TaxTMI 
TaxTMI 
2013 (12) TMI 16
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....re that the assessee company is engaged in the business of horse breeding and allied activities. The original income tax return for A.Y. 2003-04 was filed on 02.12.2003 declaring taxable income of Rs. 11,54,293/-. The return was processed u/s 143(1) of the IT Act on 19.12.2003. Subsequently, after the receipt of information from DIT (Inv.), New Delhi, a notice u/s 148 of the Act was issued on 22-03-2005 and as per the AO, the notice was served on the assessee on 24.03.2005. In compliance of the said notice, a letter dated nil was received in the Assessing Officer's office on 18.10.2005, stating therein that the notice u/s 148 of the Act dated 22.03.2005, served on 24.03.2005, had not been received by the company and the reopening of assessment was, therefore, bad in law. It was further submitted that the return filed in respect of assessment year 2003-04 u/s 139 (1) of the Act may be treated as filed in pursuance of the notice u/s 148 of the Act. In response to the above letter, a letter dated 28.10.2005 was issued by the Assessing Officer along with notices u/ss 142 (1) and 143 (2) of the Act, stating therein, that the notice u/s 148 had been duly served on 24.03.2005 by the proce....
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.... was during the later stage of the assessment proceedings, the assessee intimated that its mailing address has been changed. Despite that fact too, the registered office at Vasant Vihar was and still remains to be the residence of the Directors. The assessee has not till today produced any evidence regarding information given to the other authority other than this department of change of address. The contention raised is bereft of any merit and hence rejected. 7. By virtue of the impugned order, the Ld. CIT (A) held that there was no valid service of notice u/s 148 of the Act on the assessee and that the re-assessment proceedings were void ab-initio liable to be quashed. He made the following observations (relevant portions):- "6.1 The written as well oral submission(s) of the appellant, and the findings of the A.O. in the re-assessment order & in the remand report have been carefully considered. I have also considered the case laws relied upon by the AO and the appellant. It is not disputed that the notice under section 148 has not been served on the assessee-company or on its authorized persons. There is also nothing on record to suggest that the notice was served on the as....
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....is Act may be served on the person therein named either by post or as if it were a summons issued by a court under the Code of Civil Procedure, 1908 (5 of l908)." A bare reading of this section clearly indicates that the notice under the Act can be served on the person either by post or if not by post then in the same manner in which summons issued by the court under or the Code of Civil Procedure, 1908 are to be served. As the service of s through notice server of the Department and not by post, the procedure contemplated by the Code of Civil Procedure under Order V for service of been followed. Order V and III of Code of Civil Procedure are relevant in this regard and we reproduce relevant rules from the said order in order to decide been effected in accordance with law or not. Rule 6 of Order III is relevant to find out as to who may be appointed as agents to accept service of processes and how. That provision is as follows: "(1) Besides the recognized agents described in rule 2 any person residing within the jurisdiction of the Court may be appointed an agent to accept service of process. (2) Such appointment may be special or general and shall be made by an instrument....
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....ule 6 of Order III reproduced above, it is evident that written, authority to receive notice is necessary either by way of special or general power given in this regard. The person should have been specifically empowered to receive notice, From the analysis of the Rules reproduced above it is evident that the mandate of Legislature is that as far as possible the service of summons should be effected on the person named in the notice and, if it is not possible, then same should be effected on the person who is duly vested with the authority to receive such notice by the person named in the summon. The Legislature has further provided that in order to ensure proper service of notice acknowledgement of the person served should be obtained and person serving should also record necessary details so as to avoid any dispute in this regard. 6.7 It is settled law that it is the duty of the revenue to establish that the service of an order or a notice was made on the assessee himself or on somebody duly authorized by him in that behalf. When the assessee pleads that he has not been properly served with any notice, it is for the Department to place the relevant material to substantiate the....
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....uthorized by him to accept notices on his behalf was not valid and, therefore, the assessee would not be assessed under section 147 in pursuance of such service of notice 6.8 Thus, in order that there should be a valid service, the person on whom service is effected must have valid authorization given to him in writing to receive such notice and mere implied authority will not be enough. Alternatively, if for argument sake, it is to be held that implied authority is sufficient for service of notice, then that too is not present in the present case. It is also not the case where the assessee has avoided the service of notice on her. Even in the situation where the assessee would have avoided the service of notice, as per Order V, Rule 20 of code of Civil Procedure, it is the duty of the department to discharge its onus showing that the authority concerned has reason to believe that the assessee was keeping out of the for the purpose of avoiding service or that otherwise there were other good reasons to come to the conclusion that the notice could not be served in the ordinary way. 6.9 The ratio of the decisions cited above had also been consistent that acquiescence is not goin....
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....hat there was no valid service of notice u/s 148 of the Act on the assessee. It has been contended that the Ld. CIT (A) has failed to appreciate the observations made by the Assessing Officer to the effect that: "2. Notice u/s 148:- The assessee is harping on non-receipt fo the Notice u/s 148. The fact has already been discussed while passing speaking order in regard to the objections raised to issue of notice u/s 148. The reply simply is an attempt to deviate and to avoid the real issue of investment made over and above the disclosed amount declared in the books of accounts of purchase of the imported horses. The repeated assertion simply proves the facts that assessee do not want to come clean on the ground of reopening of the assessment that the value of the 'China visit' was grossly under stated for the reason of paying less custom duty. The notice u/s 148 dated 22.03.2005 was duly served on the address of the company. It was during the later stage of the assessment proceedings, the assessee intimated that its mailing address has been changed. Despite that fact too, the registered office at Vasant Vihar was and still remains to be the residence of the Directors. The assessee....
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.... the material on record. As per the Assessing Officer, the notice dated 22.03.2005, issued u/s 148 of the Act, was served on the assessee on 23.04.2005. The assessee has, all through, disputed such alleged service of notice. In the reply dated 18.10.2005 (APB 59), the assessee submitted as follows:- "2. It is humbly submitted that the notice u/s 148 of the Act dated 22.03.05 referred to by you and purportedly served on 24.03.05 has not been received by the company till date and the reopening of assessment is therefore bad in law." The Assessing Officer, in response to the said reply by the assessee, stated, vide letter dated 28.10.2005 (APB 60), that "as per our record, the notice u/s 148 dated 22.03.2005 was duly served on 24.03.2005 by the process server on the address of the company B-7/8, Vasant Vihar, New Delhi and was duly acknowledged." 12. Vide letter dated 02.12.2005 (APB 63-69), the assessee again objected to the non-service of the notice u/s 148 of the Act. The Assessing Officer, vide letter dated 05.01.2006, again rejected the assessee's objection regarding non-service of notice u/s 148 of the Act, stating as follows:- "13. The assessee has alleged that the ....
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....med the AO that its office had been shifted from D- 716, Vasant Vihar, New Delhi to Khasra No. 22/2/21A, Palam Pur, Sahalpur, Bijwasan, New Delhi. Thus, the notice u/s 148 said to have been issued on 22.03.2005 at appellant's address at D-716, Vasant Vihar, New Delhi was not served on the appellant company. The appellant company came to know about the issue of notice only when it received subsequent notice-cum-questionnaire u/s 142(1) dated 05.09.2005 served at appellant's new office address at Khasra No. 2212121A, Palam Vihar, Shalapur, Bijwasan, New Delhi. In response to this notice, the appellant company vide its letter dated 18.10.2005 informed the AO about non-receipt of notice u/s 148 and requested him to supply the reasons recorded for issue of said notice u/s 148. The Assessing Officer vide letter dated 28.10.2005 supplied the reasons as well as copy of the notice u/s 148 dated 22.03.2005 bearing address of the company as D-7/6, Vasant Mar, New Delhi. The name of the person to which the notice was served cannot be deciphered from the notice. Vide letter dated 02.12.2005, the appellant company strongly objected to the issue of notice u/s 148 (copy available at page 16-....
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....'HUF) (2008) 2 DTR (Del) 108, the Hon'ble Delhi High Court held that where the name of the recipient of the notice is illegible and not decipherable, service cannot be said to have been effected. The appellant company relies upon the following decisions for the proposition that proper service of notice u/s 148 is mandatory for assuming valid jurisdiction to re-assess the escaped income i) CITv. Vardhman Estate P. Ltd. 287 ITR 368 (Del) ii,) CIT v. Bhan Textiles P. Ltd. 287 ITR 370 (Del) 'iii CIT v. Lunar Diamonds Ltd. 281 ITR 1 (Del) (iv) Venkat Naicken Trust v. ITRO 242 ITR 141 (Mad) (v) Sudev Industries Ltd. v. ITO 98 TTJ 97 (Del) (vi) Hind Book House v. ITO 92 lTD 415 (Del) (vii) Dulli Chand Laxmi Narain v. AC'IT 89 lTD 426 (Del) (viii) Dina Nath v. CIT 204 ITR 667 (J&K) (ix) Jayanthi Talkies Distributors v. CIT 120 ITR 576 (Mad)" 16. By virtue of the impugned order, the Ld. CIT (A), elaborately discussing the matter, held that there was no valid service of notice u/s 148 of the Act on the assessee and the re-assessment proceedings, being void ab-initio, were liable to be quashed. 17. The issue is as to whether the said action of the Ld. CIT (....
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....vice of notice is the sine qua non for a proceedings u/s 147 of the Act to get underway. Section 148 (1) of the Act provides that the Assessing Officer shall serve a notice on the assessee, as required therein. As to the procedure for service of such notice, Section 282 of the Act is the governing Section and it provides that such a notice may be served either by post, or as if it was a summons issued by a court under the Code of Civil Procedure, 1908. In the present case, evidently, the service was as a summons and not by post. Therefore, the service is governed by the relevant provisions of the CPC, i.e., Order V thereof. Now, as per Rule 12 of Order V, CPC, service of a summons, wherever practicable, shall be made on the defendant in person, unless he has an agent empowered to accept such service. As per Rule 16, the process server shall require the signature of the person to whom the copy of the summons is delivered. According to Rule 18, the process server shall endorse or annex, on or to the original summons, a return stating the time when and the manner in which the summons was served, and the name and address of the person identifying the person served and witnessing the de....