TaxTMI 
TaxTMI 
2005 (12) TMI 230
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....nce the assessment order was not put in transit for service within limitation is illegal and barred by limitation is liable to be struck down. 5. That alleged service of notices under ss. 158BC and 142(1) are in contravention of provisions of s. 282(1) and R. 19, O. 5 of CPC does not give jurisdiction to the AO to complete the assessment. The order is thus without jurisdiction should be cancelled. 6. That the learned CIT(A) erred in holding the service of notice as proper without making enquiry as requested and confirming the assessment valid. The assessment should have been cancelled. 2. The brief facts of the case are that the assessee was searched by the Police authorities at Arhora Police Station, District Mirzapur, and a sum of Rs. 3.64 lacs was taken possession of by the Police, while he was travelling in the car. This amount was requisitioned under s. 132A on 1st March, 1997 by Dy. Director of IT, Varanasi. Notice under s. 158BC dt. 12th Feb., 1999, was issued asking the assessee to file the return for the block period ending on 1st March, 1999, within 15 days. The AO mentioned that the notice under s. 158BC was returned by the notice-server that the assessee refused to....
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.... aggrieved went in appeal before the CIT(A). Before the CIT(A) it was stated that the AO has mentioned in the assessment order that the notice under s. 158BC, dt. 12th Feb., 1999 was issued for the block period ending 1st March, 1999. This notice is apparently illegal and bad in law as the AO had the power to issue notice only for the income upto 28th Feb., 1997. Therefore, the notice dt. 12th Feb., 1999 is illegal. It was contended that no notice was presented to the assessee by the notice-server. No notice was refused by the assessee nor any notice has been served by the affixture at the address of the assessee by the Inspector of income-tax. The averments made in the assessment order in this regard are false. The assessee has not appointed any advocate, therefore, the service of notice on the advocate, Shri P.D. Shrivastava, is illegal unauthorised and unwarranted. In fact the AO has not served the notice under s. 158BC or 142(1), therefore, he cannot assume the jurisdiction and assessment was barred by limitation. The AO failed to appreciate the returns filed by the assessee for the asst. yrs. 1993-94 to 1997-98 and the return for the asst. yrs. 1996-97 and 1997-98 were filed i....
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....ct of block assessment to any advocates in Satna. The IT Act s. 282(1) provides the procedure for service of notice which is based on the rules of service as provided in the CPC. As per r. 19, O. 5 "for service of summons of the Court" this also provides that apart from service through notice-server a notice should also be sent by registered post AD. This is as per amendment of the CPC in 1976 effective from 1st Feb., 1977. In this case no such notice at all has been sent in time by "registered post AD", therefore, there is a clear violation of the mandate of s. 282(1). There is no service of any notice as provided in the proviso of s. 144 by affording an opportunity to the assessee by giving a notice calling upon the assessee to show cause on a date and time to be specified that why assessment should not be made ex parte on the basis of his judgment. No such notice was also served on the assessee. This also renders the assessment framed under s. 144 as illegal. In view of the above facts, it is submitted that since the AO has framed the assessment in violation of principle of natural justice and without serving any notice and without allowing hearing to the assessee is illegal and....
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....e, it is violation of the provision contained in CPC. (c) the assessee has filed an affidavit before the CIT(A) confirming the fact that no notice was presented for service to the assessee nor any notice was served by affixture by IT Department as alleged. There is no counter-affidavit either called by CIT(A) or submitted by any authority to controvert the assessee's claim made on affidavit. (d) the CIT(A) had summoned the remand report from the learned AO on assessee's written submission. The AO in his remand report dt. 17th Oct., 2000, in last para on page No.1 had admitted that Shri Sanjay Kumar Mishra along with Shri P.D. Shrivastava appeared before him. This clearly establishes that the assessee was not avoiding the learned AO. Why the learned AO could not serve a notice under s. 158BC immediately on the assessee. In fact it was so done but the date was 31st March, 1999. The assessee has enclosed at page No.6 of the paper book the copy of said notice served on the assessee on 31st March, 1999. The original copy of this notice was later on retrieved by the AO from the possession of the assessee's counsel Shri P.D. Srivastava. The learned AO later, realised that ....
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.... liable to be annulled. That in the instant case the assessment order has been purported to be made on 15th March, 1999. Here also the record has been fabricated. If the notice-server's notice is perused it may be seen that he has recorded noting on 3rd April, 1999 then on 4th April, 1999 and again below that on 3rd April, 1999. Such chronology of date is not possible which shows manipulation on the part of the notice-server and the Department. The West Bengal Taxation Tribunal in the case of Mafatlal Industries Ltd. & Anr. vs. CTO 101 STC 461 has held that if the assessment order is not put into motion for service before the expiry of limitation so that it goes out of control of the officer so much so that he cannot make any change in the order. If that is not done then it should be treated that the assessment is barred by limitation. Similar view is taken by the Full Bench of Andhra Pradesh High Court in the case of Ushodaya Enterprises Ltd. vs. CCT 111 STC 711 (AP)(FB). In this case it is held that delay of 8 months for service remains unexplained. It must be presumed that order is barred by limitation. In the case of State of A.P. vs. M. Ramakishtaiah & Co. 93 STC 406 (SC) ....
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.... in s. 158B(a) of the IT Act, 1961. The return should be in the prescribed Form 2B and be delivered in this office within 45 days of service of the notice, duly verified and signed in accordance with the provisions of s. 140 of the IT Act, 1961. (Shyam Lal) Asstt. CIT, Circle Satna" Copy of which is available on p. 6 of the paper book. While the assessment order has been passed on 31st March, 1999. We were surprised to note how the assessment order can be passed on 31st March, 1999 when the notice was issued to the assessee on 30th March, 1999 asking him to file the return in Form 213 within 45 days of the service of the notice. To verify this fact we have time and again asked the learned Departmental Representative to produce the original record. The assessee has alleged that when the AO realised that the notice dt. 30th March, 1999 was wrongly issued the AO created the evidence of issuing notice dt. 12th Feb., 1999 getting it served on the assessee through affixture on 15th Feb., 1999. We have asked the learned Departmental Representative to produce the evidence for the service of order on the assessee. The learned Departmental Representative could not be able to produce thi....
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....t the notice has to be served on the assessee by post or as if it were a summons issued by a Court under CPC. If the whereabouts is not traceable, then notice has to be served by affixture as per O. V of 1908 of CPC. As per order of the AO, the assessee did not receive the notice through notice-server, therefore, he made service through affixture by his Inspector/notice-server. 11. Order 5, 1908, CPC lays down the following rules for the service on, the defendant- "Rule 12. Service to be on defendant in person when practicable, or on his agent-Whenever it is practicable, service shall be made on the defendant in person, unless he has an agent empowered to accept service, in which case service on such agent shall be sufficient. Rule 13. Service on agent by whom defendant earned on business- (1) In a suit relating to any business or work against a person who does not reside within the local limits of the jurisdiction of the Court from which the summons is issued, service on any manager or agent, who, at the time of service, personally carried on such business or work for such person within such limits, shall be deemed good service. For the purpose of this rule the mater of a....
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....ving officer on oath, or cause him to be so examined by another Court, touching his proceedings, and may make such further inquiry in the matter as it thinks fit; and shall either declare that the summons has been duly served or other such service as it thinks fit. Rule 19A. Simultaneous issue of summons for service by post in addition to personal service-(1) The Court shall in addition to, and simultaneously with the issue of summons for service in the manner provided in rr. 9 to 19 (both inclusive), also direct the summons to be served by registered post, AD, addressed to the defendant, or his agent empowered to accept the service, at the place where the defendant, or his agent, actually and voluntarily resides or carries on business or personally works for gain: Provided that nothing in this sub-rule shall require the Court to issue a summons for service by registered post, where, in the circumstances of the case, the Court considers it unnecessary. (2) When an acknowledgement purporting to be signed by the defendant or his agent is received by the Court or the postal article containing the summons is received back by the Court with an endorsement purporting to have been m....
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....ture. Although names of two witnesses are given but their fathers' name and their postal address has not been given. The service has to be effected first at the residence of the assessee but the report does not state that the Inspector served the notice at the residence of the assessee. Report only states that during the visit of the Inspector the assessee was out of station and, therefore, the notice was served by affixture at the business premises of the assessee. The assessee has alleged that such a report has been prepared in the office of the AO and no such notice was served by affixture and for that the assessee has asked for the cross-examination of the Inspector and the witnesses and also the statement of notice-server to present the correct fact. The assessee has also submitted the affidavit confirming the fact that no notice was served either through notice-server or by affixture but no opportunity was given to the assessee. In our opinion this is the settled law that the affidavit of the assessee cannot be rejected without cross-examination of the person who has given the affidavit in view of the decision of the Hon'ble apex Court in the case of Mehta Parikh & Co....
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....Delhi High Court in the case of R.L. Narang vs. CIT (1982) 136 ITR 108 (Del), has held asunder: "The above two modes of serve are alternative and it is the option of the Department to adopt either of the two. As regards the former the provisions of s. 27 of the General Clauses Act, 1897, become relevant. Sec. 27 of the General Clauses Act, provides that where any Central Act or Regulation authorities or requires any document to be served by post, then unless a different intention is drawn, the serve shall be deemed to be effected properly if a correctly addressed and stamped letter containing the document is dispatched by registered post; and unless the contrary is proved, such a letters would be deemed to have been delivered in the ordinary course of post. The IT Act is a Central Act and s. 282 provides for service by post. As such the provisions of s. 27 of the General Clauses Act, 1897 are applicable. From perusing s. 27 of the General Clauses Act, it is apparent that in order to presume service having been effected, the document or letter should be sent by registered post. A notice sent under certificate of posting and not by registered post would not amount to proper servi....
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....o receive the notice. In case it is refused either by the addressee or by his authorised agent, it will be presumed that the, notice has been duly served. According to the proviso below sub-r. (2), if the notice is properly addressed, prepaid and duly sent by registered post with AD, a declaration by the postal employee that the notice was refused shall be presumed even through the acknowledgement slip has been lost or mislaid or for any other reason has not been received by the Court within 30 days from the date of issue of the notice." 19. Hon'ble Calcutta High Court in the case of Keshab Narayan Banerjee vs. CIT (1999) 156 CTR (Cal) 109: (1998) 101 Taxman 512 (Cal) has held that: "the minimum that was required to (be) shown for establishing proper service by registered post was an endorsement that an attempt was made to serve the assessee and that either he was not available at his residence or that there was no one willing to accept the service on his behalf." Tribunal, Jaipur Bench in the case of Prakash Chand Lunia vs. ITO (1996) 54 TTJ (Jp) 383 : (1996) 56 ITD 1 (Jp) has held that: "Sec. 27 of the General Clauses Act, 1897, however lays down that if a letter has be....