TMI Blog2017 (5) TMI 1210X X X X Extracts X X X X X X X X Extracts X X X X ..... e was also not provided by the CIT. Ld.CIT could have sent the notice by post to make ‘evidence on record’ that a proper notice was at-least issued, if not served, on assessee. No notice was sent by post. Having come to know that assessee was not living in the given address, no attempt was made to locate assessee, as was subsequently found out in the course of recovery proceedings. In the present case, neither there was any issuance of a show cause notice by way of post nor was there any service by affixture. There is no substituted service also as admitted in this case. Apart from not giving an opportunity to assessee, Ld.CIT also did not verify the record properly. The proceedings u/s. 153C were initiated as the department has seized certain documents in search of M/s. MBS Jewellers Pvt. Ltd. Obviously, AO could not have completed the assessment, without examining these documents, as the very basis for issuing of notices u/s. 153C for the impugned year was the said sale deed copies. Moreover, AO issued a show cause notice, as discussed in the arguments of Ld. Counsel and assessee had given a detailed reply. It was further submitted that assessee has given GPA to one Shri Kotes ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... AYs. 2007-08 to 2010-11. The grievance is with reference to AY 2006-07 only. Ld.CIT as seen from the show cause notice issued for the impugned assessment year has initiated the proceedings for nonexamination of certain information in the seized material. As per the CIT, assessee has executed ten sale deeds in favour of Shri Sukesh Gupta and his group on land situated at GuttalaBegumpet, Hyderabad. It was also noted that assessee claimed that he had given GPA to one Shri G. Koteshwara Rao in the year 1994 and the same was cancelled in the year 1997. It was claimed by assessee before the AO that the ten sale deeds are invalid as they were executed by Shri G. Koteshwara Rao after the GPA was cancelled. Assessee was not served with any notice in these proceedings, the fact of which was recorded by the CIT in para 3 of the order as under: 3. Accordingly, show cause notices dated 14.03.2014 were issued separately for the above Assessment Years to the assessee to explain as to why the assessment orders passed for the aforementioned assessment years shall not be revised u/s. 263 of the I.T.Act. The notices were sent to the A.O. for service of the same on the assessee. Apparently the A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rified the information filed by the appellant regarding cancellation of general power of attorney given to Sri G. Kotshwer Rao and hence the said order is not erroneous. 4. The appellant craves leave to add or amend or alter any of the grounds at the time of hearing of appeal . 5.1. Assessee also raised the additional ground as under: In the absence of Valid and Proper Service of show cause notice u/s. 263, the order passed by the Commissioner of Income Tax u/s. 263 is not valid . 6. Ld. Counsel referring to the order of the CIT, specifically para 3 extracted above, had submitted that it is clear that no notice was served on assessee either through process server or through post or by affixture or by any other method prescribed for service of notice and the order of CIT itself indicates that no notice was served before the said order passed. It was the submission that the provisions of Section 263 specifically mentions that assessee should be given due opportunity before an order is passed. Therefore, the order u/s. 263 dt. 28-03-2014 is bad in law. Assessee has relied on the following case law: i. ACIT Vs. Sher Singh Alias Balshear Singh [131 TTJ 1] (CHD)(UO) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... your kind information . 7. Ld. Counsel also referred to further letter submitted to the Asst. Commissioner (Pg. 7 of the Paper Book) where in it was clearly stated that there are no purchase/sale of immovable properties during the Financial Years 2003-04 to 2009-10 and gave the statement of affairs in pg. 2 of the said letter. It is also clearly reiterated vide para 6 of that letter that there are no immovable property transactions entered with M/s. MBS Jewellers Pvt. Ltd., or others as stated by the AO and clearly stated that GPA was cancelled and those documents were enclosed to the above letter. Referring to the above correspondence between assessee and the AO at the time of original assessment, it was submitted that AO has accepted the facts as stated by assessee and therefore, question of non-verification, as opined by Ld.CIT, does not arise. Ld. Counsel relied on the judgment of the jurisdictional High Court in the case of Spectra Shares Scrips Pvt Ltd., Vs. CIT [354 ITR 35 (AP)] to submit that CIT could not take any other opinion and as the entire information pertaining to so called ten sale deeds was available in the seized documents; AO has examined the same and ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .. 10. Admittedly, Ld.CIT can call for any record and examine, but before passing such order thereon, he has to satisfy two conditions which are required to be fulfilled. 1) He may pass such order after giving assessee an opportunity of being heard and 2) After making or causing to be made such enquiry as he deems necessary. In this case, neither of the conditions have been fulfilled as discussed herein after. 11. The first condition of opportunity of being heard has not been satisfied, as no notice was served on assessee, leave alone giving sufficient opportunity. Coming to the issue of non-service of notice, it is to be noted that the Ld.CIT did not serve any notice on assessee. As explained by the Ld.CIT-DR, the notice was sent through service by process server to the AO who reported that assessee was not living in the given address and his whereabouts are not available and the address which was given was demolished. In these circumstances, without taking recourse to any other mode of service of notice, CIT concluded that the proceedings are to be completed as they were time barring. As can be seen from para 6, the notice dt. 14-03-2011 was issued b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rcumstances: i. When the addressee or his agent refused to sign the acknowledgment for service of notice and ii. When the serving official after using of due and reasonable diligence cannot find the addressee in his residential or business premises within a reasonable time and there is nobody else authorised to receive the notice. 12.3. In the above circumstances, ITI can effect the service by affixture on his own initiative, without waiting for an order from the AO. A copy of the notice should be affixed on the outer door or a conspicuous part of business or residential premises. A report is to be drawn up by the ITI on the facts and circumstances of the service by affixture, specifying date and time of service and name of the identifier if any. It should conclude with an affidavit of the ITI solemnly affirming the facts and particulars of service as reiterated. The report is to be filed as an endorsement to the original notice after being docketed in the order sheet. The report should be verified by an affidavit. In the absence of such affidavit, the officer must examine the Inspector on oath. The AO can also order service by affixture or by putting a newspaper adv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y order of the Court, the Court shall fix such time for the appearance of the defendant as the case may require . Since place of last known address was demolished, the service should have been ordered to be effected by publication in a local daily newspaper. In that case service substituted by that manner [Rule20(1A)] shall be as effectual, as if it had been made on the assessee personally [Rule20(2)]. If local publication was given in a daily newspaper of the regional language (or in known language of assessee is familiar with), either assessee or any known person to assessee would have noticed and there would be compliance to the proceedings. None of these have been undertaken by the CIT before finalising the proceedings u/s. 263; in other words, the Ld. Commissioner s action in completing the proceedings within 10 days, that too, on an issue wherein facts on record indicate otherwise, indicate haste in setting aside the order without service of notice. 12.5. Specifying the procedure of service of notice, in the case of Sanjay Badani Vs. DCIT-10(3), Mumbai, Co-ordinate Bench of ITAT [35 ITR(T) 536] has held as under: As per sub-section (1) of section 282, the notice ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tice by affixture was made on 27-72012 when sufficient time was available through normal service till 30-9-2012. Nor there is any entry in the note-sheet by the Assessing Officer directing the Inspector for service by affixture and had only recorded the fact that the notice was served by the 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 reason for service through affixture has not been noted by the Assessing Officer in the note sheet nor he had 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 affi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Section 263 of Income Tax Act, 1961. There the ITI who had to serve notices u/s. 33B of the said Act claimed to have served notices by affixing them on assessee s place of business, but in his report did not mention the names and addresses of the proceedings, who identified the place of business of assessee nor did he mention in his report or in the affidavit filed by him that he personally know the place of business of assessees. Assessees, however, claimed that they had closed their businesses long before the notices were issued. In the Writ Petition filed by assessee, the High Court held that there was no proper service on assessee and the orders of Commissioner pursuant thereto could not be sustained. The Hon'ble Supreme Court upheld the judgment of Hon'ble High Court. 14. Ld. Counsel relied on the decision of ACIT Vs. Sher Singh Alias Balshear Singh [131 TTJ 1] (CHD)(UO) ITAT Chandigarh. In the said case, the issue was whether notice was served properly when provisions of Section 158BD require service of notice on assessee. In that case, proper notice was not served on assessee under any of the procedures prescribed. Co-ordinate Bench of ITAT upheld that there is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ut examining these documents, as the very basis for issuing of notices u/s. 153C for the impugned year was the said sale deed copies. Moreover, AO issued a show cause notice, as discussed in the arguments of Ld. Counsel and assessee had given a detailed reply. It was further submitted that assessee has given GPA to one Shri Koteswara Rao and subsequently cancelled the same within two years. The said GPA copies were enclosed to letter by assessee in the course of assessment proceedings itself. The copies of sale documents obviously pertain to the period after GPA was cancelled. Therefore, as presumed by assessee and may be in the eye of law, they are not valid documents. Not only that assessee has also clearly stated that he has not sold any property and the statement of affairs do indicate that the impugned property is in assessee s possession. Thus, if the CIT has examined the record correctly, he would not have come to a conclusion that there is no verification of the issue. In fact, AO has certainly verified this aspect as it is the very basis for assessment proceedings. AO has not made any addition nor brought to tax capital gains, if any, nor made any adverse observation in th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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