TMI Blog2005 (1) TMI 54X X X X Extracts X X X X X X X X Extracts X X X X ..... 11, 2000, passed by the Income-tax Appellate Tribunal in I.T.A. No. 81/Ind of 2000. This appeal was admitted for final hearing on the following substantial questions of law: "1. Whether, on the facts and in the circumstances of the case, the Income-tax Appellate Tribunal was justified in entertaining the challenge to the assuming of the jurisdiction by the Assessing Officer in view of the provisions of section 143 of the Income-tax Act, 1961, on the ground of validity of service of notice when such a point was not raised either before the Assessing Officer or the Commissioner of Income-tax? 2. Whether, on the facts and in the circumstances of the case, the point of service of notice by the mode of substituted service as indicated by Order V, rules 17 and 20, of the Code of Civil Procedure could be entertained by the Income-tax Appellate Tribunal when that point was not raised before either the Assessing Officer or the Commissioner of Income-tax? 3. Whether, on the facts and in the circumstances of the case, non-raising of point of non-service of notice to the assessee within the prescribed time limit, the Income-tax Appellate Tribunal was having jurisdiction to set aside the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ated November 24, 1997 sent by the Assessing Officer to the assessee was not served in accordance with law and hence, the entire assessment is held to be non est. The Tribunal then also proceeded to examine the case on the merits and finding some infirmities remanded the case to the Assessing Officer for further investigation on certain factual issues. It is against this order, the Revenue has come up in appeal. As observed supra, the appeal was admitted for final hearing on the aforementioned questions of law. Heard Shri R.L. Jain, learned senior counsel with Ku. V. Mandlik, learned counsel for the Revenue, and Shri P.M. Choudhary, learned counsel for the assessee. Having heard learned counsel for the parties and having perused the record of the case, we are of the considered opinion that the appeal deserves to be allowed in part resulting in setting aside of the finding in so far as it relates to notice issued by the Assessing Officer to the assessee is concerned. In our considered opinion, the Tribunal erred in annulling the assessment on the ground of invalidity of service of notice dated November 24, 1997, issued under section 143(2) ibid on the assessee. This finding in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent of service or not? Whether the persons defined in Order 5, rule 19 of the C.P. Code are required to be summoned for being examined as witness on the question of service and his report? Whether their evidence should be believed or not? All this has to be gone into at the first instance by means of factual inquiry in the form of recording of evidence, i.e., statement of such persons-namely, process server, witness named in notice and the assessee. It is only after the evidence/statement of these persons is taken up, in accordance with the requirement of law that an authority can come to a conclusion one way or other as to whether the service in question was regular or irregular and whether it can be held to be good or not as per law. In substance, therefore, we are of the view that the question of service of notice cannot be said to be a pure question of law as sought to be urged by the assessee but it is a mixed question of law and fact. The position would have been different, if the Assessing Officer had recorded a factual finding on this issue on an objection being raised by the assessee before him and the same was again examined by the Commissioner of Income-tax (Appeals) a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... an one year, clearly shows that the so-called illegality/irregularity did not cause any prejudice to the assessee. In other words, the assessee was afforded fullest opportunity to participate in the proceedings. The submission of learned counsel for the assessee was that the Assessing Officer got the notice served on the assessee by affixture in the first instance itself whereas he should have first made an attempt to serve the assessee in the manner provided in Order 5. This in the submission of learned counsel renders the issuance of notice bad. We do not agree. There is nothing on record filed by the assessee in rebuttal to show that what is mentioned in the report of P.S. is incorrect. Secondly, by the very fact that the assessee appeared before the Assessing Officer thereafter pursuant to the notices issued under section 142(1), the so-called objection regarding effecting service by affixture on the assessee loses its significance. After all, one of the basic objects of service of notice on the assessee is to give him full opportunity to participate in the assessment proceeding before the final assessment order is passed. The position would have been different if the Assessi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iding the issue of notice. It was in our view, not called for in the facts of this case at least. It was too technical rather than substantial. It was a clear case where the assessee disclosed their total income at Rs. 5,97,920 whereas they were assessed at Rs. 1,20,26,780. What was more a matter of serious concern was the forged and bogus claims made by the assessee in claiming depreciation. All these claims on a detailed inquiry made by the Director of Investigation at Bombay exposed the assessee in indulging in evading payment of tax. The assessee was given full opportunity to defend. They did avail of full opportunity and contested the case by filing documents and written submission. We are not however concerned on this issue because the Tribunal has remanded the case for inquiry on some matters. It is now for the Assessing Officer to complete the inquiry as directed by the Tribunal and pass final assessment orders. Needless to observe the Assessing Officer will again give enough opportunity to the assessee in proceedings as per the directives of the Tribunal contained in the impugned order. Let the inquiry be completed within six months from the date of this order by the Asses ..... X X X X Extracts X X X X X X X X Extracts X X X X
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