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TMI Blog2019 (2) TMI 2117X X X X Extracts X X X X X X X X Extracts X X X X ..... nd of 1058 Marlas vide sale deed executed on 09.02.2005 from Sh. Surinderjit Singh Jaspal & Sons (HUF). After going through the records, it was found that the above named person did not file his return of income for the assessment year 2005-06. Therefore, notice u/s 148 was issued on 23.03.2012 and sent through speed post No. 8274 and was also served personally upon the assessee through Notice Server on 23.03.2012, however the assessee refused to take service as reported by the Notice Server. Then one notice u/s 148 was also served through affixture on the address available on records i.e. Behind Power House, Mohalla Saingarh, Pathankot. Subsequently the assessee filed his return of income declaring an income of Rs. 87,200/- on 22.11.2012 under protest. Thereafter, the statutory notices has been issued to the assessee and finally the Assessing Officer added an amount of Rs. 6,81,620/- as an unexplained cash u/s 69A of the Act. 4. The assessee challenged the said addition before the Ld. CIT(A) on the legal grounds as well as on merit, however the Ld. CIT(A) affirmed the addition of Rs. 9,91,618/- while giving part relief of Rs. 501/- to the assessee. 5. At the outset, the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Smt. Paramjit Kaur reported at 311 ITR 38 wherein it has held by the Hon'ble High Court that there must be nexus between the material and escapement of income and the AO must record his satisfaction for reopening the assessment. Likewise, the AO could not establish nexus that the investment made by the AO represented assessee's income. Thus, the proceedings need to be held as invalid in view of the judgement of the Hon'ble High Court. Reliance is also placed on the decision of this Hon'ble Tribunal in the case of Shri Gurpal Singh Vs ITO reported at 159 ITD 757 and also on the decision of this Hon'ble Tribunal in the case of Amrik Singh Vs ITO reported at 159 ITD 329 which support the second legal ground of appeal as mentioned above. In view of the above, it is prayed that the additional ground be allowed to be admitted and also may kindly be allowed. 6. On the contrary, the ld. DR in addition to oral submissions advanced during the course of hearing, also filed the written synopsis in response to the raising of additional grounds, which we also feel appropriate to reproduce herein: Brief Submissions On Additional ground for reasons recoded for issue ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n without any new material and on the basis of return. SEWAK RAM vs. INCOME TAX OFFICER 236 CTR 462(P&H) 2010- No doubt, mere change of opinion by itself is not a ground for reassessment as held in the judgments relied upon on behalf of the assessee but if there are reasons to believe that tax has escaped, reassessment is permissible. Reasons can be even on the basis of particulars of the return without any new material. Even if proceedings under s. 143(2) are not taken, reassessment proceedings can be taken. 4) It is further held by following the case of raymond wollen mills vs ITO (1999)236 ITR 34 SC, that count can invalidate a notice issued u/s 148 only if it is satisfied that no material was available before the A.O on the basis of which he could form a belief or that the said belief was not at all bonafide or was based on wage, arbitrary or non-specific information. Thus exception to reason only when no material available with Assessing Officer- belief can be made on any material whatsoever (Grover nursing Home vs ITO -248 ITR 493-2001 (P&H)) 5) It is further held that - belief can be reached in any manner, and is not qualified by a pre-condition of faith and true discl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed out during assessment proceedings about expenses incurred relatable to tax free income u/s 14A there was omission and failure on its part to disclose fully and truly material facts and hence reopening of assessment was justified. (Honda Siel Power Products Ltd. v. Dy. CIT (2011) Delhi High court (SLP of the assesse dismissed) 7. Having heard the parties at length and perused the material available on record. The assessee has raised the additional grounds while relying upon various Apex Court's judgments. The decisions relied upon by the revenue department are factually dissimilar. In view of the judgment passed by the Apex Court, in the case of National Thermal Power Corporation Ltd. [229 ITR 383], as the additional grounds clearly emanates from the facts already on record and there is no embargo, therefore we do not have any hesitation to allow to raise the additional grounds which are un-doubtly legal in nature as it is settled by the Apex Court that the legal ground(s) if not raised at the lower stage, can be raised before any higher Adjudicatory Authorities/ Courts. 8. Now coming to the legal grounds raised by the assessee. The assessee has raised the issue that in t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eived from the survey circle that the assessee had got prepared a demand draft for a sum of Rs. 83,040 which was not accounted in the books of account of the assessee. The Assessing Officer had not examined and corroborated the information received from the survey circle before recording his own satisfaction of escaped income and initiating reassessment proceedings. The Assessing Officer had thus acted only on the basis of suspicion and it cannot be said that the same was based on the belief that the income chargeable to tax had escaped income. The Assessing Officer has to act on the basis of" reasons to believe" and not on " reasons to suspect". The Tribunal had, thus, rightly concluded that the Assessing Officer had failed to incorporate the material and his satisfaction for reopening the assessment and, therefore, the issuance of notice under s. 148 of the Act for reassessment proceedings was not valid." 9.1 In the instant case, from the reasons recorded, it reflects that the Assessing Officer mainly relied upon the information to the effect that the assessee has purchased a property for Rs. 5,30,000/- having ¼ share of total value of property at Rs. 21,20,000/- includin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essarily amount to disclosure within the meaning of the foregoing proviso. Explanation 2- For the purposes of this section, the following shall also be deemed to be cases where income chargeable to tax has escaped assessment namely:- (a) where no return of income has been furnished by the assessee although his total income or the total income of any other person in respect of which he is assessable under this Act during the previous year exceeded the maximum amount which is not chargeable to income tax. (b) Where a return of income has been furnished by the assessee but no assessment has been made and it is noticed by the assessing officer that the assessee has understated the income or has claimed excessive loss, deduction, allowance or relief in the return. (c) Where an assessment has been made, but- (i) income chargeable to tax has been under assessed; or (ii) such income has been assessed at too low a rate; or (iii) such income has been made the subject of excessive relief under this act; or (iv) excessive loss or depreciation allowance or any other allowance under this act has been computed." 9.3 The law on the provisions of section 147 is very clear. Sectio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lanation submitted and evidences places on record judiciously. Hence on this ground also, the assessment proceeding/order is liable to be quashed. 10. Now coming to the 3rd issue, which the assessee has raised by filing an affidavit qua service of notice u/s 148 of the Act. From the notice dated 23.03.2012 it reflects that the notice u/s 148 of the Act dated 23.03.2012 (Paper Book page -4) was sent through speed post to the assessee on 23.03.2012 itself, however, from the order of affixture dated 23.03.2012 (page No. 5 of PB), it reflects that the order for notice by affixture was made on 23.03.2012 itself without waiting for the outcome of the notice sent on dated 23.03.2012 through speed post. 10.1 Identical situation has already been dealt with by the Coordinate bench in the case of Om Prakash Sharma Vs Income Tax Officer (ITA No. 500(Asr)/2017 decided on 09-10-2018 ). Relevant part of the judgment reproduced herein below. 5. However, the Assessing Officer on satisfying about the non -possibility of service of notice through ordinary means, decided to serve through affixture at the last known address of the assessee. It is really surprising that the notice sent through speed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f order V further enumerates the procedure when defendant refuses to accept the service, or cannot be found. Rule 17 further mandates that where the defendant or his agent or such other person as aforesaid refuses to sign the acknowledgement, or where the serving Officer, after using all due and reasonable diligence, cannot find the aforesaid person, who is absent from his residence at the time when service is sought to be effected on him at his residence and there is no likelihood of his being found at the residence within a reasonable time and there is no agent empowered to accept the service of the summons on his behalf, nor any other persons on whom service can be made, the serving officer shall affix a copy of the summons on the outer door or some other conspicuous part of the house in which the defendant ordinarily resides or carries on business or personally works for gain. 7.4 Further Rule 20 of order-V speaks about the substituted services, according to this rule, when the Court is satisfied that there is a 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 o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... thereafter the Assessing Officer would had no option except to substitute the assessment proceedings in the name of the legal heir only, however, it is admitted fact that notice 29.05.2012 u/s 142(1) was also served to the deceased assessee by way of affixture and thereafter, getting the knowledge about the death of the assessee, the Assessing Officer initiated the assessment proceeding against the sole legal heir. The notice dated 18.02.2013 u/s 142(1) has also been claimed as served upon the legal heir, through affixture only. While serving the notice through substituted service to the sole legal heir of the assessee, the Assessing Officer never tried to serve the legal heir in the ordinary way, however made an attempt only through substituted service which also create lots of doubts about service and validity of the notices which according to our mind is not mere procedural requirement but mandatory. 7.7 The judgments relied upon by the Ld. AR, in support of assessee's case speaks about one thing only that proper notice u/s 148 of the Act for initiating reassessment proceeding is not a mere procedural requirement but the service of the prescribed notice on the assessee is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t proceedings, from which it does not reflect that the said notice u/s 148 was ever served upon the assessee or received by the assessee at the address as mentioned in the notice u/s 148 and the order for affixture of notice dated 03.03.2012. Even we realized that the Assessing Officer has sent the notice u/s 148 to the assessee at the address i.e. Behind Power House, Mohalla Saingarh, Pathankot, whereas in the assessment order, the address has been written as C/o Kundan Vila, LIC Lane, Dhanu Road, Pathankot, which further strengthen the case of the assessee that no notice or any enquiry letters dated 07.03.2012, 04.06.2012 and 12.11.2012 has ever served upon the assessee at his proper address. Therefore, non-service of notice u/s 148 of the Act, vitiate the assessment proceedings and therefore on this ground also, the assessment proceeding/order is liable to be quashed. Hence, on the aforesaid analyzations and deliberations and in cumulative effects, we do not have any hesitation to quash the assessment order. 11. ITA Nos. 354(Asr)/2016 (2006-07) The brief facts of the instant case are that the Revenue Department had received the information to the effect that the assessee has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... challenge before us. 13. At the outset, the Ld. AR submitted that he is praying for admission of additional grounds being legal in nature which goes to the root of the case. The assessee in support of admission of additional grounds also filed application for admission of additional grounds, contents of which for the sake of brevity and completeness, reproduced herein. "PRAYER FOR ADMISSION OF ADDITIONAL GROUND It is humbly prayed that the Hon'ble Tribunal may most kindly allow admission of the following additional grounds:- 1) The assessment order deserves to be quashed as the proceedings under section 147 have been initiated on the basis of suspicion and there was absolutely no material on record giving the AO any reason to believe that any income has escaped assessment. 2) That enquiry notices were issued without seeking approval from the CIT- 2, Amritsar and as such the assessment proceedings initiated u/s 147 were vitiated. 3) The AO had adjourned the enquiry proceedings to 08.03.2013 but without waiting for the same, recorded the satisfaction u/s 148(2) on 06.03.2013 which vitiated the proceedings u/s 147. Reliance is placed on the judgment of the Hon'bl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r and may be read as part and parcel of this appeal as well. 15. Having heard the parties at length and perused the material available on record. In ITA Nos.353 (Asr)/2016, while respectfully following the decision of Apex Court in the case of National Thermal Power Corporation Ltd. [229 ITR 383], we allowed the raising of additional grounds being legal in nature therefore, in view of the order in ITA Nos. 353 (Asr)/2016 and the fact that the additional grounds as raised by the Assessee clearly emanates from the facts already on record, we allow the assessee to raise the additional grounds in this case and admit the same for adjudication. 16. First we will dispose of the peculiar issue which pertains to recording of reasons on 06-03-2013. From the order sheet, it clearly reflects that vide order dated 28.02.2013, the Assessing Officer had issued preliminary notices and fixed the assessment proceedings for 05.03.2013 and thereafter, on 05.03.2013 as per order sheet, Sh. Surinderjit Mahajan, father of the assessee appeared and sought further date for reply and therefore the case was adjourned to 08.03.2013. However, from the reason recorded, it clearly appears that the Assessing Of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rcise only. 19. In the result, both the appeals filed by the assessee stands allowed. Order pronounced in open Court on 28.02.2019 (SANJAY ARORA) ACCOUNTANT MEMBER Sd/- (N.K.CHOUDHRY) JUDICIAL MEMBER I have perused the order proposed by my ld. brother, JM in the captioned appeals. I am in agreement therewith. My point of difference, however, and which explains this assent order, is in respect quashing the assessment for A.Y.2006-07 (Appeal No. 354/Asr/2016) on the ground of alleged non-service of notice u/s. 148(1). The said notice, issued on 15.3.2013 (i.e., after recording reason/s u/s. 148(2) on 13.3.2013, and seeking approval from the competent authority on 14.3.2013) was, as noted in para 3 (page 2) of the assessment order dated 20.3.2014, sent through speed-post (giving it's number), as also personally served through the notice server on 18.3.2013. The assessee did not furnish any return of income in response thereto, which he was to by 28.3.2013. This was followed by notices u/s. 142(1) (three in number), which were again duly served on the assessee (dates specified). Non-compliance thereof led to the impugned assessment u/s. 144 r/w sec. 147. The asses ..... X X X X Extracts X X X X X X X X Extracts X X X X
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