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TMI Blog2011 (5) TMI 856X X X X Extracts X X X X X X X X Extracts X X X X ..... ase of National Thermal Power Co. Ltd. v. CIT [1998] 229 ITR 383 (SC). On behalf of the assessee, Sri. S. K. Garg, advocate and Sri Ashish Bansal, advocate appeared and it was vehemently contended that no notice under section 143(2) of the Act was ever served either on the assessee, Dr. Y. D. Singh or on Shri Murli Dhar Vaish, chartered accountant, who had been appearing in the block assessment proceedings. In order to highlight this contention, counsel for the assessee placed before us the chronology of events which are relevant for deciding the additional ground taken by the assessee. The same are as under: Date Events 14-4-1998 Search and seizure action under section 132(1) was carried out at the residential premises of Dr. Y. D. Singh at 33 Kasia Road, Gorakhpur, in pursuance of warrant of authorisation dated April 8, 1998 issued by the Director of Income-tax (Inv.) Kanpur, and as per the panchanama prepared by the authorised officers, search was finally concluded on that date. 15-4-1998 Another warrant was issued by the Deputy Commissioner of Income-tax, Gorakhpur to carry out search at the bank locker No. 126 with the State Bank of India in the joint names of Dr. Y. D. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ck assessment records for our perusal. On the other hand, learned counsel for the assessee, Shri S. K. Garg contended that no such notice was served either on the assessee or on Shri Murli Dhar Vaish, the chartered accountant who was regularly attending the income-tax proceedings on behalf of the assessee. In support of this contention, learned counsel for the assessee, Shri S. K. Garg filed before us the affidavits dated October 6, 2010 duly sworn in by Sri Murli Dhar Vaish and Dr. Y. D. Singh. The averments made in the said affidavits read as under: I. Affidavit of Shri Murli Dhar Vaish "I, Murli Dhar Vaish, the deponent above named, solemnly affirm and state on oath as under : 2. That I am a practising chartered accountant and in terms of certificate of practice granted by the Institute of Chartered Accountants, Ihave been in the accountancy ever since 1970. 3. That Dr. Y. D. Singh, son of late I. D. Singh, resident of 33, Kasia Road, Gorakhpur, is well known to me and I had attended to the block assessment proceedings in this case, from time to time. That notice under section 143(2) dated June 12, 2000 issued by the Assessing Officer whose designation and name are not ful ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s been authorised by the appellant in this case to swear this affidavit. Accordingly, he has gone through the relevant records and the affidavit dated -Feb-ruary 21, 2010 of Dr. Y. D. Singh. Being conversant with the facts of this case, he is making this affidavit. True to the perso-nal knowledge of the deponent. 3. That the deponent submits that the Departmental appeal being I. T. A No. 230/Allahabad/2002 was filed against order of the Commissioner of Income-tax (Appeals) deleting some additions made by the Assessing Officer made in the block assessment of the assessee Dr. Y. D. Singh. The assessee also filed appeal bearing I. T. A. No. 244/Allahabad/2002 mainly challenging the assessment order on the ground that the same was barred by limitation. Based on records 4. That the deponent submits that learned counsel for the assessee during the course of hearing raised an additional argument that the assessment was void ab initio as no notice under section 143(2) was served after filing of the return in response to notice dated August 17, 1999 under section 158BC of the Act which was served on the assessee on August 18, 1999. However, it is apparent from records that no such ple ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce under section 143(2) of the Act. Legal advice 11. That the deponent further submits that the assessee having participated in the assessment proceedings without raising any grievance before the Assessing Officer regarding proper service of notice cannot raise such a ground, particularly in view of the provisions contained in section 292BB of the Act. Legal advice The copies of the notice under section 143(2) dated June 12, 2000 and the order sheet entries starting from March 31, 2000 to July 28, 2000, which is the date of block assessment order, marked as annexures CA-1 and CA2 were annexed along with the counter affidavit and also a copy of judgment and order dated January 29, 2010 passed by the hon'ble High Court was annexed as annexure CA-3 of the counter affidavit. Shri S. K. Garg, learned counsel for the assessee filed before us a reply to said "counter affidavit" filed along with a copy of an unreported judgment and order dated May 22, 2008 passed by the hon'ble Allahabad High Court, Lucknow Bench in the case of Harsingar Gutkha P. Ltd. v. CIT (since reported in [2011] 336 ITR 90). In his reply, the assessee pointed out various discrepancies/contradictions (according ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hority was not available on record. At this stage, learned counsel for the assessee, Shri S. K. Garg brought to our notice the provisions contained in section 288 of the Act under which an assessee can appear in income-tax proceedings at various stages through his authorised representatives. It also contains the description of the persons who can act as "authorised representative" and in that capacity can make submissions before the income-tax appellate authorities up to the stage of the Income-tax Appellate Tribunal. It does not give any power to such an authorised representative to receive notice on behalf of the assessee. The mode of service of notice is separately provided in section 282 of the Act. Unless there is service of notice in accordance with the provisions of the said section, it cannot be treated as valid service of notice. Therefore, appearance by Shri Murli Dhar Vaish before the Assessing Officer can at best be treated to be his appearance as authorised representative. Such an appearance does not meet the requirement of law as laid down in section 288 of the Act. Therefore, it cannot be said that the Revenue has discharged its onus of proving that mandatory notice ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cumstances which suggest that the statements on affidavit should not be accepted as true, the absence of denial by the other side, would not by itself be sufficient to clothe the statements on affidavit with truthfulness and reliability. In view of the special facts and circumstances of this case, we are not inclined to accept the statement of the karta made on oath in the affidavit that the notices of demand in respect of the assessment years in question were not served on him before the commencement of recovery proceedings. As said earlier, this statement is clearly an afterthought and was made when the deponent became sure that the Department is handicapped by the non-availability of the relevant record." On behalf of the Department, Shri R. K. Upadhya, learned standing counsel also placed reliance on section 35 of the Evidence Act, 1872, to canvass that there is a presumption of regularity about the "office records"/ "public records". Further, the learned standing counsel referred to a decision of the hon'ble Supreme Court in the case between R. M. Yellatti v. Assistant Executive Engineer reported in [2006] 108 FLR 213 ; 1 SCC 106 which deals with "burden of proof", under the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ue involved in the present case. Finally learned counsel for the assessee, Shri S. K. Garg submitted that there being no evidence brought on record by the Income-tax Department to show that Sri Murli Dhar Vaish had valid authority to receive notice under section 143(2) of the Act on behalf of the assessee and he had actually received that notice, the block assessment order dated July 26, 2000 is not valid and the same deserves to be quashed. We have heard the rival contentions and perused the facts of the case. As stated earlier, the ground of non-service of notice under section 143(2) of the Act was taken as an additional ground for the first time before us and the same was admitted as it was purely a legal ground. It is now a law finally settled by the hon'ble apex court in the case of Hotel Blue Moon [2010] 321 ITR 362 (SC) that the issue of service of notice under section 143(2) of the Act is mandatory in case the Assessing Officer chooses to verify the correctness of block return. Without issuing such a notice, he cannot proceed to make assessment under section 143(3) of the Act in relation to block return. In support of our view, we reproduce hereinbelow the following passa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uded. We may also notice here itself that the clarification given by the Central Board of Direct Taxes in its Circular No. 717 dated August 14, 1995 ([1995] 215 ITR (St.) 70), has a binding effect on the Department, but not on the court. This circular clarifies the requirement of law in respect of service of notice under sub-section (2) of section 143 of the Act. Accordingly, we conclude that even for the purpose of Chapter XIV-B of the Act, for the determination of undisclosed income for a block period under the provisions of section 158BC, the provisions of section 142 and sub-sections (2) and (3) of section 143 are applicable and no assessment could be made without issuing notice under section 143(2) of the Act." This overrules the objection of Sh. R. K. Upadhya, standing counsel of the Income-tax Department that applicability of the provisions of section 143(2) of the Act to the block assessment was in doubt, even after the judgment of the hon'ble apex court in the case of Hotel Blue Moon [2010] 321 ITR 362 (SC). The objection of the standing counsel that applicability of section 292BB had not come up for consideration before the hon'ble apex court in the said case is not just ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ned standing counsel for the Department on the decision in the case of Sri Krishna [1983] 142 ITR 618 (All) is also misplaced. The primary onus of proving that notice under section 143(2) of the Act had been issued and served also on the assessee or on the person authorised to receive the same on behalf of the assessee, was on the Income-tax Department. From the orders sheet entries forming part of the "counter affidavit" filed on behalf of the Department, it is seen that no such notice was even issued and no material of corroborative nature was brought on record to show that such a notice had actually been issued in the normal course. In this scenario, the said "counter affidavit" itself has been reduced to the status of a "self-serving statement" and having no evidentiary value in view of the principle laid down by the hon'ble apex court in the case of Sri Krishna [1983] 142 ITR 618 (All). Further, there are several discrepancies in the averments made in the counter affidavit. It has been sworn by one Shri Maqsud Ali working as an Inspector of Income-tax Department in the office of the Deputy Commissioner of Income-tax, Range-II, Gorakhpur. Paragraph 5 of the said counter affida ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at service of notice was through process server and not by post and it has been claimed that service of notice was on the authorised representative. There are set rules for such a mode of service, as have been dealt with at length by the hon'ble Allahabad High Court in its judgment and order dated May 22, 2008 in the case of Harsingar Gutkha P. Ltd. v. CIT [2011] 336 ITR 90 available at paper book 25 to 29. The relevant portion of the said judgment are reproduced hereunder (page 97 of 336 ITR) : "Section 282 of the Act provides as to how the notice under the Act is to be served. The relevant provision of this section reads as under : '282. Service of notice generally.-(1) A notice or requisition under this Act may be served on the person therein named either by post or as if it were a summons issued by a court under the Code of Civil Procedure, 1908 (5 of 1908).' So, according to it, any notice under the Income-tax Act has to be served on the person named therein either by post or as if it were a summon issued by the court under the Code of Civil Procedure. Order V, rule 12 of the Code of Civil Procedure, 1908 provides that wherever it is practicable, service shall be made on t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... summons for service by registered post, where, in the circumstances of the case, the court considers it unnecessary. (2) When an acknowledgment purporting to be signed by the defendant or his agent is received by the court or the postal article containing the summons is received back by the court with an endorsement purporting to have been made by a postal employee to the effect that the defendant or his agent had refused to take delivery of the postal article containing the summons, when tendered to him, the court issuing the summons shall declare that the summons had been duly served on the defendant : Provided that where the summons was properly addressed, prepaid and duly sent by registered post, acknowledgment due, the declaration referred to in this sub-rule be made notwithstanding the fact that the acknowledgment having been lost or mislaid, or for any other reason, has not been received by the court within thirty days from the date of the issue of summons.' Now, who are the recognised agents of the parties, the same has been defined in Order 3, rule 2 of the Code of Civil Procedure, which reads as under : '2. Recognised agents.-The recognised agents of parties by whom ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on record, we hold that the mandatory notice under section 143(2) of the Act has not been served at all on the assessee and such an omission is fatal to the very survival of the block assessment order dated July 28, 2000. We, therefore, quash the same as illegal being void ab initio. It is also placed on record that although in paragraph 6 of the counter affidavit it has been averred that the said notice was served on the assessee, but finally it was pleaded before us that the notice under section 143(2) of the Act was served on Sri Murli Dhar Vaish. After analysing the facts of the case, we hold that Sri Murli Dhar Vaish was not an agent of the assessee to receive notice under section 143(2) of the Act on behalf of the assessee and no notice under section 143(2) of the Act was served on him. In the circumstances and facts of the case, we are of the view that the block assessment made on July 28, 2000 under section 158BC read with section 143(3) of the Act is wholly illegal and not maintainable. The same is, therefore, quashed. Since the block assessment order dated July 28, 2000 as a whole has been quashed by us on the preliminary ground, we do not consider it necessary to deal w ..... X X X X Extracts X X X X X X X X Extracts X X X X
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