TMI Blog2016 (3) TMI 1199X X X X Extracts X X X X X X X X Extracts X X X X ..... tice 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 we are of considered view that proper service of notice u/s. 143(2) is mandatory. The Department cannot take the shelter of section 292BB 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 proper and valid service of notice, the proceedings arising therefrom are null and void and are thus liable to be annulled. - Decided in favour of assessee - ITA No. 1111/PN/2013 - - - Dated:- 31-3-2016 - R. K. Panda ( Accountant Member ) And Vikas Awasthy ( Judicial Member) For the Assessee : Girish Dave, Kadambari Dave For the Revenue : Hitendra Ninawe ORDER Vikas Awasthy ( Judicial Member) The appeal of the assessee is directed against the order of Commissioner of Income Tax (Appeals)-IT/TP, Pune dated 18-03-2013 for the assessment year 2007-08. 2. The brief facts of the case as emanating from records are: The assessee is an employee of Honeywell Automatio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g on behalf of the assessee submitted that there was no valid service of notice issued u/s. 143(2). As per the provisions of section 282 as were applicable during the period relevant to the assessment year 2007-08 the notice was required to be served on the assessee in the first instance by post or as if they were summons issued by the court under the Code of Civil Procedure. In the present case, no effort was made by the Department to serve the notice to assessee through registered post or under the normal course. No reason whatsoever has been given for service of notice by affixation. The ld. AR placed on record a copy of service report along with Panchnama dated 30-09-2008. The ld. AR submitted that no valid reason has been given in the service report or Panchnama for substituted method of service. In support of his submissions, the ld. AR placed reliance on the decision of Hon'ble Delhi High Court in the case of Commissioner of Income Tax Vs. Chetan Gupta in ITA 72 of 2014 decided on 15-09-2015 and the decision of Mumbai Bench of the Tribunal in the case of Shri Sanjay Badani Vs. DCIT in ITA No. 5221/Mum/2014 decided on 09-09-2014. 4.1 The ld. AR submitted that the provi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ch agent shall be sufficient. The procedure relating to substituted service is contained in Order V Rule 17 of the Code of Civil Procedure. The same reads as under: 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 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 a copy of the summons on the outer door or some other conspicuous part of the house in which the defendant ordinarily resides or carries on business or personally works for gain, and shall then return the original to the court from which it was issued, with a report endorsed thereon or annexed thereto stating that he has so affixed the copy, the circumstances under which he did so ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1) dtd. 26- 09-208 for A.Y. 2007-08 by affixture on the assessee Shri Anil S. Khatri [PAN ADMPK 5329H] residing at 604-A Wing, Angelina, Raheja Garden, Wanawadi, Pune today i.e. on 30/09/2008 in the presence of two witness as per Panchnama enclosed here with. Submitted Sir. Pune Date 30/09/2008 Yours faithfully, Sd/- _______ 30/9/08 (M.B. Sayyed) Inspector. PANCHNAMA As directed by the Income Tax Officer (International Taxation)-I, Pune, I Shri M.B. Sayyed, Inspector, put maximum efforts to serve the notices under section 142(1) 143(2) dt. 26/9/2008 for A.Y. 2007-08, to the assessee Shri Anil S. Khatri [PAN ADMPK 5329H] on the given address at 604-A Wing, Angelina, Raheja Garden, Wanawadi, Pune-20. On local enquiry the where abouts of the said assessee could not be traced out. Therefore, the above said notices is served by me by affixture on the main door of the assessee flat on the above given address in presence of two witnesses available at that time, at that place. The signature of the two witness have been placed on both the notices along w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Hon'ble Delhi High Court in the case of Commissioner of Income Tax Vs. Hotline International P. Ltd. reported as 296 ITR 333 (Del) has held that in the absence of proper service of notice the reassessment proceedings were bad in law. The relevant extract of the findings of the Hon'ble High Court reads as under: 23. 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 acknowledgment or could not be found. Here, in the present case, no effort was made by the Income-tax Department to serve the notice upon the assessee, since the company of the assessee was closed due to Holi festival holidays, and admittedly no effort was made by the serving officer to locate the assessee. 24. Even otherwise, as per Order V, rule 19A of the Code of Civil Procedure, the notice sent by registered post ought to have been sent along with acknowledgment due but admittedly it was not sent along with acknowledgment due. 25. So, from the entire material available on record we have no hesitation in holding that there has been no valid service of notice under section 148 of the Act upon the assessee as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... valid and liable to be quashed. (vi) Section 292 BB is prospective. In any event the Assessee in the present case, having raised an objection regarding the failure by the Revenue to effect service of notice upon him, the main part of Section 292 BB is not attracted. 12. The Mumbai Bench of the Tribunal in the case of Shri Sanjay Badani Vs. DCIT (supra) had occasion to deal with the similar situation where notice u/s. 143(2) was not served to the assessee in accordance with provisions of the Act. The Tribunal after appreciating the facts of the case and the decision of Hon'ble Supreme Court of India in the case of Assistant Commissioner of Income Tax and Another Vs. Hotel Blue Moon (supra) held that the assessment order passed without valid service of notice u/s. 143(2) is null and void. The relevant extract of the findings of the Tribunal are as under: 13. As per sub-section (1) of section 282, the notice is to be served on the person named therein either by post or as if it was a summons issued by Court under the Code of Civil Procedure, 1908 (V of 1908). The relevant provision for effecting of service by different modes are contained in rules 17, 19 and 20 of O ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e affixture. It appears that the report of the Inspector was obtained without issuing any prior direction for such process or mode. However, the fact remained that Serving Officer had not set out reason for passing subsequent entry nor for adopting the mode for service by affixture and without stating the reasons for doing so, the adoption of the mode of substituted service could not be legally justified. Notice was served by affixture. The reasons for service through affixture has not been noted by the AO in the notesheet nor he has issued any direction for issuing notice through affixtures. The next entry of note sheet dated 28-7-2012 just indicates that letter was filed by the Inspector regarding service of notice by affixtures, dated 17-7-2012. Thus, on 17-7-2012, the first entry was made and without recording any apprehension about the delay by such mode second entry for affixation was made on 28-7- 2012 without showing justification for the same. Thus, it is clear that report of the Inspector was obtained without issuing any prior direction for such process or mode. Thus, the adoption of mode of substituted service was not legally justified. It is also clear from the Inspecto ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee has raised the issue regarding validity of service of notice before the Tribunal for the first time. The Hon'ble Supreme Court of India in the case of National Thermal Power Co. Ltd. Vs. Commissioner of Income Tax reported as 229 ITR 383 (SC) has held that the Tribunal has jurisdiction to examine a question of law which arises from the facts and have bearing on the tax liability of the assessee. The valid service of notice issued u/s. 143(2) goes to the root of assessment proceedings which of course have bearing on the tax liability of the assessee. Accordingly, we do not find any merit in the objection raised by the ld. DR in respect of additional ground raised by the assessee in the ground of appeal. 15. Since, we have accepted the preliminary issue raised by assessee relating to validity of assessment proceedings in the absence of proper service of notice, the grounds raised by assessee challenging the order of Commissioner of Income Tax (Appeals) on merits have become academic. Therefore, we are not adjudicating the same. 16. In the result, the impugned order is set aside and the appeal of the assessee is allowed. Order pronounced on Thursday, the 31st ..... 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