TMI Blog2005 (3) TMI 381X X X X Extracts X X X X X X X X Extracts X X X X ..... erred in holding that, under section 147, it is sufficient to confer jurisdiction notice if it is issued within the period of limitation. (b) Because Commissioner of Income-tax (Appeals)-I has erred in considering section 147 in isolation with section 148(1) which provides that before making the assessment or re-assessment that shall serve on the assessee a notice. (c) Because notice under section 148 confers jurisdiction and has to validly served on the assessee or on his authorized agent. 4. (a) Because the Learned Commissioner of Income-tax Appeals-I has also erred in interpreting the provision of section 282 only on the basis of head note which uses the word 'Generally'. (b) Because sub-section (1) of section 282 statutorily provide the manner in which the notices may be served and in the assessee's case notice under section 148 had not been served in the manner provided. 5.(a) Because the Learned Commissioner of Income-tax Appeals-I has also erred in holding the ex parte assessment valid, as notice under section 142(1) had been served. (b) Because the service of notice under section 142(1) does not confer jurisdiction or cure the defect in the foundational notice ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... this fact. 4.3 Thereupon the Assessing Officer issued a notice under section 148 of the Act on 15-9-1998 for the assessment year 1988-89, which, admittedly, was served on one Shri M.K. Tyagi, Chartered Accountant, who put his signatures in the capacity of 'AR' (Authorized Representative). The service effect was on Shri M.K Tyagi on 9-11-1998. As per this notice, the assessee was required to file its return of income for the assessment year 1988-89 within a period of 30 days from the date of service. But, admittedly, this notice also remained uncomplied with. Thereafter, the Assessing Officer issued notice under section 142(1) of the Act on 8-3-2001 and was sent to the assessee by registered post. Another notice under section 142(1) of the Act dated 12-3-2001 was also issued at the assessee's local address, whereby the date of hearing was fixed for 16-3-2001, but both these notices under section 142(1) also remained uncomplied with However, an application dated 22-3-2001, alongwith Vakalatnama in favour of Shri Anupam Sinha, was received in Assessing Officer's office asking for Xerox copies of the documents available on record, which were made available to the assessee's Authoriz ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... referred to by the CIT(A) in para 3.8 of the appellate order. However, the ld. CIT(A) again considered the issue in presence of the Assessing Officer and accepted the Assessing Officer's stand that he had seen a power of attorney executed by the assessee in favour of Mr. M.K. Tyagi, Chartered Accountant. The relevant observations of the ld. CIT(A) as contained in para 3.13 are again reproduced below:- "The Assessing Officer pointed out that there was a power of attorney in favour of Shri M.K. Tyagi, CA signed by the assessee, particularly for the year under consideration. Even though it Was not challenged by the learned representative of the appellant in the written rejoinder filed, the same was vehemently denied to be present on the case records during the course of hearing in presence of the present Assessing Officer. The Assessing Officer before me, in presence of the counsel of the appellant, stated that he had seen the letter of authority with his own eyes before sending his report dated 20-2-2002. I am inclined to agree with the Assessing Officer. He had no reason to mention any fact, which was not correct. The Assessing Officer had taken over the charge of this case quite ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot a mere procedural requirement. It was a condition precedent to the initiation of a proceeding for the assessment under section 147. The appellant has relied on the following decisions: (i) CIT v. Thayaballi Mulla Jeevaji Kapasi [1967] 66 ITR 147 (SC) (ii) CIT v. Iskwar Singh Sons [1981] 131 ITR 256 (Cal.) (iii) Madan Lal Agarwal v. CIT [1983] 144 ITR 745 (All.) (iv) CIT v. Har Prasad [1989] 178 ITR 591 (Punjab) (v) P.N. Sasikumar v. CIT [1988] 170 ITR 80 (Ker.) (vi) Kunj Bihari v. ITO [1983] 139 ITR 73, 76 (Punjab) (vii) Addl. CIT v. Prem Kumar Rastogi [l986] 124 ITR 381 (All.) (viii) CIT v. Girdhari Lal [1984] 147 ITR 379 (Raj.) 3.3 The Assessing Officer in his comments has submitted as under: '...It is not correct that determined share of the assessee in the firm for the assessment year 1988-89 was Rs. 36,390. In this respect it is submitted that the assessee has not disclosed before your honour the factual position correctly. Originally the assessment of the firm was completed under section 143(3) in which share of the assessee was determined at Rs. 36,390 but later on assessment of the firm was revised under section 251 and thereafter finally under sect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... journed to 20-3-2001 with a direction to file Income-tax return on 20-3-2001. Nobody attended on 20-3-2001. However, on 22-3-2001 Shri Anupam Sinha, advocate attended with authority and requested for inspection of file. Inspection was allowed and the case was adjourned to 23-3-2001. On 23-3-2001 also no body attended the hearing nor any application seeking adjournment was received. It was under these circumstances that the assessment was completed under section 144 as the assessment was getting barred by limitation. The Assessing Officer has pointed out that the assessee and his firm were being assessed to tax since long and his share in the firm was determined above the taxable limits and therefore he must have been expecting action under section 148 but he intentionally avoided filing of return both before the receipt of the show-cause notice and after the receipts of the show-cause notice as well the notice under section 148. 3.6 The learned representative of the appellant in his rejoinder has made no comments on the facts of the case as given by the Assessing Officer. The appellant has again challenged the service of the notice and quoted the following case laws in his suppor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... letter.' 3.9 I have considered the arguments of the learned representative of the appellant and the facts as pointed out by the Assessing Officer and not disputed by the learned representative of the appellant. The facts of the case are that the appellant is a partner in the firm M/s. Doneria Cold Storage Ice Factory, Agra. The assessment in the case of the firm was completed under section 143(3) in which the share of the assessee was determined at Rs. 36,390. The assessment of the firm was however, later on revised and finally determined share of the appellant came to Rs. 76,787. Thus, the claim of the appellant that the determined share was Rs. 36,390 is only giving the facts partly and thus misleading. The Assessing Officer has clarified this matter and the appellant has not challenged this. It is also argued by the appellant that the period of 9 years had elapsed before the notice under section 148 was issued. In fact the order under section 143(3)/154/251 was passed on 31-3-1997 in the case of the firm determining the income at Rs. 3,90,970. Thus, the appellant was very much aware about its determined share. The matter was not as old as the learned representative of the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 22-3-2001. 3.10 From these facts it is clear that the notice was properly served on the authorized representative of the assessee. In Response to notice under section 142(1) Shri Anupam Sinha, Advocate attended. It would have been a very embarrassing situation if the Assessing Officer had asked him to come and appear only after filing proper Vakalatnama. I am emphasizing this fact to derive home the point that the regular counsel of the appellant are generally heard and entertained by the Officers of the department even without the Vakalatnama being filed. The assessment orders are not passed ex parte on taking technical grounds of non-compliance. The appellant was aware of its liability to file the return of Income-tax for the assessment year 1988-89. A letter was also issued by the Assessing Officer dated 3-9-1998 to the appellant. However, the appellant chose not to file the return of income. It may be underlined here that the appellant has not challenged the determined share taken by the Assessing Officer. The same has been accepted. However, even on this determined share which is not at all disputed, the appellant does not want to pay tax because according to him n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... itle "service of notice generally". The use of the word "generally" indicates that it is not mandatory that notice has to be served on the assessee itself. It can be served on others in the special circumstances. The purpose for issue of such notice is that the assessee must be aware of its responsibility and liabilities. So that he can defend himself from the impending action. Section 282 has used the word "may". This word gives certain leverage to the Assessing Officer regarding service of notice. Section 282 also has not indicated the procedure for service of notice in case of an individual. If somebody went by the logic of the assessee, no notice could be served on the employees of the individual. That was never the intention of section 282.' 3.13 While giving this decision the Hon'ble ITAT have considered the case of CIT v. Thayaballi Mulla Jeevaji Kapasi [1967] 66 ITR 147 (SC) and Madan Lal Agarwal v. CIT [1983] 144 ITR 745. Thus, the Hon'ble ITAT has held the service of notice under section 148 to be valid even when the service of the notice was made on the sons of the appellant. In the present case the notice has been served on the authorized representative of the appella ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g where it was on the member or principal officer of A.O.P. It was on these facts that the following question was referred before the Hon'ble High Court 'Whether on the facts and in the circumstances of the case, the Hon'ble ITAT was justified in coming to the conclusion that the proceedings vide notice dated September 2, 1977 were validly initiated. (2) whether on the facts and in circumstances of the case the Appellate Tribunal had material to come to the conclusion that the notice issued to the individual was only a mistake curable and not one which affects the jurisdiction although the assessment was made in the status of an "Association of persons".' The facts of the present case are totally different there is no doubt regarding the identity or the status of the person against whom the proceedings were initiated and the notice under section 148 was issued and served. While delivering the judgment in this case the Hon'ble High Court relied on the Commentary given in Kanga and Palkhiwala Law and Practice of Income-tax Volume-1 page 910. The service of notice has given in section 282 has been dealt with by the same author on page 1696 of VIII Edition they have mentioned that wher ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... its legal rights. The Assessing Officer had been given enough opportunities to present its case. The assessment has been completed on a determined share about which there is no dispute. Thus, the assessment order passed by the Assessing Officer is valid and also the service of notice is held to be valid. 3.16 In the case of CIT v. Girdhari Lal [1984] 147 ITR 379 (Raj.) the question before the Hon'ble High Court was whether the authorized representative was authorized to appear in the proceedings under section 263 when normal assessment proceedings were completed. In the present case the facts are different. The proceedings are under section 148 for reassessment. These are, therefore, assessment proceedings and, thus, the facts of the case relied upon by the appellant are not applicable to this case. 3.17 In the case of Kunj Bihari v. ITO [1983] 139 ITR 73, 76 (Punjab), the assessee had filed return for the assessment year 1983-84 showing an income of Rs. 14,840. The assessee claimed that he did file the return for the relevant year, but according to the Income-tax authorities the said return was filed before some ITO who had no jurisdiction to proceed with the assessment, and, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nnection with the same kindly find enclosed affidavit of Shri S.H. Rizvi, Central Circle, Agra [the then ACIT-4(1)] dated 23-12-2002 in support of the submissions made by the Assessing Officer before the ld. CIT(A)-II, Agra. The affidavit may kindly be placed on record for kind consideration of the Hon'ble Members. Yours faithfully Sd/- (Sunita Bainsla) Addl. CIT Senior Departmental Representative Income-tax Appellate Tribunal, Agra Bench, Agra. 1. Copy to Shri Rajeev Mehrotra, Addl. Commissioner Of Income-tax, Range-4, Agra with reference to his letter F. No. Addl. CIT/R-4/Agr./Notice/ITAT/02-03/1790 dated 8-1-2003. 2. Copy to the assessee for information to be served on the counsel Shri Anurag Sinha, Advocate, Agra. (Sunita Bainsla) Addl. CIT Senior Departmental Representative ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ational force and is void ab initio. (ii) That it was also submitted that it would be wrong to say that assessee executed power of attorney for the assessment year in question and for the proceedings in hand through which Sri M.K. Tyagi can be said to be the authorized representative of the assessee. (iii) That the matter was also argued before the Ld. CIT(A) in the presence of the Assessing Officer as is apparent from the order of the Ld. CIT(A) and the Ld. Authorities were of the opinion that on the strength of that Power of Attorney and on the fact that Sri M.K. Tyagi appearance before the CIT(A) as late as on 23-4-1998 that Power of Attorney also holds good for service of notice issued under section 148. (iv) That your Honour Sir, as could be seen from the impugned order of the Ld. CIT(A) great importance has been attached to Sri M.K. Tyagi appearance before the CIT(A) in the case of erstwhile firm of the assessee as late as on 23-4-1998. It has also been said that assessee is one of the partner in that firm and the proceedings are said to be the same assessment year. (v) Your Honour Sir, it is submitted that Power of Attorney has limited application and though it is sa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... your Honour would kindly appreciate that in the present case no such power of attorney ever existed and the service of notice has been made on a person who was not authorized by the assessee to receive notice issued under section 148 and on these facts, the learned CIT(A) greatly erred on facts and on the basis of material on records in concluding that the notice was served validly. (xii) That in this connection it is respectfully submitted before your Honour that it is really difficult to understand the position of law and analogy as developed by the CIT(A). It appears that the Ld. CIT(A) has not addressed himself to the central issue of the case which goes to the root of the matter and relates to service of the notice which is a foundational notice and which gives jurisdiction to the Assessing Officer to make the assessment. When the jurisdiction was not properly acquired by the Assessing Officer further incidental powers if exercised if without jurisdiction and as such any order passed in furtherance of a notice which is proved to have never been served any such order is void ab initio. Section 149 of the IT Act as referred by the CIT(A) has no relevance to the controversy in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n that the service had been affected on them." (xiv) That while passing the order the Ld. CIT(A) as placed reliance to the decision of Hon'ble Agra Tribunal in the case of Chandra Bhan Bansal v. Dy. CIT [2001] 79 ITD 639. In this case decided by the Hon'ble ITAT, Agra Bench, Agra, the facts were that a notice was issued under section 148 and was served on the major son of the assessee and assessee acted on that notice and file return of income showing total income of Rs. 1,65,000 and even paid due tax on it. (xv) In the facts in the present case, the status of the person on whom the alleged service is made is under dispute, the assessee did not acted on notice under section 148 of the I.T. Act, did not file return of income. Otherwise also the Hon'ble ITAT, Agra Bench, Agra has confirmed to settle the legal position that service of notice on major son is a valid service. It was upon these facts that the service of notice in the case of Chandra Bhan Bansal was held to be a valid service. (xvi) That further the authorities below has relied upon the judgment of Chandra Bhan Bansal's case in which it has been held that notice need not be served on the assessee himself, it can be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e deemed to have waived that irregularity by admitting that he had received the notice and having thereafter proceeded to obtain a further adjournment. (xxi) That your Honour Sir, from the perusal of case laws being relied upon by the revenue, a common feature in all the cases can be pointed out and that though in above cases assessee disputed the service of notice but in three of the above mentioned cases, have filed returns in pursuance of said notices and in the last case admitted to have received notice and sought adjournment on said notice. (xxii) That in the present case before your Honour assessee is all along and consistently stating that no notice under section 148 was received by him and no return of income have been filed in instant case so no reliance can be placed to the above referred authorities. 6.2 Reliance was further placed on the following decisions - specially the observations extracted thereunder:- (i) Addl CIT v. Prem Kumar Rastogi [1980] 124 ITR 381 (All.) Observations: "The fact that in the past notices used to be served on R and the assessee never took any objection that the services of notices on R were improper and invalid shall not make R an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ken by the trial court was a possible one. In any case, it was not perverse. It is not contrary to the evidence on records. Thus, no ground for the grant of leave is made out. The petition is, therefore dismissed in limine." (v) Dina Nath v. CIT [1993] 204 ITR 667 (J K) Observations: "The object of issuing the notice of summons is to intimate the concerns to appear and answer the queries sought to be clarified by any Court or authority. As serious consequences are likely to follow a notice or summons must necessarily be issued and served in the form and manner prescribed by the law. The authority issuing the notice cannot be permitted to substitute its own procedure for the service of the notice. The agent contemplated under order 5 CPC, upon whom a notice can be served for and on behalf of the defendant is such person who has been fully authorized in that behalf in terms of order III, r 6, CPC. Under sub-r (2) of r 6 'Such appointment may be special or general and shall be made by an instrument in writing signed by the principal and such instrument or if the appointment is general, a certified copy thereof shall be filed in court.' A combined reading of order 3, r 6 and order ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... report that assessee was not available - Provision of section 63 r/w Order 5 of CPC not compiled with - Service of notice improper and so also consequent reassessment proceedings." (ix) Madan Lal Agarwal v. CIT [1983] 144 ITR 745 (All.) Observations: "Issuing of a valid notice to the assessee under section 148 within the period specified under section 149 of the Act is a condition precedent to the validity of any assessment to be made against such assessee under section 147. Accordingly where no such notice has been issued or if the notice issued is not valid or the same has not been served on the assessee in accordance with law, it will not be possible to sustain the eventual assessment made under section 147 on the basis of such notice." (x) CIT v. Mintu Kalita [2001] 117 Taxman 388 (Gauhati) Observations: "Service of notice prescribed by section 148 for the purpose of initiating the proceeding for re-assessment is not a mere procedural requirement it is a condition precedent to the initiation of a proceeding for the assessment under section 147. Mere issuance of notice is not sufficient. There was no material to show that the employee appeared in pursuance of notice u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bove named do hereby solemnly affirms and states on oath as under: 1. That the deponent is appellant in ITA No. 151 (Agra) 2002/A.Y. 1988-89; is an old Income-tax assessee, and as such is fully aware of about the proceedings in ITA No. 151 (Agra) 2002 assessment year 1988-89 filed against the assessment order dated 26-3-2001 passed under section 144/148 of the Act. Thus the deponent is capable of executing this affidavit. 2. That the deponent has read the Affidavit dated 23-12-2002 filed by Shri S.H. Rizvi, the Assistant Commissioner of Income-tax, Central Circle, Agra, and have fully understood the contents thereof. 3. This is reply to Para 1 of Affidavit, it is submitted that it is matter of records and needs no comment. 4. That the averment in this Para No. 2 is vague. It is not mentioned as to of which assessment year the appeal was pending with which CIT(A). For the sake of arguments it is submitted that when the affidavit was executed there was no appellate proceedings pending before CIT(A)-I, Agra. 5. That the first contents of part of Para 3 is a matter of records and cannot be commented, and the later part is denied by the deponent for want of knowledge. However, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rder or for any other sufficient cause. For this purpose also, the Tribunal has to records the reasons." (ii) CIT v. Sarat Chandra Bose [1950] 18 ITR 669 (Cal.) Observations: "Reference - Jurisdiction of High Court - Exercise of discretion by Tribunal in refusing to entertain a new point and adduce new evidence not being arbitrary, it could not be directed to state a case on that point - The powers Tribunal tinder rule 29 of the Tribunal Rules, 1946, being strictly limited, the Tribunal did not act arbitrarily in refusing leave to raise new point and to adduce evidence to establish it - Tribunal cannot be directed to state a case." (iv) CIT v. Babulal Nim [1963] 47 ITR 864 (MP) Observations: "Affidavit filed not for the reason that Tribunal found itself unable to decide the appeal on materials before it - Nor assessee prayed for being allowed to file evidence in support of his statement - In these circumstances, there was no justification to rule 29 of ITAT Rules, 1946 - Evidence must be excluded from consideration." (v) CIT v. Rao Raja Hanut Singh [2001] 252 ITR 528 (Raj.) Observations: "Reference - Question of law - Production of additional evidence before Tribu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ble by the Tribunal either on the basis of cross-examination of the deponent or by reference to other material on record leading to the inference that the statement made in the affidavit, cannot be held to be true. The Tribunal arrived at its finding on a consideration of the entire material on record including the affidavits. The fact that, apart from the affidavits filed by the assessee, there was other relevant material on record, was not disputed on behalf of the assessee. If the veracity of statements in the affidavits was according to the Tribunal disproved by the material on record, the finding of the Tribunal cannot be held to be vitiated, because the Tribunal arrived at the finding by not placing reliance on the affidavits." 7.1 The ld. D.R., on the other hand, in addition to supporting the order of the CIT(A), relied upon the decision in the following cases specially pointing out to various observations extracted in relevant order for various pleas considered hereunder:- (i) Since the conduct of assessee shows contempt of law and hence, reluctance to pay tax, so deserves no favour. Reliance was placed on the decision of Hon'ble Supreme Court in McDowell Co. Ltd. v. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... est of the Revenue and in support relied on the decision in the case of CIT v. Rayala Corpn. (P.) Ltd. [1995] 215 ITR 883 (Mad.), specially on the following observations:- "The Tribunal has got to protect, on the one hand, the interest of the assessee in the sense that he is not subjected to any amount of tax in excess of what he is bound to pay, and on the other hand, it has a duty to protect the interests of the Revenue and to see that no one dodged the Revenue and escaped without paying the tax." (ii) Decision in the case of CIT v. Ramnath Goenka [2001] 252 ITR 653 (Mad.), was relied upon to the extent of following observations: "Tribunal entitled to pass such orders as would ensure assessment of the correct tax liability." (iii) Decision in the case of Estate of Late Rangalal Jajodia v. CIT [1971] 79 ITR 505 (SC), was relied on to the extent of following observations:- "The lack of a notice does not amount to the Revenue authority having had no jurisdiction to assess, but that the assessment was defective by reason of notice not having been given to her. An assessment proceeding does not cease to be a proceeding under the Act merely by reason of want of notice. It wil ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... good service and preferred appeal, etc. on the assessment order so served it was held that the Tribunal finding of fact that person served was former agent of the assessee service was justified." (iii) Commercial Motors Finance Ltd. v. Asstt. CIT [2002] 82 ITD 176 (Lucknow):- "Validity of service of notice-assessee having fully acquiesced by its conduct in acknowledging the receipt of notice under section 10 through its employee the service has be deemed to be a proper service." (iv) R.K. Upadhyaya v. Shanabhai P. Patel [1987] 166 ITR 163 (SC), CIT v. Major Tikka Khuswant Singh [1995] 212 ITR 650 (SC), 148 notice-CIT v. Kishore Chand [1989] 180 ITR 355 (Punj. Har.), CIT v. Sheo Kumari Devi [1986] 157 ITR 13 (Pat.) (F.B.):- "148-Notice must be issued within limitation period, service not a prerequisite." (v) Birla Cotton Spg. Wvg. Mills Ltd. v. ITO [1994] 209 ITR 434 (Raj.):- "Having participated in assessment proceedings the petitioners cannot complain the assessment was illegal because of want of notice to it." (vi) CIT v. Bhanji Kanji's Shop [1968] 68 ITR 416 (Guj.):- "Followed Bombay H.C. Judgment in K.C. Tewari Sons v. CIT [1962] 6 ITR 236- procedural irr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 379 (Raj.) and observations thereunder, which are as follows: "Revision - Opportunity of being heard - Power of attorney given contemplated powers relating to assessment and appellate proceedings - After completion of assessment or for that matter after decision in appeal from the same, the assessee could not contemplate any proceedings for revisions under section 263 -Notice was served on the assessee for initiating action under section 263 - Same received back with the postal endorsement "Left without address" - Subsequently notice issued on one RS holding the said power of attorney - RS requested the CIT to grant adjournment and communicate directly with the assessee as RS had no instruction from assessee in this regard - CIT in spite thereof took action under section 263 - Not justified." (iii) With respect to specific authority and specific authorization to receive notice, the counsel submitted that for assuming jurisdiction under section 148 service of notice under section 148 of the Act or provisions of Civil Procedure Code and for this purpose relied upon the decision in the cases of ITO v. Mukesh Kumar [2002] 123 Taxman 55 (Punj. Har.), Dina Nath v. CIT [1993] 204 IT ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... considered to be equivalent to or a substitute for the service of the notice on the assessee. The partners of the assessee firm or its manager may have knowledge about the issuance of a notice but that does not mean that the service had been affected on them." (iv) With respect to mandatory requirement of service of notice under section 148, the ld. Counsel relied upon the following decisions and observations made thereunder: (a) Y. Narayana Chetty v. ITO [1959] 35 ITR 388 (SC) Observations: "The service of the requisite notice on the assessee is a condition precedent to the validity of any reassessment made under section 34; and if a valid notice is not issued as required, proceedings taken by the ITO in pursuance of invalid notice and consequent order of reassessment passed by him would be void and inoperative. The notice prescribed by section 34 cannot be regarded as a mere procedural requirement; it is only if the said notice is served on the assessee as required then the ITO 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 proceedings taken by ITO without a notice or in pur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e are findings of fact and hence we cannot in advisory jurisdiction that we may also refer to a decision of this Court in the case of Addl CIT Shri Prem Kumar Rastogi [1980] 124 ITR 381, where it has been held that notice on an unauthorized person is not valid." (v) With respect to D.R.'s claim that the matter in question was covered by the order of the ITAT, Agra in the case of Chandra Bhan Bansal v. Dy. CIT [2001] 79 ITD 639, the ld. counsel for the appellant, relying upon the earlier submissions, further relied on the decision of Gujarat High Court in the case of Prakash Amichand Shah v. State of Gujarat AIR 1986 SC 468 and the relevant observations are as under: "A decision often takes it colour from the question involved in the case in which it is rendered. The scope and authority of a precedent should never be extended unnecessarily beyond the needs of a given situation." (vi) In view of the above, the counsel submitted that this decision is not applicable to the assessee's case. 9. We have considered the rival submissions, facts and circumstances of the case and various decisions, referred to and relied upon by both the parties. 9.1 After having considered the tota ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nspection of the court. Explanation 1.- Where a document is executed in several parts, each part is primary evidence of the document; Where a document is executed in counterpart, each counterpart being executed by one or some of the parties only, each counter part is primary evidence as against the parties executing it. Explanation 2.- Where a number of documents are all made by one uniform process, as in the case of printing, lithography or photography, each is primary evidence of the contents of the rest; but, where they are all copies of a common original, they are not primary evidence of the contents of the original. Section 63: Secondary evidence.- Secondary evidence means and includes- (1) Certified copies given under the provisions hereinafter contained; (2) Copies made from the original by mechanical processes which in themselves ensure the accuracy of the copy, and copies compared with such copies; (3) Copies made from or compared with the original; (4) Counterparts of the documents as against the parties who did not execute them; (5) Oral accounts of the contents of a document given by some person who has himself seen it. Section 64: Proof of documents ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nition of Primary evidence of the document and if document is executed in counter parts, then each counter part is primary evidence as against the parties executing it. Explanation Nos. 1 and 2 to this section further elaborate on the subject as to which document is primary evidence. (ii) Section 63 defines the secondary evidence and according to it, the secondary evidence is of five kinds; (i) certified copy given in the provisions contained in the Evidence Act; (ii) Copies made from the original by Mechanical process, which in themselves ensure the accuracy of copies and copies compared with such copies; (iii) copies made from or compared with the original; (iv) counter parts of the documents as against parties, who did not execute them; and (v) oral accounts of the contents of the documents given by some person, who has himself seen it. 9.5 The provisions of section 64, on the other hand, speaks of proof of primary evidence and according to these provisions, to establish the proof of document by considering the same as primary evidence^ the documents must be proved except in the case mentioned in other provisions of the Act. 9.6 So far as section 65 is concerned, it prescr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essing Officer sent the assessee's assessment records to the CIT(A)- meaning thereby that if at all the document was on record, the same was destroyed or lost or stolen when the records were in the custody of the revenue and if that was the case, then the offence fell within the category of "Criminal Offence". Since, it is settled law that if a Government Authority comes to know of commission of a criminal offence, he or she is duly bound to report the same to the police, in the present case, the CIT(A), who just after the examination of assessee's records should have referred the matter to the police or to the Chief Commissioner of Income-tax for taking necessary action in this respect, but it is also an admitted fact (The ld. D.R. admitted at the time of hearing of this appeal) that neither the CIT(A) nor the CCIT nor the CIT nor the concerned Assessing Officer had either lodged a complaint with the police or had made any departmental enquiry so as to fix the responsibility of the person, from whose custody, the relevant document got destroyed or lost or stolen. In view of the above admitted fact and circumstances, we are of the opinion that there was no power of attorney execute ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rned, the affidavit under reference is sought to be admitted on the basis of letter dated 14-1-2003 written by the ld. Sr. D.R. without enclosing or even mentioning the directions of the Commissioner of Income-tax. Since the request for admission of the affidavit has been made without there being any direction of the CIT(A) to do so, we are of the opinion that under the provisions of section 253(3), this request of the revenue cannot be acceded to. (v) Similarly, the affidavit executed by Shri S.H. Rizvi, which speaks of his being acting as ACIT 4(1), Agra during the financial year 2001-02 goes to show that in December, 2002, he was not the Assessing Officer of the assessee and therefore, had no right to file an affidavit without there being any directions of the CIT to do so. 11. In view of the above facts and circumstances of the case, we are of the opinion that the revenue is not entitled to establish its claim by way of secondary evidence and therefore, request of the ld. Sr. D.R. dated 14-1-2003 for the admission of affidavit of Mr. S.H. Rizvi, cannot be acceded to and consequently, the affidavit in question is not admitted. 12.1 Coming to the merits of the case, we are ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the case of Ramesh Khosla v. ITO [1985] 154 ITR 556 (Punj. Har.) for the proposition that "a mere averment by the assessee that the notice has not been received by him is not sufficient to rebut such presumption" is not applicable to the present case because in the present case, the Revenue has admitted that notice under section 148 of the Act for the assessment year 1988-89 was not served on the assessee i.e., Shri Rajeev Kumar Doneria or on his Authorized Representative; (iii) Similarly, the reliance of the ld. Sr. D.R. on the decision in the case of Azad Crown Works v. CST [1976] 37 STC 570 (Bom.) is also of no use for the reason stated in para (i) above. (iv) The reliance by the ld. Sr. D.R. on the decision in the case of Commercial Motors Finance Ltd. v. Asstt. CIT [2002] 82 ITD 176 (Lucknow) is also of no help to the revenue because in the present case, the assessee did not acquiesce the mandatory requirement of service of notice under section 148. (v) The decisions in the cases of R.K. Upadhyaya v. Shanabhai P. Patel [1987] 166 ITR 163 (SC), CIT v. Major Tikka Khuswant Singh [1995] 212 ITR 650 (SC) and CIT v. Sheo Kumari Devi [1986] 157 ITR 13 (Pat.) (FB) were rela ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... with respect to mandatory requirement of service of notice under section 148, we with respect, are of the opinion that this decision is also of no help to the Revenue. (ix)(i) Coming to the reliance on the decision in the case of McDowell Co. Ltd. v. CTO [1985] 154 ITR 148 (SC), we are again of the opinion that for the discussion, made hereunder, this decision is also of no help to the revenue:- (ix)(i)(a) The facts in the case of McDowell Co. Ltd were that the assessee was manufacturing and selling Indian liquor on wholesale and retail basis at Hyderabad. The manufacturing and sales activities were regularized by Andhra Pradesh Excise Act, 1968, Andhra Pradesh Distillery Rules, Andhra Pradesh Indian Liquor (Storage in Bond) Rules and Andhra Pradesh Foreign Liquor and Indian Liquor Rules, all made under the Andhra Pradesh Excise Act. (b) The excise duty was leviable on manufacturing of liquor and manufacturer could not remove the liquor so manufactured from the distillery without paying excise duty on such liquor. (c) The buyers of assessee's liquor were getting distillery passes for release of liquor after making payment of excise duty, which was not reflected in asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se in the Andhra Pradesh or in other States for sale of spirit by wholesale or retail and when the spirit is to be transported or exported beyond the limits of the district in which the distillery is situated to a person holding a permit signed by the Excise Superintendent of the District of destination or an officer of that district authorized in this behalf. (b) A person hold a permit signed by the Officer of any other State referred to in clause (a) above for the export of such spirit from the Andhra Pradesh into that that. (c) A person holding a permit signed by an Officer duly authorized in that behalf for export of such spirit to an Union Territory. (d) A person hold a permit from the Excise Superintendent of any district in the Andhra Pradesh or from an Officer referred to in clause (a) above of any other State to transport or export rectified spirits or wine, to such district or State." (ix)(ii) The Sales-tax Authorities on the basis of rules so amended issued notice to the assessee for inclusion of Excise Duty since paid by the purchasers in its turnover. (ix)(iii) The assessee went before the Hon'ble High Court for quashing of the notice by way of writ but the H ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the provision should be construed literally or liberally, nor whether the transaction is not unreal and not prohibited by the State, but whether the transaction is a device to avoid tax, and whether the transaction is such that the judicial process may accord its approval to it. A hint of this approach is to be found in the judgment of Desai, J. in Wood-polymer Ltd., In re and Bengal Hotels Limited, In re (1977) 47 Comp. Cas. 597 (Guj.), where the learned judge refused to accord sanction to the amalgamation of companies as it would lead to avoidance of tax. It is neither fair nor desirable to expect the Legislature to intervene and take care of every device and scheme to avoid taxation. It is up to the court to take stock to determine the nature of the new and sophisticated legal devices to avoid tax and consider whether the situation created by the devices could be related to the existing legislation with the aid of "emerging" techniques of interpretation as was done in Ramsay, Burma Oil and Dawson, to expose the devices for what they really are and to refuse to give judicial benediction." 12.2 After having carefully considered the decision of Hon'ble Supreme Court in the cas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al cannot, and should not, while considering the subject's (assessee's) objection that notice under section 148 was not validly served as per law, go for researching or digging out the intention of the subject (assessee) while availing statutory right to challenge the action of a quasi-judicial authority. Whether the objection raised by subject (assessee) results in "avoidance of tax" or not, is not at all relevant. 12.4 In view of the above discussion, we are of the opinion that the reliance of the ld. Sr. D.R. on the decision in the case of McDowell Co. Ltd. is also of no help. 13. Similarly, the reliance of the ld. Sr. D.R. on the decision in the case of Simplex Enterprises v. Union of India [2002] 257 ITR 689 (Bom.), the decision of Hon'ble Allahabad High Court, in the case of Dr. O.P. Agarwal v. CIT [2002] 123 Taxman 539 the decision in the case of CIT v. Rayala Corpn. (P.) Ltd. [1995] 215 ITR 883 (Mad.), decision in the case of Estate of Late Rangalal Jajodia v. CIT [1971] 79 ITR 505 (SC), decision in the case of A.K.M. Govindaswamy Chettiar v. ITO [2000] 244 ITR 559 (Mad.), decision in the case of Himmatram v. CIT 5 ITC 133, decision in the case of Rex v. Ismail 1 ITC ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the case of Chandra Bhan Bansal, we are of the opinion that this decision was rightly given by the Hon'ble ITAT and has no application to the facts and circumstances of the present case. So far as the observations of the CIT(A) that ITAT had considered the decision of Allahabad High Court in the case of Madan Lal Agarwal, we are unable to approve the observations because as already discussed, the Hon'ble ITAT has, though of course, mentioned this decision as having been relied upon by the assessee, but has nowhere discussed the applicability of this decision, meaning thereby that the Hon'ble Tribunal in the case of Chandra Bhan Bansal, having not discussed or distinguished the decision in the case of Madan Lal Agarwal, cannot be said that the decision of Allahabad High Court, which is binding, in the case of Madan Lal Agarwal is not applicable to the case of the assessee presently in appeal before us. 17. Coming to the assessee's reliance on various decisions, including the decision of Hon'ble Allahabad High Court in the cases of Madan Lal Agarwal v. CIT [1983] 144 ITR 745, Addl. CIT v. Prem Kumar Rastogi [1980] 124 ITR 381, CIT v. Jagannath Pd. Nankoo Pd. [1996] 222 ITR 58 (Al ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nature, the assessee's case is fully covered in his favour by this decision. (iii) Decision in the case of CIT v. Jagannath Pd Nankoo Pd. [1996] 222 ITR 58 (All.): (a) In this case, the Hon'ble High Court while discussing the validity of service of notice under section 148 of the Act, has held as under:- "We have heard Shri Shekhar Srivastava, for the Department, and Shri Vikram Gulati, for the assessee. The relevant assessment year is 1962-63 in which the income assessed by the Income-tax Officer was Rs. 83,700 but it was ultimately reduced to Rs. 54,111 by the Tribunal. Proceedings under section 148 were initiated and a reassessment order was passed and penalty imposed. The appeal of the assessee before the Appellate Assistant Commissioner failed, but in further appeal, the Tribunal held that there was no valid notice under section 148 served on the assessee and the condition precedent for issuing notice under section 142(1) was lacking. These are findings of fact and hence, we cannot in advisory jurisdiction that we may also refer to a decision of this Court in the case of Addl CIT v. Shri Prem Kumar Rastogi [1980] 124 ITR 381, where it has been held that notice on an una ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at a valid service of a valid notice under section 148 of the Act, is not a mere procedural requirement, but is a condition precedent to the validity of any assessment, reassessment or recomputation to be made under section 147 of the Act and it is so because of use of words "shall serve on the assessee" and also the requirement to the effect "before making the assessment, reassessment or recomputation under section 147" in the section itself-meaning thereby that if no notice under section 148 is issued or if the notice so issued is shown to be invalid, or the service of notice so issued, is shown to be invalid, the Assessing Officer cannot proceed with the subsequent proceedings for making assessment, reassessment or recomputation under section 147 of the Act. In other words, if the Assessing Officer, in such circumstances, proceeds with the subsequent proceedings, the same will be illegal and void. This proposition of law has been held by the Hon'ble Supreme Court in the cases of Y. Narayana Chetty v. ITO [1959] 35 ITR 388, 392 (SC), CIT v. Thayaballi Mulla Jeevaji Kapasi [l967] 66 ITR 147 (SC), in the case of CIT v. Kurban Hussain Ibrahimji Mithiborwala [1971] 82 ITR 821 (SC), M ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
