TMI Blog2022 (4) TMI 531X X X X Extracts X X X X X X X X Extracts X X X X ..... ligence as regards verifying the address of the assessee, and had in fact most arbitrarily dispensing with the said statutory obligation got the Notice u/s. 148, dated 11.03.2015 affixed at an address, i.e., 1-B, New Guru Teg Bahadur Nagar, Jalandhar, at which the assessee well to his knowledge (as intimated by the notice server vide his report) was not residing, therefore, the validity of such a service cannot be subscribed on our part. At this stage, we may observe, that the manner in which the A.O. had ordered for the service of the Notice u/s.148, dated 11.03.2015 by way of affixture at the aforesaid address, i.e., without using all due and reasonable diligence for verifying the whereabouts of the assessee is absolutely not in conformity with the mode and manner of service of notice as contemplated in Sec. 282(1)(b) r.w. Order V - Rule 17 of the Code of Civil Procedure, 1908 (V of 1908). We, thus, in terms of our aforesaid observations are of the considered view that the service of the Notice u/s. 148, dated 11.03.2015 cannot be held to have been carried out as per the mandate of law. As in the case before us the Notice u/s. 148, dated 11.03.2015 had been served on the asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oes not issue notice u/s. 143(2) after the assessee files return in response to notice u/s. 148. 4 The learned CIT(A) is not justified in conforming the addition of ₹ 22,00,000/- made by the AO. 5. Any other ground which may be raised at the time of hearing. 2. Succinctly stated, on the basis of information available with the A.O. that the assessee had purchased 22,000 shares of Lakhanpal Designs Pvt. Ltd., Ghaziabad for a consideration of ₹ 22 lac, the case of the assessee was reopened u/s. 147 of the Act. Notice u/s. 148, dated 11.03.2015 was issued and served by affixture. 3. On a request by the assessee, copy of the reasons to believe on the basis of which his case was reopened were made available to him. Return of income for the year under consideration, i.e., A.Y. 2008-09 was filed by the assessee on 25.02.2016, disclosing an income of ₹ 7,19,250/-. On being queried as regards the source of the investment of ₹ 22 lac that was made in the aforesaid 22,000 shares of M/s. Lakhanpal Designs Pvt. Ltd., Ghaziabad, the assessee vide his reply dated 30.03.2016, submitted, that the same was sourced from the joint bank a/c with ICICI Bank, G.T. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ad after getting the necessary instructions from the assessee participated in the assessment proceedings, and had after obtaining the copy of the 'reasons to believe' on the basis of which the assessee's case was reopened filed his objections as regards the validity of the reassessment proceedings. Apropos the objections filed by the assessee in the course of the assessment proceedings, it was submitted by him that the A.O. had failed to dispose off the same by way of a speaking order. Also, it was the claim of the assessee that the impugned assessment order, i.e., u/s. 148 r.w.s. 143(3), dated 30.03.2016 was passed by the A.O. de hors issuance of any Notice u/s. 143(2) of the Act. 5. Elaborating on his contention as regards the absence of a valid service of Notice u/s. 148, dated 11.03.2015, it was submitted by the assessee that in the 'reasons to believe' that were recorded by the A.O. for reopening of his case a wrong address was therein found mentioned, viz. 1-B, New Guru Teg Bahadur Nagar, Jalandhar. Also, it was submitted by the assessee, that even in the Notice u/s. 148, dated 11.03.2015 the aforesaid wrong address was mentioned. It was submitted by th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3.2015 was sent at a wrong address, viz. 1-B, Guru Teg Bahadur Nagar, Jalandhar, therein stated, that as the assessee on an earlier occasion had in compliance to summons that were issued to him at the aforesaid address by the ADIT(Inv.), Jalandhar, had attended the proceedings before the said officer, therefore, it was incorrect on his part to now claim that the very same address to which the Notice u/s. 148, dated 11.03.2015 was addressed was an incorrect address. It was further stated by the A.O., that the assessee in his reply dated 26.11.2011 that was filed in the course of the proceedings before the ADIT(Inv.), Jalandhar, had stated that the aforesaid address, viz. 1-B, Guru Teg Bahadur Nagar, Jalandhar, where the summons were sent was his present residential address. In order to drive home his aforesaid claim the A.O. also enclosed a copy of the letter dated 26.11.2011 (supra) that was filed by the assessee in the course of the inquiries conducted by the ADIT(Inv.), Jalandhar., wherein at Sr. No. (i) of the reply he had stated that his present address was the same at which the letter was addressed. On being supplied with a copy of the 'remand report', the assessee vid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that as the A.O. without exercising his diligence as regards verifying the whereabouts of the assessee, had despite having been informed by the notice server vide his report that no person by the name as that of the assessee was residing at the property to which the aforesaid Notice u/s. 148, dated 11.03.2015 was addressed, without putting up any efforts to locate the whereabouts of the assessee, which he could have easily gathered by going no further but referring/consulting the assessment records of the assessee, had however, most arbitrarily by way of an idle formality, or, in fact, an eye wash, got the Notice u/s. 148, dated 11.03.2015 served by way of affixture at the said wrong address. Although, the assessee had also assailed the validity of the service by way of affixture, for the reason, that the same is not in conformity with the manner contemplated in Sec. 282 of the Act r.w. Order V-Rule 17 Rule 19 of the Code of Civil Procedure, 1908 (V of 1908), as the same is not witnessed by an independent witness, but we shall deal with the said contention of the assessee, if required, after dealing with his primary objection, i.e., validity of the service by affixture at a wrong ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that year;] [(c) if four years, but not more than sixteen years, have elapsed from the end of the relevant assessment year unless the income in relation to any asset (including financial interest in any entity) located outside India, chargeable to tax, has escaped assessment.] Explanation.--In determining income chargeable to tax which has escaped assessment for the purposes of this sub-section, the provisions of Explanation 2 of section 147 shall apply as they apply for the purposes of that section.]. Insofar the mode and manner of service of a notice issued under Sec. 148 of the Act is concerned, the same can be traced in Sec. 282 of the Act and Rule 127 of the Income-tax Rules, 1962, which reads as under: 282(1) The service of a notice or summon or requisition or order or any other communication under this Act (hereafter in this section referred to as communication ) may be made by delivering or transmitting a copy thereof, to the person therein named: (a) by post or by such courier services as may be approved by the Board; or (b) in such manner as provided under the Code of Civil Procedure, 1908 (5 of 1908) for the purposes of service of summons; o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hority issuing the communication: [Provided further that where the communication cannot be delivered or transmitted to the address mentioned in items (i) to (iv) or any other address furnished by the addressee as referred to in first proviso, the communication shall be delivered or transmitted to the following address: (i) the address of the assessee as available with a banking company or a co-operative bank to which the Banking Regulation Act, 1949 (10 of 1949) applies (including any bank or banking institution referred to in section 51 of the said Act); or (ii) the address of the assessee as available with the Post Master General as referred to in clause (j) of section 2 of the Indian Post Office Act, 1898 (6 of 1898); or (iii) the address of the assessee as available with the insurer as defined in clause (9) of section 2 of the Insurance Act, 1938 (4 of 1938); or (iv) the address of the assessee as furnished in Form No. 61 to the Director of Income-tax (Intelligence and Criminal Investigation) or to the Joint Director of Income-tax (intelligence and Criminal Investigation) under sub-rule (1) of rule 114D; or (v) the address of the assessee as furnis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed the same with a report, viz. viz. Shrimaan Ji, is kothi mein is naam ka kohi nahin hai (that no one by the said name is available at this address), which thus clearly did cast an obligation upon the A.O. to have made necessary verifications as regards the whereabouts of the assessee, which we are afraid he had most arbitrarily dispensed with, and instead, by way of an idle formality got the same served by way of affixture at the aforesaid wrong address. At this stage, we may herein observe, that if the A.O. would have done the bare minimum that was expected of him, i.e., consulted/referred to the assessment record of the assessee, i.e., his returns of income, PAN data, Form No. 26AS etc., then, the correct present address of the assessee could have easily been gathered by him. In fact, as per Rule 127(2)(c)(i) (iii) of the Income-ta Rules, 1962, the address of an assessee, viz. (i) available in the PAN database; and (ii). the address available in the last income-tax return furnished by the assessee, respectively, are, inter alia, two of the addresses to which a notice or summons or requisition or order or any other communication under the I.T. Act may be delivered as per the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... opening of the assessment would be invalid in the eyes of law. The Hon'ble High Court while concluding as hereinabove had after drawing support from the various judicial pronouncements observed as under: 7. As is well known, section 147 of the Act pertains to income escaping assessment. In terms of sub-section (1) of section 147, if the Assessing Officer has reason to believe that any income chargeable to tax has escaped assessment, he may, subject to the provisions of sections 148 to 153, assess or reassess such income and any other income chargeable to tax which has escaped assessment. Section 148 of the Act pertains to the issue of notice where income has escaped assessment. Sub-section (1) of section 148 provides that before making assessment or recomputation under section 147, the Assessing Officer shall serve on the assessee a notice requiring him to furnish the return of income in prescribed form. Section 149 of the Act pertains to time limit for such notice to be issued under section 148 of the Act. 8. In terms of section 148(1) of the Act, thus, before making reassessment under section 147, the Assessing Officer had to serve on the assessee the notice requiri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d consequent orders of reassessment passed by him would be void and inoperative. In our opinion, this contention is well-founded. The notice prescribed by Section 34 cannot be regarded as a more procedural requirement; it is only if the said notice is served on the assessee as required that the Income Tax Officer would be justified in taking proceedings against him. If no notice is issued or if the notice issued is shown to be invalid then the validity of the proceedings taken by the Income Tax Officer without a notice or in pursuance of an invalid notice would be illegal and void. That is the view taken by the Bombay and Calcutta High Courts in the CT v. Ramsukh Motilal and R.K. Das Co. v. CT and we think that that view is right. 10. In the case of Shanabhai B. Patel vs. R.K. Upadhyaya, Income Tax Officer, Ahmedabad reported in (1974) 96 ITR 141, the Division Bench of Gujarat High Court had examined similar issue and opined as under: 9. In our opinion, therefore, the assumption of jurisdiction by the Income-tax Officer of reassessing an assessee is subject to the provisions contained in section 148 to 153 of the Act. Section 148 and 149, which we have reproduced above ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g with a similar contention that the words issue and service as used in section 34 cannot be equated with each other and that the stage of issue of notice is a distinct and different stage from the stage of service of notice. Mr. Justice Bhagwati (as he then was) observed as under: Now, it is undoubtedly true that, according to the decision of Desai C.J., as he then was, and Miabhoy J. in Madanlal Mathurdas v. Chunilal, Income-tax Officer, the words 'issue' and 'serve' as used in section 34 cannot be equated with each other and that the stage of issue of notice is a distinct and different stage from the stage of service of notice and ordinarily this decision being a decision of a Division Bench of this court would be binding upon us, but having regard to the subsequent decision of the Supreme Court in Banarasi Debi v. Income-tax Officer, this decision can no longer be regarded as good law and its authority must be held to have been impliedly overruled, though we may point out that even if the view taken by the Bombay High Court in this decision were correct, we should still have found considerable difficulty in accepting the contention that the proceedings ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ections 148 and 149 clearly shows that the Income-tax Officer cannot assume jurisdiction to make assessment, reassessment of recomputation unless the notice has been issued and served within the time limit prescribed under the aforesaid sections. The same question came up before a Division Bench of the Gujarat High Court in Shanabhai P. Patel v. R.P. Upadhyaya, income-tax Officer, B.K. Mehta J., while speaking for the court, observed as follows: Sections 147, 148 and 149 of the Income-tax Act of 1961 confer the power of reassessment on the Income-tax Officer. This scheme of power was originally comprehended in the provisions of section 34 of the Act of 1922. The division of the provisions contained in section 34 of the 1922 Act into sections 147, 148 and 149 in the Act of 1961 does not in any way indicate that the legislature intended to depart from or materially alter the position as it emerged from the provisions of section 34 of the old Act regarding notice of reassessment. The Supreme Court held in Banarsi Debi vs. Income-tax Officer (1), that the words, 'service of notice' or 'issuance of notice' in section 34 have no fixed connotation but are interchange ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Act pertains to service of notice generally and reads as under: Service of notice generally. 282. (1) The service of a notice or summon or requisition or order or any other communication under this Act (hereafter in this section referred to as communication ) may be made by delivering or transmitting a copy thereof, to the person therein named,- (a) by post or by such courier services as may be approved by the Board; or (b) in such manner as provided under the Code of Civil Procedure, 1908 (5 of 1908) for the purposes of service of summons; or (c) in the form of any electronic record as provided in Chapter IV of the Information Technology Act, 2000 (21 of 2000); or (d) by any other means of transmission of documents as provided by rules made by the Board in this behalf. (2) The Board may make rules providing for the addresses (including the address for electronic mail or electronic mail message) to which the communication referred to in sub-section (1) may be delivered or transmitted to the person therein named. Explanation. - For the purposes of this section, the expressions electronic mail and electronic mail message shall have ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed to the following address:- (i) the address of the assessee as available with a banking company or a co-operative bank to which the Banking Regulation Act, 1949 (10 of 1949) applies (including any bank or banking institution referred to in section 51 of the said Act); or.... 16. As per sub-rule (1) of Rule 127 for the purposes of sub-section (1) of section 282, the addresses to which a notice or a summons, etc. may be delivered or transmitted, shall be as per the sub-rule (2). Clause (a) of sub-rule (2) of Rule 127 includes four sources of address for such transmission. First one being the address available in PAN database of the addressee. It was at this address that the notice in question was despatched. The first proviso to sub-rule (2) provides that the said communication shall not be delivered at any of the above mentioned addresses where the assessee has furnished any other address for such purpose, which is not in the present case. The further proviso to sub-rule (2) which is of considerable importance to us provides that where communication cannot be delivered or transmitted to the addresses mentioned in item Nos. (i) to (iv) or the address furnished by the ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ajprakash Girotra (supra), we are of the considered view, that the A.O. had invalidly assumed jurisdiction for reopening the concluded assessment of the assessee company and passed the reassessment order u/s. 148 r.w.s. 143(3), dated 30.03.2016. At the same time, we may herein observe, that our aforesaid view is subject to our observations recorded herein below. 11. In the backdrop of our aforesaid deliberations, we are of the considered view that as the A.O. had failed to validly serve the Notice u/s. 148, dated 11.03.2015 on the assessee, therefore, he had invalidly assumed jurisdiction and framed the assessment u/s. 148 r.w.s. 143(3), dated 30.03.2016. But then, we may herein observe, that as per Sec. 292BB of the Act as had been made available on the statute w.e.f. 01.04.2008, and is applicable to the case of the assessee before us, if an assessee had not raised any objection in the course of the assessment proceedings as regards the service of a notice, viz. that the notice had not been served; or that the notice was served beyond the stipulated time period; or that the notice was served in an improper manner; then he is precluded from raising any such objection in any proc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has been issued without going through my return of income. Had it been taken into consideration, the notice would have been issued at the proper address. It is a trite law that notice served at a wrong address is nothing but nullity and needs to be filed. The same being the case here it is prayed that the notice may please be filed. Letter dated 08.03.2016: Had the record of the assessee been followed by the A.O., the notice under s. 148 would not have been served on wrong address and that too by affixture. Even after report of Notice Server that no one resides at the given address, the affixture was made at the same address. No effort was made to see the address of the assessee from the return and issue the notice at proper address. In so far the respective 'order sheet' entries dated 25.02.2016 and 08.03.2016 are concerned, we find that the same as reproduced at Page 16 of the order of the CIT(A) though refers to the attendance of the assessee's counsel; supply of copy of the reasons to believe on the basis of which the case of the assessee was reopened and; seeking of adjournment by the assessee's counsel, but on there is no reference of fili ..... X X X X Extracts X X X X X X X X Extracts X X X X
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