TMI Blog2020 (9) TMI 1212X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee has successfully placed on record letter dated 07/11/2017 issued by the department wherein it has no where been mentioned that the notice u/s 148 was ever served upon the assessee - we can safely conclude that there was no proper service of notice u/s 148 of the Act was effected in the present case before completion of reassessment u/s 147 r.w.s 143(3). Therefore, we set aside the orders of the lower authorities and quash the proceeding u/s 148 - This ground of appeal is allowed. - ITA No. 168/JP/2020 - - - Dated:- 11-9-2020 - SHRI RAMESH C SHARMA, AM SHRI SANDEEP GOSAIN, JM Appellant by : Shri S.L. Poddar (Adv.) Respondent by : Shri B.K. Gupta (Addl.CIT) ORDER PER: SANDEEP GOSAIN, J.M. The present appeal has been filed by the assessee against the order of the ld. CIT(A)-1, Jaipur dated 31/01/2020 for the A.Y. 2010-11. Following grounds have been taken by the assessee: 1. Under the facts and circumstances of the case, the ld. CIT(A) erred in confirming the action of the ld. AO in passing the order U/s 148/143(3) which is void an-initio deserves to be quashed. 2. Under the facts and circumstances of the case, the ld. CIT(A) erre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the ld. CIT(A) in passing the order U/s 148/143(3) of the Act. 7. At the outset, the ld AR appearing on behalf of the assessee had raised the arguments that no notice u/s 148 of the Act was ever served upon the assessee and reiterated the same argument as were raised before the ld. CIT(A) and submitted that this ground raised by the assessee is a jurisdictional ground and goes to the root of the case. It was submitted that no notice U/s 148 of the Act was issued or served by the revenue upon the assessee. In this respect, the ld AR has submitted written submissions filed, the relevant part of the same are reproduced below: In this case while filing return of income on 30.10.2017 in response to notices received by the assessee u/s 142(1) a note was given that notice u/s 148 was not served upon the assessee. However, since the assessee has received notice u/s 143(2) and 142(1) for assessment proceedings hence return was filed in protest. A copy of the return filed along with computation of income mentioning the above note is available on paper book page number 1 to 4. Just after filing return of income the assessee further submitted a letter dated 01.11.2017 i.e. just next da ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The Learned Assessing Officer could not assume jurisdiction without service of notice u/s 148. The assessment proceedings are therefore ab-initio void. It is settled law that it is the duty of the revenue to establish that the service of an order or a notice was made on the assessee himself or on somebody duly authorized by him in that behalf. When the assessee pleads that he has not been properly served with any notice, it is for the Department to place the relevant material to substantiate the plea that the assessee was served. In the present case, no material is on record to show that the person to whom the notice is alleged to have been served. It was fundamental requirement to get the notice served on the assessee before proceeding to complete the reassessment and as it is lacking, this jurisdictional defect cannot be cured and thus assessment is liable to be quashed on this point. Notice under section 148 is a jurisdictional notice. Therefore, no service of notice under section 148 cannot be said to be a procedural defect and it cannot be cured by the participation of the assessee in the reassessment proceedings. Since the assessee raised this issue and questioned the serv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gs, therefore, return was filed in protest. The assessee has placed on record copy of return alongwith computation of income which is at page No. 1 to 4 of the paper book wherein specific note has been written by the assessee that no notice U/s 148 of the Act was served upon the assessee. It was further submitted that a separate letter dated 01/11/2017 on the next day of filing of return of income was also filed by the assessee to the revenue thereby again stating the fact that notice U/s 148 of the Act was not served upon the assessee. In this regard, copy of letter is available at page 5 6 of the paper book. Ld AR has also drawn our attention to the letter dated 07/11/2017 issued by the revenue and the copy of which is scanned below. 10. From perusal of the said reply, it is amply clear that A.O. has nowhere mentioned in the reply that on which date notice U/s 148 of the Act was served upon the assessee and there is no evidence on record with regard to service of notice U/s 148 of the Act upon the assessee. The assessee has relied upon the decision in the case of CIT Vs Mal Chand Surana 28 ITR 684 (Cal) and in the case of Saha Vs CIT 27 ITR 231 (Cal) wherein it has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Station Vigilance Bureau, Ludhiana pertaining to the Ludhiana City Centre Scam and a pen drive had been recovered from him. The print outs from the pen drive received by ADIT from the Punjab Vigilance Bureau were forwarded to the Assessing Officer (AO) in Chandigarh. A perusal of the print outs revealed that there were various entries in different names pertaining to Financial Year (FY) 2000-2001. The information when tabulated by the AO showed that there were credits of ₹ 40,49,77,905 on which interest of ₹ 7,35,49,141 had been paid. For the FY in question a sum of ₹ 84,86,363 had been paid as interest. The Assessee had failed to enclose a balance sheet with his return of income filed. Apart from salary income, the Assessee had disclosed income from house property on account of his half share in a property in Delhi and some interest income. The AO therefore concluded that the Assessee had not fully and truly disclosed all material facts for the AY in question. The AO noted that in a statement dated 24th September 2007, recorded by the ADIT (Inv.), Ludhiana, the Assessee denied knowledge of the names appearing in the pen drive although he failed to deny that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... addresses mentioned hereinbefore acknowledging that the letter dated 12th December, 2008 of Vipin Aggarwal Associates had been received in dak and further stating as under: . . . . . . . . I have been informed by the ACIT, Circle 3(1), Chandigarh that notice has been validly served on Shri Ved Prakash, accountant of Kiran Cinema (who also receives other notices of the concerned group concerns). 9. The ACIT stated that the assessment was going to be barred by limitation on 31st December, 2008 and, therefore, the Assessee should show cause why the sums mentioned hereinbefore should not be added in the income as they were not declared in the return of AY 2001-02. 10. In response to the above letter, Vipin Aggarwal Associates wrote to the ACIT on 19th December, 2008, as under: Dear Sir, This is with reference to your letter dated 12.12.08 and our earlier reply dated 12.12.08. It is again submitted that notice u/s 148 was not received by the assessee. However, without prejudice to the above submissions, it is respectfully submitted that the copy of information mentioned in the reason recorded as received from ADIT (Investigation Unit), VI(1) may please ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... service of all notices pertaining to the Assessee Group was effected at the above address at Kiran Cinema and that different employees of Kiran Cinema had received the said notices. Further, in the case of Ms. Vandana Gupta, the Assessee's daughter, service of notices had been effected at Kiran Cinema. Even in the other group case of M/s. Jagtumal Kundan Lal, C/o Jagat Theatre, service of notice had been effected at Kiran Cinema. It was accordingly asserted by the Revenue that proper compliance had been made. 14. The Assessee, inter alia, contended before the CIT(A) that service of notice had not been effected properly in accordance with the legal requirements specified under Section 282(1) of the Act; that Section 292 BB did not have retrospective operation and further that the Assessee had in any event raised an objection in that regard prior to the completion of re-assessment by the AO. 15. The CIT(A) rejected the above contentions by observing that the Assessee was silent on the issue as to why notices in the case of family members and other group cases were received at the address of Kiran Cinema. The CIT (A) concluded that it appeared that the Assessee and his gro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the reassessment. This was different from the requirement under Section 34 of the Income Tax Act, 1922 ('1922 Act') In other words as long as notice had been issued under Section 148 of the Act, the AO would have jurisdiction to proceed with the reassessment. The only restriction was that he could not complete the re-assessment without notice being served upon the Assessee. 21. Mr. Singh submitted that in the present case the Assessee did not deny that Mr. Ved Prakash was employed by him as an Accountant. Referring to the decision in Harshad J. Shah v. LIC of India AIR 1997 SC 2459 Mr. Singh submitted that in such circumstances the doctrine of 'apparent authority' would apply such that although the principal may not have given that person such authority, his conduct was such that it could be inferred. According to Mr. Singh, in terms of Section 282 (1) of the Act read with Order 9 Rule 12 CPC, invoking the doctrine of implied authority, service of notice upon Mr. Ved Prakash should be construed as proper service of notice upon the Assessee. Further the Assessee had nowhere denied that in other proceedings Mr. Ved Prakash had in fact represented the Assessee. O ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Section 139; and the provisions of this Act shall, so far as may be, apply accordingly as if the notice were a notice issued under that sub-section. 25. The Supreme Court in R.K. Upadhyaya (supra), explained that there was a distinct shift in the scheme of the provisions of the 1961 Act in comparison with the corresponding provision i.e. Section 34 under the 1922 Act under which the mandatory requirement was that both the issuance and service of notice had to be completed within the prescribed period. Consequently, the service of notice within the limitation period was the foundation of jurisdiction under the 1922 Act. In Y. Narayana Chetty v. ITO [1959] 35 ITR 388 the Supreme Court observed in the context of Section 34 of the 1922 Act,: The notice prescribed by section 34 of the Income tax Act for the purpose of initiating reassessment proceedings is not a mere procedural requirement; the service of the prescribed notice on the assessee is a condition precedent to the validity of any reassessment made under section 34. If no notice is issued or if the notice issued is shown to be invalid then the proceedings taken by the Income-tax Officer without a notice or in pursuan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Hotline International (P) Ltd. (supra) this Court held that affixation of notice on an address at which the security guard of the Assesseecompany refuses to receive such notice cannot be construed to be a proper service of notice under Section 148 of the Act. The security guard was not an agent of the Assessee and therefore, the reassessment proceedings were held to be bad in law. 30. In Dina Nath v. CIT [1994] 72 Taxman 174 (J. K.) the notice under Section 143 (2) of the 1961 Act was served upon one S, who was neither a member of the family of the Assessee nor his duly authorized agent. However, S had been accepting the notice on behalf of the Assessee and prosecuting the cases on his behalf earlier before the income tax authorities. The High Court held: the object of issuance the notice or summons is to intimate the concerned person to appear and answer the queries or the question sought to be clarified by a Court or the authorities. As serious consequences are likely to follow, a notice or summons must necessarily be issued and served in the form and in the manner prescribed by law. 31. The High Court in Dina Nath (supra), referred to Order V Rule 12 CPC as well ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 41 (Mad). In CIT v. Thayaballi Mulla Jeevaji Kapasi [1967] 66 ITR 147 (SC), the Respondent to whom the notice was directed was not in town. The only information which the process server had was that the Respondent was either in Bombay or Ceylon. Thereafter, the process server affixed the notice on the business premises of the Respondent. The Supreme Court affirmed the essential principle that if no notice was served within the period, the Income-tax Officer was incompetent to commence proceedings for reassessment under Section 34 of 1922 Act. It was further held that service of notice under Section 34 (1) (a) within the period of limitation being a condition precedent to the existence of jurisdiction, if the Income tax Officer was unable to prove that the notice was duly served upon the Respondent within the prescribed period, any return filed by the Respondent after the expiry of the period of eight years will not invest the Income-tax Officer with authority to reassess the income of the Respondent pursuant to such return. On the facts of that case it was held that the Revenue had sufficiently discharged the onus by producing the affidavit of the process server. 35. Under S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , and upon not finding him there the Revenue learnt of the address where he would be found. Merely because other notices sent to the 'Assessee group' were received by the employees of Kiran Cinema it does not automatically lead to the inference that the Assessee's place of business was also Kiran Cinema. In any event, there could not be an inference that Mr. Ved Prakash was duly empowered by the Assessee to receive notices on his behalf. In the very first notice dated 28th March 2008 the endorsement made by Mr. Ved Prakash shows him describing himself as Accountant, Kiran Cinema, Sector-22, Chandigarh and nothing more. 38. It was not as if the Revenue was not made aware of the lapse. Vipin Aggarwal Associates, the Chartered Accountants (CAs) of the Assessee, by their letter dated 12th December 2008 informed the ACIT that the Assessee had not till then received the notice dated 28th March 2008 under Section 148 of the Act. They made a specific request to the ACIT that a copy of notice under Section 148 along with basis and reason of opening the above mentioned case under Section 148 be provided to them to enable them to comply with the same. However, the ACIT ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... service on behalf of the Assessee, notice could not be said to have been duly served upon the Assessee. It was held that acquisition of knowledge in regard to the issuance of a notice under Section 22 (2) of 1922 Act could not be considered to be equivalent to, or a substitute for, the service of the notice on the Assessee. It was further observed that knowing about the issuance of the notice otherwise than by its service on the person concerned is one thing and the service of the notice on the person is another. 41. In the context of sales tax the Full Bench of the Allahabad High Court in Laxmi Narain Anand Prakash v. Commissioner of Sales Tax AIR 1980 All 198 it was held that the notice of initiation proceeding under Section 21 of U.P. Sales Tax Act, 1947 was a condition precedent and not only a procedural requirement. The mere fact that the Assessee had obtained knowledge of the proceeding and participated could not validate the proceeding being initiated without jurisdiction. It is subsequently held that it is firmly established that where a Court or Tribunal has no jurisdiction, no amount of consent, acquiescence or waiver can create it. Decisions referred to by th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f such notice upon the Assessee are jurisdictional requirements that must be mandatorily complied with. They are not mere procedural requirements. (ii) For the AO to exercise jurisdiction to reopen an assessment, notice under Section 148 (1) has to be mandatorily issued to the Assessee. Further the AO cannot complete the reassessment without service of the notice so issued upon the Assessee in accordance with Section 282 (1) of the Act read with Order V Rule 12 CPC and Order III Rule 6 CPC. (iii) Although there is change in the scheme of Sections 147, 148 and 149 of the Act from the corresponding Section 34 of the 1922 Act, the legal requirement of service of notice upon the Assessee in terms of Section 148 read with Section 282 (1) and Section 153 (2) of the Act is a jurisdictional pre-condition to finalizing the reassessment. (iv) The onus is on the Revenue to show that proper service of notice has been effected under Section 148 of the Act on the Assessee or an agent duly empowered by him to accept notices on his behalf. In the present case, the Revenue has failed to discharge that onus. (v) The mere fact that an Assessee or some other person on his behalf not duly a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 148 of the Act. Therefore, the proviso to Section 292BB is attracted and Revenue cannot take advantage of the main portion of Section 292BB. This view has already been taken by the Special Bench of the Tribunal in Kuber Tobacco Products (P.) Ltd. v. Dy. CIT [2009] 28 SOT 292 (Delhi) (SB). 14. After having gone through the judgment cited by both the parties and more particularly the decision of the Hon ble Delhi High Court in the case of CIT Vs Chetan Gupta (supra), which is squarely applicable to the facts of the present case, we are also of the view that: (i) Under Section 148 of the Act, the issue of notice to the Assessee and service of such notice upon the Assessee are jurisdictional requirements that must be mandatorily complied with. They are not mere procedural requirements. (ii) For the AO to exercise jurisdiction to reopen an assessment, notice under Section 148 (1) has to be mandatorily issued to the Assessee. Further the AO cannot complete the reassessment without service of the notice so issued upon the Assessee in accordance with Section 282 (1) of the Act read with Order V Rule 12 CPC and Order III Rule 6 CPC. (iii) Although there is change in the scheme ..... X X X X Extracts X X X X X X X X Extracts X X X X
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