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M/s. Remahay Stores Pvt. Ltd. Versus Income Tax Officer & Another

2016 (10) TMI 408 - CALCUTTA HIGH COURT

Reopening of assessment - validity of notice - whether or not the notice under Sec. 148 of the Income Tax Act was duly served on the petitioner? - effect of non-service of notice on the proceedings or action taken in pursuance of such notice? - Held that:- From the report of the Inspector attached to the office of the IT Act, Ward-9(3), Calcutta, it is evident that the said Inspector attempted to contact the petitioner at its erstwhile address at Biplabi Anukul Chandra Street and not having foun .....

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sought to be served at the petitioner's Sunny Park address nor any such point was urged in the course of making oral submission by Learned Counsel for the respondents. - Hence, it appears to be absolutely clear that the notice under Sec. 148 of the IT Act was never served on the petitioner at its Sunny Park address. - Hon'ble Apex Court in the case of Commissioner of Income Tax-vs.- Thayaballi Mulla Jeevaji Kapasi [1967 (3) TMI 1 - SUPREME Court] wherein it was held that the mere fact t .....

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en only can it be said that he cannot be found. - In the instant case, it does not appear that any attempt was made by the serving officer to find the assessee at any other address. Indeed, we are at a loss to understand why the notice was sought to be served at the erstwhile address of the petitioner when the Department was fully aware of the shifting of the registered office of the petitioner to Sunny Park and had the current Sunny Park address in its records. Thus have to hold that notice .....

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Mr. V. Tibrewal, Adv. Mr. R. Chatterjee, Adv. For the Respondent : Mr. Nizamuddin, Adv. JUDGMENT Arijit Banerjee, J. (1) The subject matter of challenge in the instant writ petition is a notice dated 31 March, 2014 issued under Sec. 148 of the Income Tax Act, 1961 (in short 'IT Act') by the Income Tax Officer (in short 'ITO'), Ward No. 9(3) Calcutta. The impugned notice is a notice of initiation of reassessment proceedings against the petitioner company in respect of assessment y .....

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any action on the basis of the impugned notice. Contention of the petitioner: (2) Appearing for the petitioner Mr. Poddar, Learned Sr. Advocate submitted that from a perusal of the impugned notice it appears that the same records both the erstwhile and current addresses of the petitioner company being 1/1A Biplabi Anukul Chandra Street, Electronic Building, 5th Floor, Room No. 5G, Kolkata-700072 and 11/1, Sunny Park, Flat - E, Kolkata-700019 respectively. However, the notice was sent by speed po .....

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IT Act within 30 days failing which reassessment would be done ex parte as per material available on record. In the last week of December, 2014, the petitioner received a notice dated 24 December, 2014 from the office of the ITO, Ward 12 (1), Calcutta intimating that jurisdiction of the case was with his office and the case was re-fixed for hearing on 6 January, 2015 which was the last opportunity for the petitioner to represent his case. (3) By a letter dated 5 January, 2014, the petitioner in .....

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essed ex parte under Sec. 144 of the IT Act. (5) By its letter dated 14 January, 2015 the petitioner informed the ITO that it had ascertained from the department of speed post that the notice issued under speed post reference EW571319860IN was not sent to the Sunny Park address where the petitioner's registered office was located. The petitioner contended that in the absence of service of notice under Sec. 148, the proceeding by the department was unjustified and illegal. (6) On or about 19 .....

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8 was originally filed by the company on 8 October, 2007 wherein earlier address of the petitioner was shown. However, the petitioner changed its office to the present Sunny Park address with effect from 3 December, 2008. In this connection learned Counsel relied on Form No. 18 filed by the petitioner with the Registrar of Companies, West Bengal, in terms of Sec. 146 of the Companies Act, 1956. (9) The factum of shifting of office was also intimated to the IT Department vide Form No. 49A prescri .....

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Copy of IT Acknowledgement evidencing filing of the Income Tax Return by the Petitioner Assessee Company for the assessment year 2009-10 on 30 September, 2009 showing its said new address. (ii) Copy of IT Acknowledgement evidencing filing of the Income Tax Return by the Petitioner Assessee Company for the assessment year 2010-11 on 30 September, 2010 showing its said new address. (iii) Copy of the intimation under Section 143(1) of the said Act in respect of the assessment year 2009-10 issued a .....

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ling of the Income Tax Return by the Petitioner Assessee Company for the assessment year 2012-13 on 27th September, 2012 showing its said new address. (vii) Copy of the Notice dated 31st July, 2012 issued under Section 143(2) of the said Act in respect of the assessment year 2011-12. (viii) Copy of the requisition under Section 142(1) of the said Act for the assessment year 2011-12 dated 4th July, 2013 made by the then Assessing Officer, the Respondent No. 2 herein. (ix) Copy of the Notice dated .....

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2011-12. (xii) Copy of the Notice issued by the Commissioner of Income Tax, Kolkata-III, Kolkata having jurisdiction over the Petitioner Assessee Company under section 263 of the said Act for the assessment year 2009-10 at the said new address on 28th November, 2013. (xiii) Copy of the Notice issued by the Commissioner of Income Tax, Kolkata - III, Kolkata having jurisdiction over the Petitioner Assessee Company under Section 263 of the said Act for the assessment year 2008-09 at the said new ad .....

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the relevant assessment year, in the prescribed form and verified in the prescribed manner and setting forth such other particulars as may be prescribed. Service of Sec. 148 notice (corresponding to Sec. 34 of the IT Act, 1922) is a condition precedent for initiating any proceedings for assessment/re-assessment/re-computation under Sec. 147 of the IT Act. In this connection learned Counsel relied on the Apex Court decisions in the cases of CIT-vs.-Thayaballi Mulla Jeevaji Kapasi, (1967) 66 ITR 1 .....

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Cal) and Gajendra Kumar Banthia-vs.-Union of India, (1996) 222 ITR 632 (Cal). (12) Learned Counsel then referred to Sec. 282 of the IT Act which provides for the mode of service of a notice or summon or requisition or order or any other commutation under this Act. He also referred to O. 5 Rules 17-20 of the CPC, 1908 as regards mode of service. On this point, learned Counsel relied on the following seven decisions:- (a) Rameshwar Sirkar-vs.-ITO, (1973) 88 ITR 374 (Cal). (b) CIT-vs.-Thayaballi Mu .....

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find the party to be served with the notice at his address is not sufficient to establish that he cannot be found. It must be shown not only that the serving officer went to the place at a reasonable time when the assessee would be expected to be present but also that if he was not found, proper and reasonable attempts were made to find him either at that address or elsewhere. A notice by affixture without reasonable attempts to find the assessee is not a proper notice. In the instant case, the .....

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exchange of affidavits was given by this Court on 3 February, 2015. On 11 May, 2015, the writ petitioner was granted liberty to file supplementary affidavits and the respondents were permitted to file comprehensive affidavit-in- opposition dealing with the allegations in the writ petition as also in the three supplementary affidavits. However, the respondents have chosen not to file any affidavit. Oral submissions have been made on behalf of the respondents and a written notes of arguments has a .....

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of the IT Act is for 'issuance of notice' and not 'service of notice' under Sec. 149(1)(b) of the IT Act. The Department had time till 31 March, 2015 to issue notice under Sec. 148. The notice was issued much prior thereto and was despatched through usual machinery. Whether or not the notice was received by the petitioner is a disputed question of fact which the writ Court will not go into. (17) Learned Counsel submitted that during the pendency of the writ petition, the petitio .....

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pening the assessment. It was much later i.e. by letter dated 12/14 April, 2015 that the petitioner asked for a copy of the impugned notice. (18) It was next submitted that the condition precedent for issuance of a notice under Sec. 148 of the IT Act is that the Assessing Officer would record reasons for issuing the same and the notice shall be issued within the time prescribed under Sec. 149 of the IT Act. In the present case, the reasons were duly recorded and the notice was issued and despatc .....

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nge to a notice under Sec. 147 of the IT Act, the Hon'ble Apex Court observed that it is only to be seen whether there was prima facie some material on the basis of which the department could reopen the case. Sufficiency and correctness of the material is not a thing to be considered at that stage and it would be open to the assessee to prove that the assumption of facts made in the notice was erroneous. (19) Learned Counsel finally submitted that the IT Act is a self- contained code providi .....

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Court would set aside the order passed pursuant to the impugned notice and remand the matter back to the Assessing Officer for fresh assessment in accordance with law. Court's View:- (20) Two questions fall for determination in this case. Firstly, whether or not the notice under Sec. 148 of the Income Tax Act was duly served on the petitioner? Secondly, if the answer to the first question is in the negative, what is the effect of such non-service of notice on the proceedings or action taken .....

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r the assessment years 2009-10, 2010-11, 2011-12, 2012-13 and 2013-14 issued by the Department which mention the Sunny Park address of the petitioner. The petitioner has also brought on record copies of notices issued by the Department to the petitioner under Sec. 143(1) of the IT Act pertaining to various assessment years starting from 2009-10, all of which were sent to the Sunny Park address of the petitioner. Hence, it is beyond any doubt that the Department was well-aware of the current addr .....

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ner, such statement is obviously incorrect. As stated above, starting from 2009-10 the Department has sent all correspondences and notices to the petitioner at its Sunny Park address. Further, the Department has disclosed no document to show that Sec. 148 notice was even sought to be served at the petitioner's Sunny Park address nor any such point was urged in the course of making oral submission by Learned Counsel for the respondents. Hence, it appears to be absolutely clear that the notice .....

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erved with the notice at his address is not sufficient to establish that he cannot be found. It must be shown not only that the serving officer went to the place at a reasonable time when he would be expected to be present, but also that if he was not found, proper and reasonable attempts were made to find him either at that address or elsewhere. If after such reasonable attempts the position still was that the party is not found, then and then only can it be said that he cannot be found. In the .....

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f Sec. 282 of the IT Act, a notice has to be served in the manner laid down in the Code of Civil Procedure which provides that service of summons shall be made by delivering or tendering a copy thereof signed by the Judge or such officer as appointed in this behalf and sealed with the seal of the Court. Delivering or tendering the same is the sine qua non of such service. In Lakshmi Narayan Prasad Bhagat-vs.-State of West Bengal (supra), a learned Judge of this court held that under the provisio .....

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e it at the initial stage or at the stage of the certificate proceeding, the service of notice by affixation would be invalid. (emphasis added is mine). In Ramendra Nath Ghosh-vs.-Commissioner of Income Tax (supra), a notice of hearing was served on the assessee by post long after the hearing date. A Division Bench of this Court held that service by affixture was not proper service as provided in O. 5 R. 17 of the CPC as the house on which the notice was served was not the residence of the appel .....

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ot only that the serving officer went to the place at a reasonable time when he would be expected to be present but also that if he was not found, proper and reasonable attempts were made to find him either at that address or elsewhere. In Thomas (M.O)-vs.-Commissioner of Income Tax (supra), a Division Bench of the Kerala High Court held that in view of the provisions contained in Sec. 63 of the Income Tax Act, 1922 (corresponding to Sec. 282 of the IT Act 1961), the procedure prescribed in O. 5 .....

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ld not be furnished by his representative. That too, had not been done in that case. When an order of assessment levying tax is being passed, it is incumbent upon the assessing officer to serve the notice in accordance with the provisions. This had not been done. Thus, the principles of natural justice had been violated and on that ground the assessment order was liable to be set aside. (25) In view of the aforesaid, I have to hold that notice under Sec. 148 of the IT Act was not duly served on .....

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) of the IT Act, 1922 (corresponding to Sec. 148 of the IT Act, 1961) within the period of limitation is a condition precedent to the exercise of jurisdiction. In CIT-vs.-Kurban Hussain Ibrahimji Mithiborwala (supra), the Hon'ble Supreme Court held that the income tax officer's jurisdiction to reopen an assessment depends upon the issuance of a valid notice to the assessee. If the notice issued is invalid for any reason, the entire proceedings taken by him would become void for want of j .....

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w. This must be the position in law since reopening of an assessment by the Department without duly notifying the assessee and without giving him an opportunity to oppose such a decision clearly amounts to breach of principles of natural justice. It cannot be gain-said that natural justice is one of the principal pillars of legal justice. Any action taken or any order passed by an authority in infraction of the rules of natural justice must be held to be null and void and of no effect whatsoever .....

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erein, if any, are hereby quashed. (29) Learned Counsel for the respondents urged that there is an alternative remedy available to the petitioner by way of statutory appeal under the IT Act and therefore this writ petition should not be entertained. While it is true that the Writ Court normally would not intervene when the aggrieved party has an efficacious alternative remedy available to him and particularly a remedy prescribed under the relevant statute, this is not a rule of law but only a ru .....

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assessing officer was well within his jurisdiction in issuing the notice. On the request of the petitioner the assessing officer also furnished to the petitioner the reasons for issuing such notice. It is not for this court to adjudge whether such reasons are good or bad so long as they are not perverse. The notice is really in the nature of a show-cause notice and the Writ Court normally does not interfere with such a notice. It is open to the noticee to respond to such notice and urge as to w .....

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