision of the CPC, firstly, the mode of sending notice through speed/registered post is recognized mode and secondly, a presumption can be drawn regarding service by speed post within 3-4 days in the present case, where the assesse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s of the present case are concerned. 7.9 In the case of Hind Book House also the issue relating to service of notice under section 143(2) was examined. In that case, the validity of the order passed by the Assessing Officer under section 143(3) was challenged by alleging that no notice under section 143(2) was served on it within the time-limit specified in the proviso to that sub-section. On examination of assessment record, the learned CIT (Appeals) found that the first notice issued under section 143(2) was served at the address given by the assessee in its return and the same was also signed by the recipient as 'A. Singh'. It was further submitted on behalf of the assessee-firm that the said signature appearing on the office copy of notice under section 143(2) did not belong either to any of its partners or authorized representative. It was also submitted that there was no person employed with the assessee-firm who could have signed as Mr. A. Singh in this regard. An affidavit of the partner of the firm in support of this contention was filed. A copy of this affidavit was forwarded by the learned CIT (Appeals) to the Assessing Officer. The Assessing Officer, in reply s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and has to be rebutted by the Department and the Assessing Officer has to produce the acknowledgement, to prove that the notice has actually been served upon the assessee up to 30-11-1998. In spite of the fact the Assessing Officer has not responded to the objection of the assessee before the completion of the assessment vide his letter dated 8-2-1999 before the Assessing Officer and also through an affidavit before the learned CIT(A) and Assessing Officer has also avoided to comment upon the production of acknowledgement, in his report submitted before the learned CIT(A). Therefore, the matter is restored to the file of the learned CIT(A) who is directed to ask the Assessing Officer to produce the copy of the acknowledgement from his assessment records or make the enquiry from the postal authorities. In the absence of which it should be presumed that notice has not been served upon the assessee and assessment will be deemed to be null and void and without jurisdiction of the Assessing Officer. Thus, the matter is restored to the file of the learned CIT(A) with the specific directions given above." 7.10-2 Thus, firstly the above case is not applicable to the facts of this case bec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... same to be set off in the succeeding assessment year. The Assessing Officer has observed that during this year the assessee did not do any business activity and on the other hand claimed expenses amounting to Rs. 4,66,160 which could not be allowed in absence of business activity. Hence, loss claimed by the assessee was disallowed and income of the assessee was assessed at nil loss/income. 9.1 In appeal, it was submitted before the learned CIT (Appeals) that the business loss was claimed by the assessee on account of various expenses incurred during the year for purposes of its business which were fully allowable as deduction. It was submitted that the Assessing Officer was not justified in disallowing the claim of the assessee with regard to these expenses. The learned CIT (Appeals) upheld the finding of the Assessing Officer by observing as under: "The allowability of the alleged business expenses has to be examined with reference to computation of income chargeable under the head 'Profits and gains of business or profession' under section 28 of the Act. In order to compute the profits or loss assessable under the head 'Profits and gains of business or profession& ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 7-98]. The learned counsel further pointed out that in assessment year 1999-2000 the assessee had suffered loss which was allowed. In support of this contention the learned counsel placed reliance on the decisions in the cases of CIT v. Rajeev Grinding Mills [2005] 142 Taxman 567 (Delhi); and Daljit Exports (Ind) (P.) Ltd. v. ITO [1991] 36 ITD 305 (Delhi). 11. The learned DR on the other hand, opposed the arguments of the learned counsel for the assessee and submitted that deduction could be allowed only when the assessee succeeds in justifying the same. According to him, if the Assessing Officer has not passed a speaking order then the matter should be restored to the file of Assessing Officer for passing a speaking order. 12. In rejoinder, the learned counsel for the assessee submitted that the nature of expenditure remained the same in this year as was in the earlier year. He further submitted that matter should not be restored because a party which is guilty of conduct, should not be given remissness. 13. We have carefully considered the facts and circumstances relating to these matters. In the assessment order, the Assessing Officer has not examined the nature of expenses n ..... X X X X Extracts X X X X X X X X Extracts X X X X
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