TMI Blog2019 (9) TMI 365X X X X Extracts X X X X X X X X Extracts X X X X ..... g officer, in such circumstances, proceeds with the subsequent proceedings, the same will be illegal and void. Under the aforesaid provisions of section 148 of the Act, unless, the notice is served on the proper person in the manner prescribed under section 282, the service is insufficient and the Assessing officer does not have jurisdiction to re-assess the escaped income - Decided in favour of assessee. - ITA No. 145/Agra/2018 - - - Dated:- 22-3-2019 - SHRI SUDHANSHU SRIVASTAVA, JUDICIAL MEMBER, AND DR. MITHA LAL MEENA, ACCOUNTANT MEMBER For The Assessee : Shri Anurag Sinha, AR. For The Revenue : Shri Waseem Arshad, Sr. DR. ORDER Per Dr. M. L. Meena; A.M.: This appeal, filed by the assessee, calls into question correctness of order dated 12.12.2017 passed by the learned CIT(A)-II, Agra in the matter of assessment order dated 21.12.2016 passed under section 147/144 of the Income Tax Act, 1961 for Assessment Year 2009-10 by the learned ITO 2(1)(2), Agra. 2. Brief facts of the case as mentioned in the assessment order are that an information was rec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... T(A) has omitted to consider that assessment framed by the ITO 2(1)(2) on the basis of Notice issued by the ACIT 2(1)(1), Agra is also without jurisdiction and liable to be held void-ab-intio. 7. BECAUSE, the purported Reasons as reproduced in the Assessment Order are No Reasons in the eyes of Law. The so called Reasons do not show any application of mind on part of the AO to show that any Income liable for Tax has escaped Assessment warranting recourse to Notice under section 148 of the Act. WITHOUT PREJUDICE TO THE ABOVE 8. BECAUSE, addition of ₹ 70, 00, 000/- is bad on facts and in law and has been made purely on unfounded presumptions and surmises without any evidence brought on records and confronted to the assessee. 9. BECAUSE, addition of ₹ 1, 39, 15, 000/-representing cash deposited in various Bank Accounts of the appellant which is duly recorded in the books of accounts is bad on facts and in law and has been made purely on unfounded presumptions and surmises without any evidence brought on records and confronted to the assessee. 10. BECAUSE, in an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... RA/148/2015-16/1930 dated 31.03.2016 alleged to have been issued under section 148 of the I.T. Act, 1961 has been received by the assessee.The subject Notice dated 4.11.2016 issued by you is barred by limitation and therefore, vitiated in law. The said notice dated 4.11.2016 is without jurisdiction and therefore, cannot be proceeded with. 3. It may also be apprised that territorial jurisdiction over the assessee lies with ACIT, Circle-I, Agra as evident from the jurisdiction detail as appearing on e-filing site of the Income Tax Department. Copy enclosed In the above background of the matter it will be in accordance with the law that the Notice u/s 142(1) is dropped as being illegal, without jurisdiction and is not further proceeded with. Encl: (a) Jurisdictional detail Rajesh Agarwal Partner K.P Cold Storage Sent through speed post after being denied to accept by hand as ASK Centre as well as by the learned AO on 25.11.2016 8. However, the objection so raised was rejected by the learned Assessing officer vide his Letter dated 05.12.2016 (APB 25 to 26) by obse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted 31.03.2016 upon the assessee or upon any of his duly appointed agent. He invited our attention to his application dated 09.10.2017 filed under the Right to information Act whereby interalia assessee has required certified copy of evidence of service of notice dated 31.03.2016 , (APB- 27 to 29) application dated 02.01.2018 seeking inspection of assessment records, (APB-30 to 32) application dated 07.05.2018 (APB- ), application dated 11.05.2018 (APB-33 to 34), application dated 11.05.2018 (APB-35 to 36) application addressed to the learned Additional CIT, Range-4 requesting him to issue appropriate directions to the learned Assessing officer for allowing inspection of assessment records (APB-37 to 38) . These applications were finally responded by the learned Assessing officerwhovide his Letter dated 13.07.2018 denied inspection and certified copies on the pretext that since no proceedings are pending and therefore, assessee is not entitled for seeking inspection and copies of material (APB- 39 to 40). Soon thereafter, assessee, without giving up his efforts re-imitated his efforts and again filed an application dated 18.07.2018under the Right to Information Act and requested ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d also by speed post provided under 282 of the Act and he invited attention to statement of the assessee recorded under section 131 (1) of the Act, specifically to question No. 8, he also stated that as per the provisions of Partnership Act assessee was required to intimate the change of address of registered office to the Registrar of Firms and no such intimation was given to Registrar. He disputed the contents of Annexure- G of the affidavit and submitted that cold storage has not been disposed off, only business operations have been discontinued. He also submitted that no evidence has been submitted by the assessee to show that Chetan Singh to whom possession was given was on behalf of the Firm or on behalf of the official liquidator. He thus placed heavy reliance to the order passed by the authorities below. 13. We have heard the rival submissions, perused the evidences on records and case laws referred and relied upon by the parties. During the course of arguments after hearing parties at length in respect of ground no. 3 4 it was made clear to the parties that as the case is being heard in respect of ground No. 3 to 4, pertaining to validity of proceedin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... elevant portion of section 148(1), sections 282, of the Income Tax Act and Order V, Rule 12, Rule 17, rule 19, Rule 20(1) and Order III, Rule 2 of the Code of Civil Procedure 1908, which are relevant for the decision to the issue under consideration and which reads as under: 148. Issue of notice where income has escaped assessment.- ( 1) Before making the assessment, reassessment or recomputation under section 147, the Assessing Officer shall serve on the assessee a notice requiring him to furnish within such period, as may be specified in the notice, a return of his income or the income of any other person in respect of which he is assessable under this Act during the previous year corresponding to the relevant assessment year, in the prescribed form and verified in the prescribed manner and setting forth such other particulars as may be prescribed; and the provisions of this Act shall, so far as may be, apply accordingly as if such return were a return required to be furnished under section 139. 18. Section 282 of the Act provides as to how the notice under the Act is to be served. The relevant provision of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Officer: Where a summons is returned under rule 17, the court shall, if the return under that rule has not been verified by the affidavit of the Serving Officer and may, if it has been so verified, examine the serving officer on oath or cause him to be so examined by another court, touching his proceedings, and may make such further inquiry in the matter as it thinks fit and shall either declare that the summons has been duly served or order such service as it thinks fit. 22. Order V, Rule 20(1) provides for the circumstances under which the Court upon its satisfaction can direct notice to be served by Affixture. It reads as under: rule-20(1) Where the court is satisfied that there is reasons to believe that the defendant is keeping out of the way for the purpose of avoiding service, or that for any other reason the summons cannot be served in the ordinary way the court shall order the summons to be served by affixing a copy thereof in 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 resided or carried on business or persona ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt s agent to receive service of notice. Similar view was adopted by the ITAT, Delhi Bench in the case of Auram Jewellery Exports (P) Ltd Vs ACIT (2017) 88 taxman.com 633 (Del) where on alleged refusal by the Chowkidar, whose name has not been mentioned in the report notice was served through affixture. The Bench while quashing notice under section 148 held that no effort was made by the assessee to serve notice upon the assessee rather paper work showing service has been completed within two days. 25. 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 acknowledgement or could not be found. Here, in the present case as per the report of the notice server he made his very first attempt to serve the notice at the cold storage which was found closed. Thereafter, rightly he went to the residence of the partnerShri. Rajesh Agarwal resident of B-23, Kamla Nagar, Agra and who being Partner of the Firm was agent of the Firm on whom service can validly be made. Here, as report of notice server an unidentified person came out who refused to receive notice, admittedly, in the present case, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e case of Jagannath Prasad Vs CIT (1977) 110 ITR 27 (All) where the Hon ble High Court had the occasion to consider the validity of order of the ITO directing service by affixture. The Hon ble Court held that We have already extracted rule 20. Before action under rule 20 can be taken two conditions must exist, one that the court has reason to believe that the defendant is keeping out of the way for the purpose of avoiding service or that for any other reason the summons cannot be served in the ordinary way. We will avoid going into the controversy as to whether the satisfaction of the court regarding these two conditions must be recorded in a written order. Nevertheless, there must be material on the record on the basis of which a reasonable person might come to the conclusion that either of these conditions is satisfied. The satisfaction of the court contemplated by Order V, rule 20 is an objective satisfaction. It is not a subjective one and, as such, relevant material must exist on the record to justify this conclusion. Counsel for the revenue has urged that inasmuch as the Income-tax Officer passed the impugned order it must be taken that he was satisfied that one or the other ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e was affected. With a view to resort to the method of substituted service, it is the duty of the Department to discharge the onus by showing that the authority concerned had reason to believe that the assessee was keeping out of the way for the purpose of avoiding service or that there were other good reasons to come to the conclusion that the summons could not be served in the ordinary way. In spite of a specific averment having been made in the petition, nothing has been disclosed in the return to show that the above mentioned condition precedent was satisfied before substituted service was resorted to. The only averment made in the return is that the assessee was duly served by affixation. Nothing has been averred in the return, nor any record has been shown at the time of hearing to satisfy the Court that the authority, who ordered for the substituted service was satisfied that there was reason to believe that the assessee was keeping out of the way for the purpose of avoiding service or there was any good reason to come to the conclusion that the assessee could not be served in the ordinary way. In the present case, an ex parte assessment order was passed and obviously the as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y cannot lead to the conclusion that there is no likelihood of Rajesh Agarwal being found at his home at reasonable point of time. 33. Further, service as claimed to have been made by affixture is in violation to Rule 17, Order V of the CPC which specifically requires that the name and address of the person (if any) by whom the house was identified and in whose presence the copy was affixed has to be mentioned in the report of the process server who affixed the notice. In this case from the report as reproduced above there is no mention of any name of the person who identified the house of Shri. Rajesh Agarwal and the so called service by affixture is not witnessed by any independent person, which not only is in violation of Rule 17, Order V of the CPC and also raises serious doubts about the claim of the Department of service by affixture.The requirement that report is to be authenticated by independent persons is with a view to avoid any attempt by the process server to prepare the report sitting in his office.This is also in conflict with the Judgment of Hon ble Supreme Court in the case of CIT Vs Ramendra Nath Ghosh reported as (1971) 82 ITR 888 (S.C) (APB- 50 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eal of the assessee have recorded the contents of inspector s report in their respective order. The contents of Inspector s report are reproduced here as under: Thus it is apparent that Sh. Vishwa Deep Singh and Sh. Rashtra Deep Singh are avoiding to take delivery of notice. In These Circumstances I affix the original notice on te front door of office of the firm M/s Electronic Glass Industry situated at Arya Nagar, Firozabad, ShriDeewan Singh, S.N. accompanied with me who identified the office of M/s Electronic Glass Industry. I affix the original notice in the presence of Sh. Deewan Singh Notice server of the office. Submitted or necessary action. Dated 23-05.2001 Your faithfully, Sd/- ( Atma Ram) ITI On this Basis the Assessing officer has assumed jurisdiction or completing the assessment reopened under section 147/148 and thereafter has completed the assessment. The ld. CIT (A) has also confirmed the action of the Assessing Officer. The procedure for serving the notice by affixture has b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is without any independent witness. Therefore, we have no hesitation in holding that issuance of notice under section 148 was bad in law. Since we have held that issuance of notice under section 148 bad in law, the assumption of jurisdiction for completion of assessment is also bad in law. Accordingly, we set aside the order of Assessing officer for both the assessment year 1993-1994 and 97-98 where notice has been served through affixture which is not valid in the eyes of law. 36. Similar view was adopted by the ITAT, Delhi Bench in the case of Wg. Cdr. Sucha Singh, C/o Manoj Kumar Kanth Vs ITO 2017 (7) TMI 1046 - ITAT Delhi to which one of us was the party: Non service of notice - validity of assessment - service by way of affixture - Held that:- For resorting to affixture, efforts have to be made to serve the notice upon the assessee and only after reaching a finding that the notice cannot be served upon the assessee, the mode of affixture can be resorted to. Further rule 17 of order V of CPC mandates that an independent local person be the witness of service through affixture and for the purpose of having been associated with the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... en verified by the affidavit of the serving officer, and may, if it has been so verified, examine the serving officer on oath, or cause him to be so examined by another Court, touching his proceedings, and may make such further inquiry in the matter as it thinks fit; and shall either declare that the summons has been duly served or order such service as it thinks fit. In the instant case evidently the requirements under Order V r. 19, have been complied with. Hon ble Kerala High Court in the case of M.O. Thomas vs. CIT (1963) 47 ITR 775 (Ker.) quashed re-assessment holding that There is no verification of the service under r. 17 of O. V by an affidavit by the serving officer as enjoined by r. 19 of O. V. Curiously enough, the learned ITO has declared the notice to have been served on 29th March, 1954, even without previously obtaining a sworn statement from the notice server. There is no indication whatever that any sworn statement has at any time been obtained from the serving officer. It is clear that r. 17 has been violated by the serving officer in that the serving officer has not used all due and reasonable diligence for finding out the assessee and for ascertaining whether ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2.2019 filed under Rule-10 of the ITAT Rules 1963 to contend that as the department for the first time vide its synopsis has claimed that such a notice was sent by speed post and therefore, in compliance to such a assertion made by the department assessee has filed an affidavit denying service of notice. In such circumstances, as rightly contended by the learned AR the department should come out with evidence showing that a such a notice was ever sent by speed post. He placed reliance toVenkatNaicken Trust (supra) for the proposition that when the assessee pleads that he was not properly served with notice, burden is on the Department to prove such service with relevant material. He submitted that after receipt of Synopsis dated 26.09.2018 inspection of assessment record as was requested long back vide application dated 02.01.2018 (APB-136) was allowed and carried out by the learned A.R and upon his inspection no evidence was found to be available on records of assessment in evidence of service by speed post. He invited attention to Letters dated 03.10.2018 (APB-137) filed in ASK and Letter of even dated filed personally before the learned Assessing Officerbear ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Adv. AnuragSinha 41. In view of the above it was submitted that in absence of the any evidence available on records merely by a bare assertion service by speed post cannot be assumed more so when as per the own claim of the department the cold storage on the date of 31.03.2016 was found closed. 42. The learned Sr. D.R submitted that there exists evidence on records that such a notice was sent by speed post he invited attention to the stamp affixed on the notice dated 31.03.2016. He also submitted that there is a presumption of correctness in respect of official Act. He also submitted that assessee has not challenged issuance of notice dated 31.03.2016 only dispute being raised by the assessee is about its service which even if resolved in favour of the assessee will not render the assessment void-ab-intio and for this proposition he placed reliance to the learned Third Member Bench decision of Agra ITAT in the case of ITO Vs Lal Chand Agarwal(2012) 134 ITD 91 (Agra) for the proposition that non service of notice will not render assessment void-ab-intio but in such a case set-aside is a proper course of action. He also relied upon Apex Court ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sume that the, common course of business has been followed in a particular case that is to say, when a letter is sent by post by prepaying and properly addressing it the same has been received by the addressee. Undoubtedly, presumption sunder sections 27 of the General Clauses Act as well as under section 114 of the Evidence Act raises rebuttable presumption in favour of the sender regarding proof of service but before being entitled for the advantage of the presumption under the aforementioned sections it has to demonstrated with evidence that the essentials thereof are fully met and due compliances have been made in respect of steps provided therein and in the process of claiming presumption onus is on the sender to prove with evidence that the required compliances were duly made and therefore the sender is entitled to advantage of presumption. 47. However, in the facts of the present case the revenue cannot claim advantage of above presumption as despite specific challenged by the assessee no evidence has been brought on our records in the shape of any acknowledgement issued by the postal authority against booking of such an article being notice dated 31.03.201 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der Section 34 of the Income Tax Act, 1922. The Supreme Court held that a clear distinction hasbeen made between issue of notice and service of notice under the Act. The Supreme Court held that oncea notice is issued within the period of limitation, the Income Tax Officer gets the jurisdiction to proceed toreassess and make the assessment order. The mandate of Section 148(1) of the Act is, that reassessment shallnot be made until there has been a service of notice which is a condition precedent to making an order ofassessment. In the facts of present case notice has not been served till the completion of assessment as clearly stated in the ground of appeal. Thus, the case in a way advances the case of assessee where the Hon ble Supreme Court has held that the mandate of Section 148(1) of the Act is, that reassessment shall not be made until there has been a service of notice which is a condition precedent to making an order of assessment. 49. Now, the question for consideration would be, when can be notice under Section 148 of the IT Act can be said to have been issued? At this stage, it would be appropriate to notice Section 149(1) of the IT Act. The term ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... control over the said notice after issuance of the said notice. It must be properly stamped and issued on the correct address to whom it has been addressed. Mere signing of notice cannot be equated with the issuance of notice as contemplated under Section 149 of the IT Act. 53. Thus, we hold that notice claimed to have been sent by speed post was no notice in the eye of law in absence of any evidence of its being put to the process of post for delivery having been brought on our records. 54. Though we have already held service claimed to have been made by speed post to be invalid in law. In addition to the above, there is one more objection raised by the learned A.R and duly rebutted by the learned Sr. D.R whichrenders the service by speed post invalid. Vide its Affidavit dated 11.02.2019 assessee has submitted as under: BEFORE THE HON BLE INCOME TAX APPELLATE TRIBUNAL, AGRA BENCH, AGRA ITA No.145/Agra/2018 Assessment Year 2009-10 Affidavit under Rule 10 of Income tax Appellate Tribunal Rules, 1963 AFFIDAVIT OF SHRI RAJE ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d the Sale Deed dated 05.07.1996 executed by the UPFC in favour of M/s Dass Cold Storage (P) Limited and in consequence thereof the Hon ble Allahabad High Court inter alia held Respondent No. 5 6 being the Deponent and his father who acquired the Cold Storage from M/s Dass Cold Storage (P) Limited to be not entitled to retain the possession of the Cold Storage. Xerox copy of the Judgment by the Hon ble Allahabad High Court is enclosed herewith and marked as ( Annexure- D ) to this Affidavit. 6. The Deponent confirms that above mentioned facts stood acknowledged by the UPFC who in response to an application filed under the Right to Information Act vide Letter dated 09.02.2011 has confirmed to the facts stated in Para 1 to 5 of this Affidavit. Xerox copy of the Information as provided under the RTI Act is enclosed herewith and marked as ( Annexure- E ) to this Affidavit. 7. That vide Judgment dated 19.07.2011 the Hon ble Allahabad High Court in Company Petition Number 29 of 1995 titled as M/s Seema Ice Cold Storage (P) Ltd Vs Bank of Baroda Others directed that the Official Liquidator to take over the actual physical possession of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the fact that on account of nonoperation of Cold Storage at Ujrai, Hathras Road, Khandauli, Agra which resulted into few postal non delivery or post being returned undelivered the Partners have decided to change the address of the Registered office to Chamber No.7, Manu Video Complex, Opposite Central Excise Customs office, WazirPura Road, Agra.Copy of the Supplementary Deed is enclosed herewithand marked as Annexure- J to this Affidavit. 13. The Deponent confirms that similar change got effected in Bank Account of the Firm and in evidence thereof Bank Statement is filed herewith. Copy of the Bank statement is enclosed herewithand marked as Annexure- K to this Affidavit. 14. The Deponent confirms that accompanied with the Supplementary Deed as referred above, an Application was filed on 05.03.2016 with the Income Tax PAN service Unit managed by NSDL making request for the change in Address. Copy of the Acknowledgementas issued is enclosed herewithand marked as Annexure- L to this Affidavit. 15. That the Deponent confirms that in pursuance of the Application so made seeking change of address in PAN the addre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Sd. Sd. Witness Deponent 55. The learned Sr. D.R has denied the above position stated in Affidavit by his Synopsis submitting that no such change was intimated to the Investigation wing where statement of the assessee was recorded on 11.02.2016. He submitted that assessee has not disposed of the cold storage but has discontinued its operation. He also submitted that Mr. Chetan Singh to whom possession of the Cold Storage was given was occupying cold storage on behalf of the assessee Firm or its Partner Shri. Rajesh Agarwal and no reliance can be placed to the change effected in address of the Firm without getting it registered in the records of Registrar of Firms and Register maintained by the Registrar as required vide section 61 and 62 of the Indian Partnership Act. 56. In rejoinder it was replied that to the investigation wing no such change was intimated as no such question was put forward in the questions posed to the assessee. It was also submitted that from the reading of the minutes it is abundantly clear that Chetan Singh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and more specifically to learned ACIT, Circle-1(1), Agra as is evident from the efiling portal of the Income Tax Department evidenced by print out obtained from web-site mentioning site last updated 01.04.2016. The above evidences are sufficient enough to prove that prior to 31.03.2016 the Income Tax department has the changed address on their system/records and therefore notice was wrongly addressed and such notice is no notice in the eye of law. 58. Reliance has been placed to a recent Judgment passed by the Hon ble Delhi High Court in the case of Veena Devi Karnani Vs ITO 2019 (1) TMI 596 wherein the Hon ble Delhi High Court vide Judgement dated 14.09.2018 The assessee has relied upon a screenshot of the PAN database at the stage when the petition was filed to say that the Revenue always had the wherewithal to access the correct address, PAN number and all other relevant details including the e-mail ID as well as the bank account. The omissions of the Assessing officer deserve, therefore, to be not only adversely noticed but appropriately reflected in his or her confidential reports and appropriate proceedings initiated by the Revenue authorities, which is so d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ITR 821 (SC) by the Hon ble High Courts in MadanLalAgarwal v. CIT (1983) 144 ITR 7451 (All.), Vijay Kumar Jain v. CIT (1975) 99 ITR 349, 353 (Punj. Har.), CIT v. Ishwar Singh Sons (1981) 131 ITR 480 (All.) to mention few and many more. 61. Under the aforesaid provisions of section 148 of the Act, unless, the notice is served on the proper person in the manner prescribed under section 282, the service is insufficient and the Assessing officer does not have jurisdiction to re-assess the escaped income. This proposition of law is supported by the decisions of Hon ble Madras High Court in the case ofThangam Textiles v. First ITO (1973) 90 ITR 412 by decision of Hon ble Mysore High Court in the cases of Lakshmibai v. ITO (1972) 86 ITR 804 and C.T. Rajagopal v. State of Mysore (1972) 86 ITR 814 and by the decision of Hon ble Bombay High Court in the case of S.K. Manekia v. CST (1977) 39 STC 426 (Bom.) and in the case of CST v. ShrimalSakharchand (1984) 57 STC 224, 235 (Bom.). 62. Respectfully following the various decisions referred to in aforesaid para, we, after having held the service of notice under section 148 to be no service in the eye of law ..... X X X X Extracts X X X X X X X X Extracts X X X X
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