TaxTMI 
TaxTMI 
TaxTMI 
2016 (12) TMI 1410
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....,929/- 2.2 Aggrieved by the order of assessment dated 29.11.2007 for A.Y. 2005- 06, the assessee preferred an appeal before the CIT(A)-22, Mumbai challenging the aforesaid three disallowances (supra), non allowance of carry forward of business loss of earlier years and the existence of/and the validity of the notice issued under section 143(2) of the Act for A.Y. 2005- 06. The learned CIT(A) disposed off the assessee's appeal allowing the assessee partial relief. 3. Aggrieved by the order of the CIT(A)-22, Mumbai dated 17.07.2010 for A.Y. 2005-06, the assessee has preferred this appeal and raised the following grounds: - "I. VALIDITY OF THE NOTICE UNDER SECTION 143(2) OF THE ACT AND THE ASSESSMENT THEREUNDER: 1.1 On the facts and in the circumstances of the case and in law, the learned Commissioner of Income Tax (Appeals) [CIT (A)] erred in upholding the assessment for the above year framed by the learned Assessing Officer without complying with the relevant provisions of the law. 1.2 It is respectfully submitted that no notice under Section 143(2) of the Act was served on the Appellant within the time limits prescribed under Section 143(2) of the Act. Accordingly, the l....
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....rcumstances of the case and in law, the learned CIT (A) erred in holding that losses of the earlier years cannot be allowed to be carried forward as there are no business activities and the losses are not from business. 4.2 The learned CIT(A) and the Assessing Officer failed to appreciate that the issue of allowing carry forward of business loss had already been settled in earlier years and having complied with the relevant provisions of the law, the Appellant is eligible to carry forward and set off of such losses. 4.3 It is submitted that the learned CIT(A) and the Assessing Officer exceeded his jurisdiction while dwelling upon the issue." 4. Ground No, I (1.1 to 1.2) - Validity of Notice under section 143(2) of the Act and the assessment thereunder 4.1.1 In this ground, the assessee assails the impugned order of the learned CIT(A) in upholding the validity of the assessment for A.Y. 2005-06 framed by the Assessing Officer (AO) in violation of the relevant provisions of law. It is further contended therein that no notice under section 143(2) of the Act was served on the assessee within the time limit prescribed under section 143(2) of the Act. Therefore, since the AO had....
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....was allegedly served by affixture by the Inspector of Income Tax on 31.10.2006 at Nathani Road, Vidyavihar (W), Mumbai 400086, as given in the return of income for A.Y. 2005-06. It is submitted that this place is the assessee's old Registered Office, the shifting of which was intimated to the AO vide letter dated 19.06.2006. In this regard, it was pointed out that the order of assessment for A.Y. 2004-05 dated 24.10.2006 was served on the assessee on 06.12.2006 at the new address of its Registered Officer at Bajaj Bhawan, Nariman Point, Mumbai; indicating that the intimation for charge of address was available on the records of the Department. 4.1.4 Adverting to the AO's remand report, it was contended that it appears that the Inspector who furnished the report of service of notice by affixture to the AO, had visited the old office of the assessee at Vidyavihar from which it has shifted earlier for this purpose. As submitted earlier, the assessee had discontinued its manufacturing business long back and commenced real estate business years ago and in consequence of a development agreement entered into with Gamon Neelkanth Realty Corporation, the said old office land at Vidyavihar ....
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....d that the alleged notice under section 143(2) of the Act dated 23.10.2006 has been allegedly served at the previous Registered Office of the assessee instead of the new Registered Office, the address of which was intimated and received by the Revenue office on 19.07.2006 (copy at pg. 19 & 20 of the paper book). Further, the said notice was allegedly served by "affixture'; apparently without making any efforts to trace the assessee at the new premises, the details of which were part of Revenue's records, and without the signatures of two independent witnesses of the locality, as is required in such cases. It is also evident from the report that the alleged service of the notice under section 143(2) by affixture has only been witnessed by a colleague of the Inspector making the affixture. According to the learned Sr. Counsel, the alleged service of the notice under section 143(2) of the Act by 'affixture' in the above manner was highly irregular, unwarranted, unjustified and is invalid/bad in law. In support of the proposition that the service of notice under section 143(2) of the Act by affixture in the manner carried out as above being bad in law, in the factual matrix of the case....
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....be done are expressed in negative language; i.e. if the statute enacts that it shall be done in such manner and not in any other way, then such requirements in all cases are absolute and infraction of the same will invalidate the whole proceedings. Since the alleged service of the notice under section 143(2) of the Act by affixture in the case on hand is not in accordance with the law prescribed, it is bad in law. Therefore the AO has no jurisdiction to take up scrutiny assessment of the assessee for A.Y. 2005-06 and consequently, the order of assessment framed on the basis of such invalid notice is bad in law and liable to be quashed as null and void as initio. In support of this proposition, reliance was placed on the following judicial pronouncements: - (i) CIT vs. Blue Moon (2010) 321 ITR 362 (SC) (ii) CWT vs. HUF of late Shri J.M. Scindia (2008) 300 ITR 193 (iii) Arunlal vs. ACIT (2010) 124 ITD 85 (Agra) (TM) (iv) Abacus Distribution Systems (I) P. Ltd. vs. DCIT (2014) 29 ITR (Trib) 1 (Mumbai) 4.2 Per contra, the learned D.R. for Revenue supported the finding of the learned CIT(A) in the impugned order on this issue. The learned D.R. placed reliance on the followi....
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....r of the assessee company (copy placed at pg. 23 & 24 of the paper book) contending that the AO had neither furnished any proof of service of notice dated 23.10.2006 nor addressed its objections raised in letter dated 07.09.2007 that, since the said notice was never served on the assessee in the time prescribed under section 143(2) of the Act, the AO had no authority to assume jurisdiction for taking up scrutiny assessment in the case on hand, for A.Y. 2005-06. 4.3.4 It is seen from the remand report dated 15.06.2010 (copy placed on pg. 15 to 18 of paper book), called for by the learned CIT(A) that it was reported that the AO had issued notice under section 143(2) of the Act dated 23.10.2006 which was allegedly served by affixture by the Inspector of Income Tax ('ITI') on 31.10.2006 at Nathari Road, Vidyavihar (W), Mumbai 400086 as per the address given by the assessee in the return of income, since no one from the assessee's side was present. In respect of the fact that the assessee had intimated the Department of the change of address of its Registered and Administrative offices vide letter dated 19.06.2006, the learned CIT(A) brushed this aside stating that the said letter was ....
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....ent: - (i) the service by affixture of the said notice under section 143(2) on 31.10.2006 was at the wrong place, i.e. at the old address of the assessee at Vidyavihar and not at the new Registered Office address at Bajaj Bhavan, 3rd Floor, 226, Nariman Point, Mumbai. The change of address was intimated by the assessee vide letter dated 19.06.2006 and in the knowledge of the Department, (ii) The ITI's report establishes that the affixture of notice was witnessed by a colleague of the ITI making the report, whereas it is necessary that the service of notice by affixture should have been witnessed and signed by two independent witnesses from the locality, which has not been done, (iii) the ITI's report in our view established that there is no evidence to show that any enquiry was made by the ITI to ascertain the whereabouts or the correct address of the assessee on which the notice under section 143(2) dated 23.10.2006 was to be served. Further, it appears that no attempt was made in the period 23.10.2006 to 31.10.2006 to serve the notice by post or to ascertain the new address from the given telephone numbers of the company in the return of income for A.Y. 2005-06 before service ....
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.... affixture. The impugned assessment is of asst. yr. 2001-02. It is not the case of Revenue that on 10th Nov., 2003, if notice is not served within a short span, the initiation of reassessment proceedings will be barred by time, as it has been the contention of the learned Authorised Representative that there was ample time available with the Department to initiate reassessment proceedings. Thus, it is clear that the AO had no exigency to issue and serve the notice under s. 148 on 11th Nov., 2003 itself so as to bring the same within the period of limitation. When a notice is issued on 10th Nov., 2003, and it was ordered to be served by affixture on 11th Nov., 2003, the Revenue will be under legal obligation to show that between the period of 10th Nov., 2003 and 11th Nov., 2003 what efforts were made by the Revenue to effect the service of notice in a normal manner. The record is silent about it. There is no material on record to show or to suggest that any effort was made by the AO to serve the notice in normal course before issuing the directions to serve the same by way of alternative mode, i.e., by way of affixture. The jurisdictional High Court in the case of Jagannath Prasad v....
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....f the decision in the case of Ganeshi Lal & Sons (supra) is in any way different from the decision in the case of Jagannath Prasad vs. CIT (supra). Here it will be important to mention that in the case of Ganeshi Lal & Sons (supra), it has been observed by the Hon'ble High Court that in the said case the process-server, despite due diligence, was not able to find the petitioners or any other person who was willing to accept the notice on behalf of the assessee and in that circumstance the service by affixture was made. Therefore, in that case there was material on record to show that attempts were made by the Department to effect service in normal mode and those attempts were not successful, resultantly, service was made though affixture. However, in the impugned case there is no material on record to suggest or to hold that any sincere attempt was made by the Revenue to make the service through normal mode. For the reasons discussed above, the decision in the case of Jagannath Prasad vs. CIT (supra) will have square application to the present case and relying on the decision in the case of Ganeshi Lal & Sons (supra), it cannot be held that service of notice by affixture in the pre....
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.... not served on the adult members of the family who were in existence at the time of the partition of the joint Hindu family. Filing of the return in consequence of illegal service of notice on Shri B.D. Agrawal will not validate the reassessment proceedings. A Full Bench decision of this Court rendered under s. 21 of the Uttar Pradesh Sales-tax Act which is in pari materia of s. 147 of the Act says no. This has been so held in Laxmi Narain Anand Prakash vs. Commr. of Sales-tax (supra). In this case the High Court has relied upon number of cases relating to service of reassessment notice under the IT Act including Bhagwan Devi Saraogi & Ors. vs. ITO (1979) 118 ITR 906 (Cal) and quoted following passage from it : 'If the authority concerned does not acquire jurisdiction in absence of a valid notice being served, the entire proceedings will be without jurisdiction and void and even the consent on the part of the assessee would confer no jurisdiction on the 'ITO'.' The Kerala High Court in P.N. Sasikumar & Ors. vs. CIT (1988) 69 CTR (Ker) 78 : (1988) 170 ITR 80 (Ker) has held that the issue of a notice under s. 148 of the IT Act, 1961, is a condition precedent to the validity of ....
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....the Act is a jurisdictional notice and is not curable under s. 292B of the Act, if it was not served in accordance with the provisions of the Act. 10. No other point was pressed or raised by the learned counsel for the Department. 11. In view of the foregoing discussion, we find that the order of the Tribunal is legally sound. We, therefore, answer the question in affirmative i.e., against the Revenue and in favour of the assessee. However, there shall be no order as to costs." 24. Respectfully following the above decision of Hon'ble jurisdictional High Court, it has to be held that the participation of the assessee in the reassessment proceedings cannot cure the defect in the reassessment notice, i.e., the notice issued under s. 148 as the said notice is jurisdictional notice. Therefore, invalid issuance or service of notice under s. 148 cannot be said to be a procedural defect and it cannot be cured either by the participation of the assessee in the reassessment proceedings or by setting aside the same to the file of the AO. 25. In view of the above discussions, in my humble opinion, the view taken by the learned JM appears to be a correct view which has to be adopted....