TMI Blog2010 (11) TMI 537X X X X Extracts X X X X X X X X Extracts X X X X ..... at Shri Dinesh Singh was having the Power of Attorney on the stamp paper of Rs. 20/- which was purchased on 30/06/2004, the facts remain that on 10/03/2004 he was not having any Power of Attorney to receive the notice u/s 148 of the Act - since there was not a valid service of notice upon the assessee, the Assessing Officer does not get jurisdiction to make assessment. - ITA NO. 66/LUC/07 & 268/2010 - - - Dated:- 1-11-2010 - H.L. KARWA, VICE-PRESIDENT AND N.K. SAINI, ACCOUNTANT MEMBER S.K. Garg and Amit Shukla for the Appellant. Praveen Kumar for the Respondent. ORDER Per N. K. Saini These two appeals have been filed by the assessee for the assessment year 1999-2000. In these appeals the assessee has challenged the validity of the assessment. 2. First we will deal with I.T.A. No.66/Luc/07. 3. The facts related to this case, in brief, are that the original assessment order u/s 143(3)/147 was passed by the Assessing Officer on 28/03/2005 at an income of Rs. 7,69,34,330/- which included addition on account of extra profit on suppressed sale for Rs. 6,68,68,738/-. The assessee preferred an appeal to the learned CIT (A) who dismissed the assessee s appeal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s recalled for the limited purposes and the Registry is directed to fix the case on 15/04/2010. 3.2 With this background we proceeded to decide the legal grounds No. 2 raised by the assessee. The said ground read as under: 2. BECAUSE the appellant had, inter alia, objected to the validity of proceedings, on the ground of irregularities in matter of drawing the notice under section 148 dated 25.2.2004 and also in the matter of service thereof, and the learned CIT(A) has erred in law and on facts in holding that the appellant s objections are hi-per technical for the reasons that (a) the said notice had reached (somehow) the appellant; and (b) it (the appellant) had not only complied with the said notice but had also participated in the reassessment proceedings; and in rejecting the same. 4. The facts of the case, in brief, are that the Assessing Officer issued a notice u/s 148 dated 25/02/2004 and it was claimed that the said order was served upon the assessee through notice server on 10/03/2004. The assessee challenged the validity of notice by stating that the notice u/s 148 was non-est as it was not even addressed to the Principal Officer which is the basic require ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the cost of repetition the same are not reproduced herein. According to the learned CIT (A) the sum and substance of the assessee s pleadings were that the reasons recorded by the Assessing Officer (the then) did not meet the requirement of law initiation of proceedings was based merely on the show-cause notice dated 30.1.2003 issued by the Excise Department and that on the date of recording the reasons, the said show-cause notice was yet to be adjudicated upon by the Central Excise Authorities. The assessee submitted before the learned CIT (A) that the reasons recorded were based merely on pretence and did not constitute the material much less the relevant material which could provide the live link and nexus between formation of reason to believe and escapement of income chargeable to tax . The learned CIT (A) pointed out that in the written submissions the assessee had referred a large number of case laws and great emphasis was laid on the decision of the Hon ble Calcutta High Court in the case of Peerless General Finance Investment Co. v. Dy. CIT 273 ITR 16 and the decision of the Hon ble Apex Court in the case of Coca-cola Export Corporation v. ITO 231 ITR 200. A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ad duly acknowledged the receipt of the said notice and in due compliance with the same it had filed the return and later on, after the reasons recorded were confronted to it, the appellant filed its objection also. The plea is, therefore, rejected. Now the assessee is in appeal. 6. The learned counsel for the assessee reiterated the submissions made before the authorities below and further submitted that no notice u/s 148 of the Act was served upon the Principal Officer or any authorized person of the assessee company. It was contended that the signature on the notice dated 25/02/2004 issued u/s 148 of the Act appears to be signature of Shri Dinesh Singh, Chartered Accountant but he was not having any authority to receive such notice on 10/03/2004 i.e. the date appended below the signature, because power of attorney was given to Shri Dinesh Singh, a practicing Chartered Accountant and one of the partners in M/s A. Sachdeva Company, Chartered Accountants for a matter relating to the proceedings u/s 143(2) of the I.T. Act, only on 30/06/2004. A reference was made to page No. 10 the departmental compilation which is the copy of power of attorney on stamp paper of Rs. 20/- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Officer 35 ITR 388 (SC) (ii) CIT v. Kurban Hussain Ibrhimji Mithiborwala 82 ITR 821 (SC) (iii) CIT v. Ishwar Singh 131 ITR 480 (All.) (iv) Madan Lal Agarwal v. CIT 144 ITR 745 (All.) 6.1 It was further submitted that the Hon ble Jurisdictional High Court in the said judgment and order dated 22.5.2008 had laid down a very important rule governing service of notice on Authorized Representatives or agents and after referring to the relevant provisions of Civil Procedure Code, 1908 (CPC), the Hon ble Court has held that unless the recipient is representative or agent, duly authorized to receive such notice, there is no valid service of notice. It was contended that the assessee had objected to the validity of the notice dated 25/02/2004 issued u/s 148 vide its letter dated 28th September, 2004 on specific ground of lack of service thereof vide para 8.1 thereof, as supported by various case laws as listed in para 8.2. A reference was made to pages 28 to 35 of the assessee s compilation which is the copy of the said letter dated 28th September, 2004 written to the Assessing Officer i.e. DCIT, Range-4, Income-tax office, Lucknow. It was contended that the Assessing Officer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . 7. In his rival submissions the learned CIT, D. R. supported the orders of the authorities below and further submitted that the Assessing Officer issued a notice u/s 148 dated 25/02/2004 and served upon the assessee through the notice server on 10/03/2004 and the said notice bears an initial dated 10/03/2004 with no name under the signature and below that signature the notice server appended his signature on 10/03/2004. A reference was made to page No. 1 of the departmental paper book which is the copy of the notice dated 25/02/2004 issued u/s 148 of the Act. It was further stated that Shri Mahesh Singh, M.D. of the assessee filed a letter dated 23/03/2004 before the Assessing Officer stating as under: With reference to the notice u/s 148 for the above stated case, we are hereto submit that original return filed on 12/11/99 (photocopy of which is enclosed) can be treated as the return filed in response to notice u/s 148 dated 25/02/2004. 7.1 It was further stated that during the course of assessment proceedings the Assessing Officer issued many other notices and the notices were also served in persons. A reference was made to page Nos.3 to 9 of the departmental paper book ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... signatures on the letter dated 18.2.2005. Therefore, from the human probabilities and surrounding circumstances, it could be inferred that the notice u/s 148 would have been received on the instructions of the M.D. of the assessee company. It was stated that the notice u/s 148 was well replied by the M.D. himself on 23.03.2004 i.e. within a fortnight and in the said letter he did not mention about the validity of the service of notice and that the compliance was made within the stipulated time mentioned in the notice. It was contended that from the information as extracted from the internet it was seen that Shri O.P. Nehru was a Legal Officer of the assessee company for 18 years and his job summary undertake that he was looking for Income Tax, Excise and Trade Tax. A reference was made to page No. 15 of the departmental paper book which is a copy of the profile of Shri O.P. Nehru extracted from the internet. The learned CIT, D. R. referred to the order 5, rule 12, of the Civil Procedure Code and submitted that service should be made on the defendant in person, wherever practicable, unless he has an agent empowered to accept service, in which case service on such agent would be dee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wed entry from the gate then it was the sweet will of the assessee that who should put signature on the notice and that the Assessing Officer is not fettered by technical rules of evidence which may be circumstantial or based on preponderance of probabilities judged by human conduct. The reliance was placed on the judgment of Hon ble Jurisdictional High Court in the case of CIT v. Swarup Cold Storage and General Mills 136 ITR 435. . . . . 8. In his rejoinder the learned counsel for the assessee submitted that the learned CIT, D. R., during the course of hearing, took a stand that the notice u/s 148 dated 25/02/2004 appears to have been served on Shri O. P. Nehru on 10/03/2004 and such a service was valid, for making such a plea, he has relied upon a profile given by Sri Om Prakash Nehru on his website, wherein he has claimed himself to be a legal adviser of the assessee for 18 years, ever since 1992 and also of some other groups. It was contended that the profile of Shri Om Prakash Nehru was a self proclaimed one for exploring a job opportunity for himself and it is not evident that he was having any authority from the assessee to receive the notice and even nothing is brough ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the assessee vide judgment and order dated 23/12/2008 given by the ITAT, Lucknow Bench, Lucknow in I.T.A. No.870/Luc/06 in the case of Kanpur Plastipack Ltd. v. Income Tax Officer and the judgment and order dated 12/02/2007 in the case of Anil Kumar Goel v. Income Tax Officer in I.T.A. Nos.290 291/Luc/2005, therefore, the said orders constitute binding precedence and in view of the fact, candidly admitted by the learned CIT, D.R. during the course of hearing of appeal that there existed no authority or power of attorney in favour of Shri Om Prkash Nehru (to accept service of notice), deserves to be held that the notice in question had not been served in accordance with the provisions of law and consequently the Assessing Officer never got jurisdiction to make assessment in pursuance of the same vide order dated 28/03/2005 passed u/s 143(3) read with section 148 of the Act. 8.1 The learned counsel for the assessee submitted that the case laws relied by the learned CIT, D. R. are not at all applicable to the facts of the assessee s case since in the case of Jangi Bhagat Ramawater v. CIT AIR 1930 Pat. 127, the issue was related to the service of notice u/s 22(2) of the old Act, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on record to show that Shri Om Prakash Nehru was an authroised person to whom the notice was claimed to have been served. 8.4 As regards to the case of Sunder Lal v. CIT reported in AIR 1931 (Patna) 282 relied by the learned CIT, D. R., it was stated that in the said case it has been held that service of notice on the agent is sufficient, whether the Principal is or is not a resident within the local jurisdiction but in the present case the facts are altogether different. Accordingly it was submitted that the reliance placed by learned CIT, D. R. was wholly misplaced as in the present case it had not been shown that the service of notice u/s 148 dated 25/02/2004 had been effected on 10/03/2004 on an agent of the assessee company who possessed the authority to receive such notice. Rather the decision in the said case support the assessee s case as the notice had not been served on an agent duly authorized on behalf of the assessee as per the provisions of Civil Procedure Code (as have been referred to in section 282(1) of the Act). 8.5 The learned counsel for the assessee also distinguished the case of Ram Niwas Hanuman Bux Somani v. Income Tax Officer reported in [1959] 37 ITR ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on the record. In the present case the whole controversy revolves around the validity of the service of notice dated 25/04/2004 issued u/s 148 of the Act. The claim of the assessee is that no notice u/s 148 was served either on the Principal Officer of the assessee company or any authorized person. On the contrary, the claim of the department is that one Shri O. P. Nehru received the notice and he was the legal advisor of the assessee company, therefore, there was a valid service of notice u/s 148 of the Act. It is well settled that for initiating the proceedings u/s 147 of the I.T. Act, 1961, the service of notice u/s 148 is the pre requisite condition. For this proposition, it is required to discuss the provisions contained in sub section (1) of section 148 of the I.T. Act, 1961 which read as under: 148. [(1)] Before making the assessment, reassessment or recomputation under section 147, the Assessing Officer shall serve on the assessee a notice requiring him to furnish within such period, as may be specified in the notice, a return of his income or the income of any other person in respect of which he is assessable under this Act during the previous year corresponding to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d that Shri O. P. Nehru who was not the Principal Officer of the assessee was having any authority to receive such notice. Therefore, the service of notice to the aforesaid person could have only been a valid service if he was having the authority to receive the notice. However, nothing is brought on record that the said person was having any authority. Another plea was also taken by the learned counsel for the assessee that one Shri Dinesh Singh, Chartered Accountant, who was not authorized to receive such notice on 10/03/2004, might have received the notice. It is noticed that a Power of Attorney was given to Shri Dinesh Singh, Chartered Accountant, copy of which is placed at page No. 10 of the departmental paper book and reads as under: SPECIAL POWER OF ATTORNEY I Mahesh Singh Patel, Managing Director of M/s Harsingar Gutkha Private limited,Lucknowdo hereby authorise Shri G.K. Lath, F.C.A. Chartered Accountant and Sri Dinesh Singh, F.C.A. Chartered Accountant to represent us before the Deputy Commissioner of Income Tax Range -4, Lucknow in connection with Notice U/s 143(2) of the Income Tax Act, 1961 for the Assessment year 1999-2000. Their information and explanations ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wherever it is practicable, service shall be made on the defendant in person or on his agent. The relevant provision reads as under: Rule 12. Service to be on defendant in person when practicable, or on his agent. Wherever it is practicable, service shall be made on the defendant in person, unless he has an agent empowered to accept service, in which case service on such agent shall be sufficient. Order V rule 17 of the Code of Civil Procedure lays down the procedure when the defendant refuses to accept service, or cannot be found and it reads as under: Rule 17, Procedure when defendant refuses to accept service or cannot be found.- Where the defendant or his agent or such other person as aforesaid refuses to sign the acknowledgment, or where the serving officer, after using all clue and reasonable diligence, cannot find the defendant (who is absent from his residence at the time when service is sought to be effected on him at his residence and there is no likelihood of his being found at the residence within a reasonable time), and there is no agent empowered to accept service of the summons on his behalf nor any other person on whom service can be made, the serving offic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... appearances, applications and acts may be made or done, (a) persons holding power-of-attorney, authorizing them to make and do such appearances, applications and acts on, behalf of such parties, (b) persons carrying on trade or business for and in the names of parties not resident within the local limits of the Jurisdiction of the court within which limits the appearances, application or act is made, the appearances, application or act is made or done, in matters connected with such trade or business only, where no other agent is expressly authorized to make and do such appearances, applications and acts, 9.3 Now by keeping in view the aforesaid observations of the Hon ble Jurisdictional High Court, we have to see in the present case as to whether the notice u/s 148 of the I.T. Act was served in accordance with the provisions contained in section 282 of the act. Admittedly, the notice u/s 148 was not served upon the Principal Officer of the assessee company and was claimed to have been served firstly on one Shri Dinesh Singh, Chartered Accountant and secondly later on one Shri O. P. Nehru. However, nothing is brought on record that either Shri Dinesh Singh or Shri O. P. Neh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rakash v. CIT reported in 46 STC 71 (FB) (All.), while considering the issue related to the service of notice under U.P. Sales Tax Act. has held as under: The bar created by section 6 is in respect of territorial and pecuniary jurisdiction only. The jurisdiction exercised under section 21 without service of notice is neither territorial nor pecuniary. It is a jurisdiction which pertains to the subject-matter and if no proceedings could be taken without issue and service of notice then the assessing authority could not assume jurisdiction simply because the assessee consented or participated in the proceedings. Estoppel is a principle of equity but it does not apply to taxation proceedings. If the law says that no jurisdiction can be assumed without issue of notice and serving it on the assessee if cannot be circumvented by invoking equitable principle of estoppel and participation of the assessee. It is not an error in the exercise of jurisdiction but an error which debars the assessing authority from proceedings in the matter. 9.5 In the instant case, as we have discussed in the former part of this order, since there was not a valid service of notice upon the assessee, t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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