9911796707
TMI Blog2016 (3) TMI 1199X X X X Extracts X X X X X X X X Extracts X X X X ..... ce Agreement (DTAA). The Assessing Officer did not accept the contentions of the assessee and held that the salary received by him during the relevant period in India and as well as in China aggregating to Rs. 41,95,468/- was taxable in India. The Assessing Officer vide order dated 24-12-2009 assessed the taxable income of the assessee as Rs. 42,03,760/-. Aggrieved by the assessment order, the assessee preferred an appeal before the Commissioner of Income Tax (Appeals). The Commissioner of Income Tax (Appeals) held that the provisions of India-China DTAA are not applicable to the assessee and the salary income received by the assessee in India is correctly taxed under the domestic law and dismissed the appeal of the assessee. Now, the assessee has come in second appeal before the Tribunal assailing the findings of the Commissioner of Income Tax (Appeals). 3. Before the Tribunal apart from challenging the order of First Appellate Authority on merits, the assessee has raised additional grounds challenging the validity of assessment proceedings on the ground that there was no valid service of notice issued u/s. 143(2) of the Income Tax Act, 1961 (hereinafter referred to as "the Act" ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oner of Income Tax and Another Vs. Hotel Blue Moon reported as 321 ITR 362 (SC). 5. On the other hand Shri Hitendra Ninawe representing the Department vehemently supported the findings of authorities below and submitted that this issue has been raised by the assessee for the first time before the Tribunal. The ld. DR further submitted that the assessee has participated in the assessment proceedings and no objection whatsoever was raised by the assessee at that time. The ld. DR further draws support from the provisions of section 292 BB and submitted that since the assessee has participated in the assessment proceedings the notice shall be deemed to have been served. 6. We have heard the submissions made by the representatives of rival sides and have perused the orders of the authorities below. The assessee in the first instance has challenged the validity of assessment proceedings in the absence of proper service of notice issued u/s. 143(2) of the Act. Before adverting to the facts of the case it would be relevant to first examine the provisions of section 282 as were applicable for the assessment year 2007-08. The relevant extract of the same are reproduced here-in-inder: "28 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... some conspicuous place in the court house, and also upon some conspicuous part of the house (if any) in which the defendant is known to have last resided or carried on business or personally worked for gain, or in such other manner as the court thinks fit. (1A) Where the court acting under sub-rule (1) orders service by an advertisement in a newspaper, the newspaper shall be a daily newspaper circulating in the locality in which the defendant is last known to have actually and voluntarily resided, carried on business or personally worked for gain. (2) Effect of substituted service-Service substituted by order of the court shall be as effectual as if it had been made on the defendant personally. (3) Where service substituted, time for appearance to be fixed- Where service is substituted by order of the Court, the Court shall fix such time for the appearance of the defendant as the case may require." 8. Thus, from a perusal of provisions of section 282 of the Act and the method of service of notice as specified under the Code of Civil Procedure it is clearly evident that in the first instance the effort has to be made to serve the notice/summons to the assessee through normal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has not brought on record to show that any effort was made to serve notice u/s. 143(2) to the assessee in the normal course through registered post. A close scrutiny of the Panchnama would also reveal that the assessee is a resident of Raheja Garden, Wanwadi, Pune, whereas the persons who have witnessed the Panchnama are not from the vicinity or the same area but are from far of places. One of the witnesses is resident of Mukundnagar, Pune and the other is from Balewadi, Pune. Both these places are far away from the residence of assessee. There is no mention in the Panchnama that enquiries were made from neighbors of the assessee in respect of his whereabouts. The reasons for joining the witness from far of location and whether the witnesses were able to identify the name and address of the assessee, the reasons for not joining the witness from local area are also not specified. Thus, raising a cloud of suspicion on the genuineness of service even through affixation. Order V of Rule 20 clearly states that the court shall order for substitute service if it is satisfied that there is reason to believe that the defendant is purposely avoiding service or the summons could not be serve ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nts. (ii) For the AO to exercise jurisdiction to reopen an assessment, notice under Section 148 (1) has to be mandatorily issued to the Assessee. Further the AO cannot complete the reassessment without service of the notice so issued upon the Assessee in accordance with Section 282 (1) of the Act read with Order V Rule 12 CPC and Order III Rule 6 CPC. (iii) Although there is change in the scheme of Sections 147, 148 and 149 of the Act from the corresponding Section 34 of the 1922 Act, the legal requirement of service of notice upon the Assessee in terms of Section 148 read with Section 282 (1) and Section 153 (2) of the Act is a jurisdictional pre-condition to finalizing the reassessment. (iv) The onus is on the Revenue to show that proper service of notice has been effected under Section 148 of the Act on the Assessee or an agent duly empowered by him to accept notices on his behalf. In the present case, the Revenue has failed to discharge that onus. (v) The mere fact that an Assessee or some other person on his behalf not duly authorised participated in the reassessment proceedings after coming to know of it will not constitute a waiver of the requirement of effecting pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under which he did so and the name and address of the person by whom the house or premises were identified and in whose premises the copy of the summon was affixed. These facts should also be verified by an affidavit of the Serving Officer. 14. The reason for taking all these precautions is that service by affixture is substituted service and since it is not direct or personal service upon the defendant, to bind him by such mode of service the mere formality of affixture is not sufficient. Since the service has to be done after making the necessary efforts, in order to establish the genuineness of such service, the Serving Officer is required to state his full action in the report and reliance can be placed on such report only when it sets out all the circumstances which are also duly verified by the witnesses in whose presence the affixture was done and thus the affidavit of the Serving Officer deposing such procedure adopted by him would also be essential. In the instant case, the whole thing had been done in one stroke. It was not known as to why and under which circumstances another entry for service of notice by affixture was made on 27-7-2012 when sufficient time was availa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... instant case, the department has not been able to demonstrate that notice u/s.143(2) was served within the statutory time limit, the assessment made on the basis of such invalid notice could not be treated to be valid assessment and, hence, such assessment order deserves to be treated as null and void and liable to be quashed and annulled. Accordingly, we allow assessee's appeal on legal issue regarding non-service of notice u/s.143(2). As we have already allowed assessee's appeal on legal issue, we are not going to discuss the merits of the addition made on account of deemed dividend u/s.2(22)(e) of the Act." 13. In the present case, since, the notice u/s. 143(2) has not been validly served on the assessee the proceedings arising there from are vitiated. Thus, in view of the provisions of the Act and various decisions discussed above we are of considered view that proper service of notice u/s. 143(2) is mandatory. The Department cannot take the shelter of section 292 BB where there is no proper service of notice u/s. 143(2) and the assessee has participated in assessment proceedings. Non-service of notice u/s. 143(2) is fatal to the assessment proceedings. In the absence of prope ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
