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2015 (11) TMI 490 - ITAT DELHI

2015 (11) TMI 490 - ITAT DELHI - [2015] 43 ITR (Trib) 635 (ITAT [Del]) - Reopening of assessment - non serving of notice - Held that:- No hesitation in holding that there has been no valid service of notice under section 148 of the Act upon the assessee as the same was neither tendered to the assessee or his agent, nor the same was refused by either of them.

On the facts of the case and respectfully following the ratio of judgment laid down by the Hon’ble High Court of Delhi in the ca .....

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untant Member And Shri Sudhanshu Srivastava, Judicial Member For the Appellant : Shri Salil Aggarwal, CA, Shri Shailesh Gupta, CA For the Respondent : Shri Sujit Kumar, Sr. DR ORDER Per Bench ITA No. 1467/Del/2011 arises from the order of learned Commissioner of Income Tax (Appeals), Ghaziabad dated 17.01.2011 for the Assessment year 2003- 04, wherein the appeal of the appellant was partly allowed on merits. The assessee has taken as many as 14 grounds in this appeal before us but the main griev .....

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ses of the assessee on 17.02.2006 wherein during the course of survey, a loose paper (marked as Page No 89 of Annexure D-3) was found which showed that certain payments had been made by one Shri Vijay Gupta and another Shri JK Gulati to Shri Satish Kumar, Secretary of the assessee society. The amount pertaining to AY 2003-04 was ₹ 33,15,100/- which according to AO was the undisclosed income having escaped assessment u/s 147 r.w.s. 148 of the Income Tax Act, 1961. Notice u/s 148 was issued .....

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albeit, for the first time. The Learned DR has strongly objected to the admitting of this additional ground. However, in view of the decision of the Hon'ble Supreme Court in the case of National Thermal Power Co. Ltd. Vs. CIT 229 ITR 383 (SC), we are of the opinion that the assessee is entitled to urge question of law on the basis of facts already available on record. We also rely on the decision of the Hon ble Supreme Court in the case of Jute Corporation of India Ltd. v. CIT [1991] 187 IT .....

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uld be allowed to be raised when it is necessary to consider that question in order to correctly assess the tax liability of an assessee. We accordingly, allow this additional ground to be admitted. 4. The Learned AR for the assessee submitted that a perusal of the notice dated 26.03.2007 allegedly issued under section 148 of the Act (placed at 61 of the paper book), would reveal that the said notice has not been issued at the correct address, as the address mentioned on the said notice is not t .....

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ct was not served on the assessee nor the same was refused at all by the assessee. He submitted that when the officials of the Income-tax Department went to serve the notice under section 148, the servant (not of assessee, as the notice was not sent at the address of assessee - appellant) refused to accept the notice. The Learned AR submitted that the servant here, by no stretch of imagination can be said to be the agent of the assessee and thus, admittedly, no notice was tendered either to the .....

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hority concerned has reason to believe that assessee was intentionally hiding himself from authorities for purpose of avoiding service or that there were other good reasons to come to the conclusion that summons could not be served in the ordinary way. The Learned AR submitted that the said process had not been exhausted or carried out by the AO in the instant case and as such, the service of notice by affixation is bad in law. The Learned AR placed reliance on the decision of the Hon ble Delhi .....

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laws:- 1. CIT vs. S. Khader Khan Son (2008) 352 ITR 480 (SC) 2. Commissioner of Income-tax v. S. Khader Khan Son [2008] 300 ITR 157 (Mad) 5.1 He further submitted that the information is not backed by any evidence. 5.2 He raised number of other contentions which we would be dealing, if necessary, in our findings. Shri Salil Aggarwal also made statements on merit and raised contentions with which we would deal, if necessary. The Ld. DR Shri Sujit Kumar on the other hand controverted the statement .....

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was only at the residence of the assessee master that the servant refused to take service of the notice. Because of assessee s conduct with a criminal mind, the department was forced to serve the notice by affixture. He argued that the service was valid. 5.3. Both on the issues of reopening as well as on merits, he strongly opposed the contentions of the assessee. We would be dealing with the same, if necessary. Both parties agreed that the issues for the assessment year 2004-05 are identical to .....

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ved on the person mentioned u/s 282. 6. We have considered the rival submissions and have perused the facts on record. Undisputedly, notice u/s 148 was issued on 26.03.2007 and was served upon the assessee through affixture on 16.04.2007. This fact has been recorded by the AO also on Page 2 of the Assessment Order. There is no other evidence on record to even suggest that efforts were made earlier to serve the notice on the assessee. The short question which arises for consideration in this case .....

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t, reassessment or re computation 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 relevant assessment year, in the prescribed form and verified in the prescribed manner and setting forth such other particulars as may be prescribed; and .....

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Procedure, 1908 (5 of 1908)." Thus 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 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 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.-Wh .....

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refuses to sign the acknowledgement, or where the serving officer, after using all due 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 officer shall affix .....

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affixed. " Order V, Rule 19A provides for simultaneous issue of summons for service by post in addition to personal service. It reads as under:- "Rule 19A. Simultaneous issue of summons for service by post in addition to personal service.-(l) The Court shall, in addition to, and simultaneously with, the issue of summons for service in the manner provided in rules 9 to 19 (both inclusive), also direct the summons to be served by registered post, acknowledgement due, addressed to the de .....

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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, acknowledgement due, the de .....

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e made or done are- (a) persons holding powers-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 appearance, 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 appea .....

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y the servant of another person who by no stretch of imagination can be said to be the agent of the assessee and admittedly no notice was tendered either to the assessee or his agent nor was the same refused either by the assessee or his agent. Under Order V, Rule 17 of the Code of Civil Procedure, the affixation can be done only when the assessee or his agent refuses to sign the acknowledgement or could not be found. Here, in the present case, it is very much apparent from the records that no e .....

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ner in which a valid service can be affected. According to this section, a notice under the Act is to be served either by post or as if it was summon under the Code of Civil Procedure, 1908. In the present case, admittedly, notice was never sent by post. So the question arises whether the service was effected in accordance with the provisions of Civil Procedure Code. The relevant provisions of the service of summons under the Code of Civil Procedure are contained in Order V Rules 12 to 20. Rule .....

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used to accept service, or cannot be found: Where the defendant or his agent or such other person as aforesaid refused to sign the acknowledgement, or where the serving officer, after using all due 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 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 .....

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entified and in whose presence the copy was affixed. Rule 19 provides that where a summon is returned under Rule 17, the Court shall, if the return under that rule has not been verified by the affidavit of the serving officer and may, if it has been so verified, examine the serving officer on oath, or cause him to be so examined by another Court, touching his proceedings and may make such further enquiry in the matter as it thinks fit; and shall either declare that the summon has been duly serve .....

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