TMI Blog2018 (6) TMI 221X X X X Extracts X X X X X X X X Extracts X X X X ..... esent appeal and answer the substantial question of law in favour of the appellant-Revenue and against the respondent-assessee. It is held that the assessment proceedings under Section 147/148 are not invalid or void for want of proper service of notice. However, an order of remand is required to be passed as the Tribunal has not adjudicated and decided the appeal filed by the respondent-assessee on merits. - Income Tax Appeal No. 805/2005 - - - Dated:- 31-5-2018 - Sanjiv Khanna And Chander Shekhar, JJ. For the Petitioner : Ms. Lakshmi Gurung Mr. Asheesh Jain, Sr. Standing Counsel For the Respondent : Dr. Rakesh Gupta, Mr. Somil Agarwal, Ms. Monika Ghai Mr. Rohit Kumar Gupta, Advocates ORDER Sanjiv Khanna, J. This appeal by the Revenue under Section 260A of the Income Tax Act, 1961 (Act, for short), relates to Assessment Year 1995-96 and arises from order dated 30th March, 2005 passed by the Income Tax Appellate Tribunal (Tribunal, for short) in the case of M/s Sudev Industries Limited (hereinafter referred to as, the respondent-assessee). 2. The appeal was admitted for hearing vide order dated 4th August, 2006 on the following substantial question o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er of Income Tax, Circle Bulandshahar, who had issued notice under Section 147/148 of the Act was raised. This contention was rejected, primarily for three reasons namely, (i) the respondent-assessee for the AYs 1994-95 and 1995-96 had voluntarily filed returns before the Assessing Officer at Bulandshahr;(ii) during the course of the assessment proceeding for AY 1994-95 on a query being raised by the Assessing Officer, the respondent-assessee vide letter dated 7.4.1995 had stated that a resolution had been passed for shifting of the registered office from Delhi to Sikandarabad. The plea was accepted and return for AY 1994-95 was processed by ITO, Ward 1, Bulundshahar and (iii) respondent-assessee had filed an application dated 12.5.1997 for certificate under Section 230A(1) with ITO ward-1, Bulandshahar, which was furnished on 28.5.1997. 6. On 22nd March, 2001, assessment order under section 144 of the Act to the best of judgment of the Assessing Officer was passed. Profit and loss account was not submitted and filed. Only a chart, indicating purchases and sales after 1st October, 1994 when the trading operations had started, and closing stock on 31st March, 1995 was filed. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t-assessee filed further appeal which has been allowed by the impugned order of the Tribunal dated 30th March, 2005, on the ground that notice under Section 148 of the Act dated 11th September, 1998 issued by the Assistant Commissioner of Income Tax, Bulandshahar, and addressed to M/s Sudev Industries Limited, A-74/142, UPSIDC Industrial Area, Sikandarabad, District Bulandshahar, Uttar Pradesh, was not served as per Section 282 of the Act. Service of notice affected on 8th February, 2001 through Inspector at the above address was not on any director or any person authorised by the respondent-assessee to receive the notice but on Ajay Pratap Singh, Security Guard. Inspector while effecting service had recorded that the factory was not working and only security guards were present. Service on the security guard, who was not authorised to receive notice, it was held, was invalid and therefore the re-assessment proceedings were entirely void and bad in law. Referring to the decision of Gauhati High Court in Commissioner of Income Tax versus Mintu Kalita, [2002] 253 ITR 334(Gau.), it was held that service of notice was not a procedural requirement, but a condition precedent for initiati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of a firm or Hindu undivided family, a local authority or company, any other association or body of individuals or any other person. In case of a company notice may be addressed to the principal officer. Use of the word may in sub-section (2) reflects that this provision is permissive and not mandatory. Therefore, it would not be correct to hold as held by the Tribunal that the notice under Section 148 of the Act not being addressed to the principal officer but to the company itself was invalid and completely illegal so as to not confer jurisdiction on the assessing officer. 10. In Agricultural Company Rampur versus Commissioner of Income Tax, (1974) 93 ITR 353 (Delhi), notice was issued to the dissolved firm and accepted by an accounts officer. Question arose whether the said notice was served on the firm itself as it had not been issued to a specific partner or addressed to partners. Referring to Commissioner of Income Tax (Central), Bombay versus Devidayal and Sons, (1968) 68 ITR 425 (Bom), it was observed that notice if not addressed to a partner would not render it invalid if it was served and accepted and return was submitted in pursuance thereof. In Agricultural Company ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (supra), Calcutta High Court had observed that mere fact that the physical delivery of the notice was made to a person, other than the addressee, who had no authority to receive the letter on the addressee's behalf, would not be sufficient to prove lack or failure of proper service. Presumption would still be there and would remain unrebutted notwithstanding that the actual service had been affected on a different person. In such a case, there could be room for rebuttal of the presumption by further facts being proved by the addressee, who denies service but this would depend upon facts of each case. Legality and sufficiency of service would depend on facts. Particular facts in the knowledge of the assessee must be proved and established by the assessee. Thus, mere fact that notice was served on the brother of the assessee was not sufficient to rebut the presumption under Section 27 of the General Clauses Act. Primary question would be whether the assessee had come to know about service at all, or whether the assessee having come to know that some notice had been served, had not made any further enquiry and had not been informed and whether the presumption raised by the Section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... omission in service of notice, summons etc. and states that notice, order, proceedings, etc. will not be invalid on account of any mistake, defect or omission if in substance and effect it is in conformity with and in accordance with the intent and purpose of the Act. The aforesaid section is a broad and wide provision which lays emphasis on substance rather than form and that technicalities should not result in invalidating the proceedings, notice, orders, etc. 15. It is correct that legal dictums draw distinction between inherent invalidity which relates to jurisdiction as when the jurisdictional pre-conditions are not satisfied or when limitation period for passing an order has expired, and irregularities and mistakes in proceedings while in exercise or during jurisdiction. We need not dilate and expound on the said differentiation in detail in the present case, for service of notice under Section 148 of the Act, it was held in R.K. Upadhyaya (supra) is an aspect relating to procedure and a pre-condition for passing of an order of assessment and not jurisdictional pre-condition which would make the assessment order invalid when the assessee has been duly served and had parti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ound by the judgment in Banarsi Debi v. ITO [AIR 1964 SC 1742 : (1964) 7 SCR 539 : 53 ITR 100] . As the Income Tax Officer had issued notice within limitations, the appeal is allowed and the order of the High Court is vacated. The Income Tax Officer shall now proceed to complete the assessment after complying with the requirements of law. Since there has been no appearance on behalf of the respondents, we make no orders for costs. (emphasis supplied) 16. Section 292B was introduced by Taxation Laws (Amendment) Act, 1975 with effect from 1st October, 1975. The object and purpose of introducing the said section as explained in Commissioner of Income Tax versus M/s Jagat Novel Exhibitors Private Limited, [2013] 356 ITR 562 (Del) is as under:- 28. The aforesaid provision has been enacted to curtail and negate technical pleas due to any defect, mistake or omission in a notice/summons/return. The provision was enacted by Tax Laws (Amendment) Act, 1975 with effect from 1st October, 1975. It has a salutary purpose and ensures that technical objections, without substance and when there is effective compliance or compliance with intent and purpose, do not come in the way or affect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ation period. The question whether the notice was addressed to the correct person has been examined and dealt with by us above. Service of notice is not the jurisdictional precondition but a matter pertaining to making of the order of assessment. Before an assessment order is passed, the notice must be served. As noticed above, on 21st February, 2002, Vijay Narain Seth, Director of the respondent company appeared before the Assessing Officer. The respondent had also filed some details before the Assessing Officer who passed the assessment order. 18. Thereafter, in M/s Jagat Novel Exhibitors Private Limited (supra), reference was made to some other judgments, which are to the following effect:- 42. In Commissioner of Income Tax Vs. Anand and Company (1994) 207 ITR 418 (Cal.), it has been observed as under:- In our view, the Tribunal has taken an unduly technical view of the whole matter. The judiciary in this country has never gone on technical triviality. Even in the litigation of private parties, the courts have shown a wide measure of forgiveness in similar acts of omission or failure as pointed out by learned counsel for the Revenue. (See Gouri Kumari Devi s cas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing to the intent and purpose of the Act. The return of income, if not signed by the authorized signatory, as contemplated under Section 140 of the Act, would be a mistake, defect or omission stated in Section 292B of the Act. 45. We may note, observations of the Supreme Court in Balchand Vs. ITO (1969) 72 ITR 197 (SC) wherein it was held that in construing a statutory notice, extraneous evidence may be looked into to find out whether the technical defects or lacuna had any effect on the validity of the notice. The facts had revealed that though there were defects in drafting the preamble of the notice, it did not affect its validity as the notice itself clearly informed the assessee that he had to file a return of income for the relevant year. 46. In Chief Forest Conservator, Government of Andhra Pradesh Vs. Collector (2003) 3 SCC 472, the Supreme Court examined the question of misdescription or misnomers of parties and the effect thereof and it was held as under:- 12. It needs to be noted here that a legal entity - a natural person or an artificial person - can sue or be sued in his/its own name in a court of law or a tribunal. It is not merely a procedural formality ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al requirement relating to a pleading, memorandum of appeal or application or petition for relief should not entail automatic dismissal or rejection, unless the relevant statute or rule so mandates. Procedural defects and irregularities which are curable should not be allowed to defeat substantive rights or to cause injustice. Procedure, a handmaiden to justice, should never be made a tool to deny justice or perpetuate injustice, by any oppressive or punitive use. The well-recognised exceptions to this principle are: (i) where the statute prescribing the procedure, also prescribes specifically the consequence of non-compliance; (ii) where the procedural defect is not rectified, even after it is pointed out and due opportunity is given for rectifying it; (iii) where the non-compliance or violation is proved to be deliberate or mischievous; (iv) where the rectification of defect would affect the case on merits or will affect the jurisdiction of the court; (v) in case of memorandum of appeal, there is complete absence of authority and the appeal is presented without the knowledge, consent and authority of the appellant. 20. Earlier in Rani Kusum vers ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stage, refer to some facts, which were not disputed and were recorded in the assessment order. Said facts were found to be correct and were not overturned by the Tribunal. Notice under Section 147/148 had been sent by registered post vide receipt No.4896 dated 15th September, 1998 in addition to service by the Inspector of the Income Tax Department. Secondly, upon service of the said notice, Mr. Rajeev Aggarwal, director of the respondent-assessee had appeared before the Deputy Commissioner of Income Tax, Circle Bulandshahar and on request was given a copy of the notice issued under Section 148 of the Act and of the reasons recorded for issue of notice. The third aspect is that the respondent-assessee during the assessment proceedings before the Assessing Officer at Bulandshahar and then at Delhi, did not contest or object that notice under Section 147/148 of the Act was not duly served as it was not served on the authorized officer or director or the notice was not addressed to the principal officer. In case, and if, the respondent-assessee had taken the said plea, the Assessing Officer had the option to furnish and serve the notice on the director or the authorised representative ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the appellant-Revenue that this ground was not taken at the initial stage and when the first appeal was preferred and decided. Moreover, what is important and relevant is whether this contention was raised before the Assessing Officer. Respondent-assessee accepts that this contention was not raised before the Assessing Officer. 24. We would now deal with the decisions relied upon by the counsel for the respondent-assessee, which he submits support their case. In Commissioner of Income Tax versus Rajesh Kumar Sharma, [2009] 311 ITR 235 (Del) reference was made to Section 282 of the Act and provisions of Order V of the Code of Civil Procedure and more importantly Rules 12 to 15 thereof. In the said case, as per the postal receipt notice was addressed to Sh. R.K. Prop. M/s Karol Bagh, New Delhi, Pin 110065 and it was held that this was not the address of the assessee. The Court had also observed that it would have been a different matter if the Revenue had been able to show that the envelope was addressed to the correct person, but the receipt issued by the postal department was incomplete. Contention of the Revenue that the envelope was not returned and, therefore, it should be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se circumstances, it was held that notices issued were wholly invalid. 26. In the facts of the present case we would prefer to follow the decision of the Delhi High Court in M/s Jagat Novel Exhibitors Private Limited (supra). 27. M/s Gopiram Bhagwandas, Dhanbad versus The Commissioner of Income Tax, Bihar and Orissa, Patna, [1956] 30 ITR 8 (Pat) is an old decision arising under the 1922 Act. The question adjudicated was whether for the purpose of determining the starting point of limitation date of service of the Tribunal s order on the assessee himself or his lawyer would be relevant. Issue and question in the present case is different. 28. Commissioner of Income Tax versus Hyderabad Deccan Liquor Syndicate, [1974] 95 ITR 130 (AP) was again a decision under the Income Tax Act, 1922. The dispute therein had several facets, including whether the assessing officer had elected to assess the individual members of the Association of Persons (AOP), instead of the AOP. Reference in this context was made to the provisions of the Income Tax Act, 1922, which as noticed in R.K. Upadhyaya (supra) were different. 29. B. Johar Forest Works versus Commissioner of Income Tax, [1977] 10 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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