TMI Blog2022 (2) TMI 1140X X X X Extracts X X X X X X X X Extracts X X X X ..... ereabouts of the assessee in Canada, despite using all reasonable and due diligence could not be gathered by him. We are of the considered view, that the A.O despite being in knowledge of the fact that the assessee had shifted and was residing abroad, i.e, in Canada, had however grossly erred in taking recourse to substituted service of the Notice u/s 148, i.e, by getting the same affixed at his old residential house in India, which residential house he had himself observed in the assessment order was sold by the assessee prior to his shifting abroad, i.e, to Canada. The observations of the A.O, as recorded in the assessment order, therein revealing beyond doubt his knowledge that the assessee had sold his old residential house at Village Bhaika Dayalpura, Tehsil Rampura Phul, District : Bathinda. We are unable to comprehend that as to what purpose the service of Notice u/s 148 by affixture on the main gate of the assessee s residential house (which as observed by the A.O was no more owned by the assessee and had been sold by him prior to shifting abroad) would have served. The service of Notice u/s 148 by ordering a substituted service, as contemplated in Order V-Rule 20 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... That the Ld. CIT(A) erred on facts and law in rejecting the grounds of appeal of the assessee that the reassessment proceedings initiated u/s 147/148 by the AO were void ab-initio because the notice u/s 148 was not served on the assessee. 3. That the Ld. CIT(A) erred on facts and law in rejecting the grounds of appeal of the assessee that the reassessment proceedings initiated u/s 147/148 by the AO were void ab-initio because the reasons recorded by the AO to issue notice u/s 148 are reasons to suspect and not reasons to believe. 4. That the Ld. CIT(A) erred on facts and law in confirming the taxability of ₹ 32,00,000/- as Long Term Capital Gain without allowing the benefit of cost of acquisition. 5. That the appellant craves leave to add or amend the grounds of appeal before the appeal is finally heard or disposed of. 2. Succinctly stated, on 27.04.2007, the Defence Services Co-operative House Building Society Ltd., Mohali ( Society , for short) of which the assessee is a member, had entered into a tripartite Joint Development Agreement ( JDA , for short) with M/s Hash Builders Private Limited AND M/s Tata Housing Development Company Ltd. ( THDC , for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e u/s 142(1) too remained uncomplied with. Observing, that the assessee despite having been afforded sufficient opportunities had failed to comply with the notices that were issued to him, the A.O therein proceeded with the assessment on an ex-parte basis u/s 144 of the Act, i.e, on the basis of the material/information available on record. 3. Observing, that the assessee a/w all other members had allotment rights in the identified demarcated parcel of land in the society, which in lieu of the JDA were irrevocably and unequivocally granted and assigned in perpetuity in favour of THDC, the A.O was of the view that the same did tantamount to extinguishment of the rights that were vested with the owner qua the aforesaid property in question. Backed by his aforesaid observations, the A.O was of the view that as the total consideration of ₹ 1,81,25,000/- (supra) had accrued to the assessee during the year under consideration, therefore, the LTCG therein arising to him, i.e, as provided in Sec. 45 r.w Sec. 48 of the Act was liable to be brought to tax in his hands. On the basis of his aforesaid deliberations, the A.O vide his order passed u/ss. 144/147 of the Act, dated 18.03.20 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to verify whether one furnished flat admeasuring 2250 sq. ft worth ₹ 1,01,25,000/- was received by the assessee as per the JDA, dated 25.02.2007, and directed, that the same be charged to capital gain tax only when the same was so received, and not otherwise. Accordingly, the CIT(A) in terms of his aforesaid observations partly allowed the appeal. 5. The assessee being aggrieved with the order of the CIT(A) has carried the matter in appeal before us. At the very outset of the hearing of the appeal, it was submitted by the ld. Authorised Representative ( A.R , for short) for the assessee, that as the A.O had framed the impugned assessment u/ss. 144/147, dated 18.03.2014 without validly serving notice u/s 148 of the Act, therefore, the same could not be sustained and was liable to be quashed on the said count itself. Elaborating on his aforesaid contention, it was submitted by the ld. A.R, that as could be gathered from the assessment records the alleged service of notice u/s 148, dated 06.06.2012 suffered from certain serious infirmities, viz. (i). that though the notice server in his report had categorically stated that the assessee was residing in Canada, the A.O despite ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rresponding 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. Admittedly, the assumption of jurisdiction for framing of an assessment or reassessment under Sec.147 of the Act presupposes a valid service on the assessee of a notice issued under Sec.148 of the Act. For the sake of clarity Sec. 148 (relevant extract) is culled out as under : 148 (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. (emphasis supplied by us) Further, the time li ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is section, the expressions electronic mail and electronic mail message shall have the meanings as assigned to them in Explanation to section 66A of the Information Technology Act, 2000 (21 of 2000). Further, Rule 127 of the Income Tax Rules, 1962 contemplates the address (including the address for electronic mail or electronic mail message) to which a notice or summons or requisition or order or any further communication under the Act may be delivered for the purpose of subsection (1) of Sec. 282, and the same reads as under: Service of notice, summons, requisition, order and other communication. 127, (1) For the purposes of sub-section (1) of section 282, the addresses (including the address for electronic mail or electronic mail message) to which a notice or summons or requisition or order or any other communication under the Act (hereafter in this rule referred to as communication ) may be delivered or transmitted shall be as per sub-rule (2). (2) The addresses referred to in sub-rule (1) shall be (a) for communications delivered or transmitted in the manner provided in clause (a) or clause (5) of sub-section (1) of section 282- (i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... itted electronically:- (i) email address available in the income-tax return furnished by the addressee to which the communication relates; or (ii) the email address available in the last income-tax return furnished by the addressee; or (iii) in the case of addressee being a company, email address of the company as available on the website of Ministry of Corporate Affairs: or (iv) any email address made available by the addressee to the income tax authority or any person authorised by such income-tax authority. (3) The Principal Director General of Income-tax (Systems) or the Director, Gene of Income-tax (Systems) shall specify the procedure, formats and Standard, for ensuring secure transmission of electronic communication and shall also responsible for formulating and implementing appropriate security, and retrieval policies in relation to such communication.] As provided in Sec. 282 of the Act, the service of a summon or requisition or order or any other communication under the Act, inter alia, may also be carried out in such manner as provided under the Code of Civil Procedure, 1908 (5 of 1908) for the purposes of service of summons. 8. As ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... said notice, is as under (translated version): Sir, I had gone to Village Bhaika Dayaplura. The assessee is residing in Canada. I have in the presence of Shri. M.L Tuteja, Inspector of Incometax affixed the notice u/s 148 at his old residential house. Report is being filed herewith. Sd/- Makhan Singh, Dayalpura (Witness) Sd/- Kulwant Singh (Notice Server) 17.09.2012 (Affixed by Sh. Kulwant Singh) in my presence) Sd/- (M.L Tuteja), Inspector 17.09.2012 9. In the backdrop of the aforesaid facts r.w the mandate of law, we shall now advert to the validity of the Notice u/s 148, dated 03.09.2012, that was got served by the A.O by taking recourse to substituted service, i.e, Order V Rule 20 of the Code of Civil Procedure (V of 1908). Before proceeding any further, we may herein observe, that as gathered by Shri. Kulwant Singh, Notice server of the I.Tax department on two occasions, i.e, vide his reports dated 14.06.2012 on 17.09.2012 which were returned by him to the A.O, the assessee, i.e Shri. B.P.S Bhullar had shifted and was residing abroad, i.e, in Canada. Backed by the aforesaid fact, which we may herein observe was well within th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 5 of the Code of Civil Procedure (5 of 1908) is culled out as under : 25. Service where defendant resides out of India and has no agent :- Where the defendant resides out of India and hs no agent in India empowered to accept service , the summons shall be addressed to the defendant at the place where he is residing and sent to him {by post or by such courier service as may be approved by the High Court, by fax message or by Electronic Mail Service or by any other means as may be provided by the rules made by the High Court], if there is postal communication between such place and the place where the court is situate : [Provided that where any such defendant [resides in Bangladesh or Pakistan], the summons , together with a copy thereof, may be sent for service on the defendant, to any court in that country (not being the High Court) having jurisdiction in the place where the defendant resides : Provided further that where any such defendant is a public officer [in Bangladesh or Pakistan (not belonging to the Bangladesh or, as the case may be, Pakistan military, naval or air forces)] or is a servant of a railway company or local authority in that country, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... In the backdrop of the aforesaid factual position, we are unable to comprehend that as to what purpose the service of Notice u/s 148 by affixture on the main gate of the assessee s residential house (which as observed by the A.O was no more owned by the assessee and had been sold by him prior to shifting abroad) would have served. As observed by us hereinabove, the service of Notice u/s 148 by ordering a substituted service, as contemplated in Order V-Rule 20 of the Code of Civil Procedure, 1908 (5 of 1908), in the absence of using of all reasonable and due diligence for locating the whereabouts of the assessee, not being as per the mandate of law cannot be subscribed on our part. Our aforesaid view that service of notice in case of an assessee residing abroad, by affixing the same on the main door of his local residence in India is not a valid service, is supported by the judgment of the Hon ble High Court of Allahabad in the case of CIT Vs. Habibullah (1985) 21 Taxman 392 (All). In the said case, it was observed by the Hon ble High Court that as the assessee had shifted and was residing in London for the past two years, and there was no possibility of his coming back in the nea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eve was never served upon the assessee. Be that as it may, we are of the considered view, that as the A.O had framed the impugned assessment u/s 144 r.w.s 147, dated 18.03.2014 without effecting a valid service of Notice u/s 148 upon the assessee prior to the framing of the assessment, therefore, the same cannot be sustained and is liable to be vacated. We, thus, in terms of our aforesaid observations quash the assessment framed by the A.O vide his order passed u/s 144 r.w.s 147, dated 18.03.2014 for want of valid assumption of jurisdiction on his part. The Ground of appeal No. 2 is allowed in terms of our aforesaid observations. 13. As we have quashed the assessment framed by the A.O u/s 144 r.w.s 147, dated 18.03.2014 for want of valid assumption of jurisdiction on his part for the reasons discussed hereinabove, therefore, we refrain from adverting to the other contentions advanced by the ld. A.R on the basis of which the validity of the assessment had been assailed by him before us, as well as those raised by him qua the merits of the addition, which, thus, are left open. The Grounds of appeal Nos. 1, 3 4 are disposed off in terms of our aforesaid observations. 14. The ..... X X X X Extracts X X X X X X X X Extracts X X X X
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