TaxTMI 
TaxTMI 
2017 (5) TMI 1210
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....e assessment was completed on 30-12-2011 u/s. 143(3) r.w.s. 153C of the Act accepting the returned income resulting in NIL demand. Subsequently, Ld.CIT invoked the provisions of Section 263 and set aside the order dt. 30-12-2011 along with other orders for AYs. 2007-08 to 2010-11. The grievance is with reference to AY 2006-07 only. Ld.CIT as seen from the show cause notice issued for the impugned assessment year has initiated the proceedings for nonexamination of certain information in the seized material. As per the CIT, assessee has executed ten sale deeds in favour of Shri Sukesh Gupta and his group on land situated at GuttalaBegumpet, Hyderabad. It was also noted that assessee claimed that he had given GPA to one Shri G. Koteshwara Rao in the year 1994 and the same was cancelled in the year 1997. It was claimed by assessee before the AO that the ten sale deeds are invalid as they were executed by Shri G. Koteshwara Rao after the GPA was cancelled. Assessee was not served with any notice in these proceedings, the fact of which was recorded by the CIT in para 3 of the order as under: "3. Accordingly, show cause notices dated 14.03.2014 were issued separately for the abov....
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....u/s. 143(3) r.w.s. 153(c) passed by the Assessing Officer is erroneous and prejudicial to the interest of the Revenue. 3. The learned Commissioner of Income Tax failed to appreciate the fact that the Assessing Officer, in the assessment proceedings, raised a specific query and verified the information filed by the appellant regarding cancellation of general power of attorney given to Sri G. Kotshwer Rao and hence the said order is not erroneous. 4. The appellant craves leave to add or amend or alter any of the grounds at the time of hearing of appeal". 5.1. Assessee also raised the additional ground as under: "In the absence of Valid and Proper Service of show cause notice u/s. 263, the order passed by the Commissioner of Income Tax u/s. 263 is not valid". 6. Ld. Counsel referring to the order of the CIT, specifically para 3 extracted above, had submitted that it is clear that no notice was served on assessee either through process server or through post or by affixture or by any other method prescribed for service of notice and the order of CIT itself indicates that no notice was served before the said order passed. It was the submission that the provisions....
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....cial Years 2003- 04 to 2009-10. I further confirm have not entered any Immovable Property transactions with M/s. MBS Jewellers Pvt. Ltd., M/s. MBS Impex Pvt. Ltd., Aashi Realtors, Sukesh Gupta, Pramod Kumar Gupta or their group concerns during the period (Financial Years 2003-04 to 2009-10). This is for your kind information". 7. Ld. Counsel also referred to further letter submitted to the Asst. Commissioner (Pg. 7 of the Paper Book) where in it was clearly stated that there are no purchase/sale of immovable properties during the Financial Years 2003-04 to 2009-10 and gave the statement of affairs in pg. 2 of the said letter. It is also clearly reiterated vide para 6 of that letter that there are no immovable property transactions entered with M/s. MBS Jewellers Pvt. Ltd., or others as stated by the AO and clearly stated that GPA was cancelled and those documents were enclosed to the above letter. Referring to the above correspondence between assessee and the AO at the time of original assessment, it was submitted that AO has accepted the facts as stated by assessee and therefore, question of non-verification, as opined by Ld.CIT, does not arise. Ld. Counsel relied on t....
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....r making or causing to be made such inquiry as he deems necessary, pass such order thereon as the circumstances of the case justify, including an order enhancing or modifying the assessment, or cancelling the assessment and directing a fresh assessment. [Explanation 1.]........................ ........................................................................................." 10. Admittedly, Ld.CIT can call for any record and examine, but before passing such order thereon, he has to satisfy two conditions which are required to be fulfilled. 1) He may pass such order after giving assessee an opportunity of being heard and 2) After making or causing to be made such enquiry as he deems necessary. In this case, neither of the conditions have been fulfilled as discussed herein after. 11. The first condition of 'opportunity of being heard' has not been satisfied, as no notice was served on assessee, leave alone giving sufficient opportunity. Coming to the issue of non-service of notice, it is to be noted that the Ld.CIT did not serve any notice on assessee. As explained by the Ld.CIT-DR, the notice was sent through service by process se....
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....v. Courier service approved by High Court; v. Other means of transmission of documents (including fax message or electronic mail service) provided by the Rules made by the High Court. For personal service, copy of the notice is served on assessee or his empowered agent, generally in the department, by a notice server. In case the notices are not served personally, service by affixture is resorted to in two circumstances: i. When the addressee or his agent refused to sign the acknowledgment for service of notice and ii. When the serving official after using of due and reasonable diligence cannot find the addressee in his residential or business premises within a reasonable time and there is nobody else authorised to receive the notice. 12.3. In the above circumstances, ITI can effect the service by affixture on his own initiative, without waiting for an order from the AO. A copy of the notice should be affixed on the outer door or a conspicuous part of business or residential premises. A report is to be drawn up by the ITI on the facts and circumstances of the service by affixture, specifying date and time of service and name of the identifier if any....
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....be a daily newspaper circulating in the locality in which the defendant is last known to have actually and voluntarily resided, carried on business or personally worked for gain. (2) Effect of substituted service - Service substituted by order of the court shall be as effectual as if it had been made on the defendant personally. (3) Where service substituted, time for appearance to be fixed - Where service is substituted by order of the Court, the Court shall fix such time for the appearance of the defendant as the case may require". Since place of last known address was demolished, the service should have been ordered to be effected by publication in a local daily newspaper. In that case service substituted by that manner [Rule20(1A)] shall be as effectual, as if it had been made on the assessee personally [Rule20(2)]. If local publication was given in a daily newspaper of the regional language (or in known language of assessee is familiar with), either assessee or any known person to assessee would have noticed and there would be compliance to the proceedings. None of these have been undertaken by the CIT before finalising the proceedings u/s. 263; in other w....
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....n the report and reliance can be placed on such report only when it sets out all the circumstances which are also duly verified by the witnesses in whose presence the affixture was done and thus the affidavit of the Serving Officer deposing such procedure adopted by him would also be essential. In the instant case, the whole thing had been done in one stroke. It was not known as to why and under which circumstances another entry for service of notice by affixture was made on 27-72012 when sufficient time was available through normal service till 30-9-2012. Nor there is any entry in the note-sheet by the Assessing Officer directing the Inspector for service by affixture and had only recorded the fact that the notice was served by the affixture. It appears that the report of the Inspector was obtained without issuing any prior direction for such process or mode. However, the fact remained that Serving Officer had not set out reason for passing subsequent entry nor for adopting the mode for service by affixture and without stating the reasons for doing so, the adoption of the mode of substituted service could not be legally justified. Notice was served by affixture. The reason for ser....
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....2 ITR 888] (SC) has held, affirming the decision of the High Court on the facts, that the service of notices was not in accordance with law and therefore, it could not be said that assessee had been given proper opportunity to put forward their case as required by Section 33B of the Income Tax Act, 1922. In the above said case, the facts are similar, that the CIT initiated revision proceedings u/s. 33B of the Income Tax Act, 1922, corresponding to Section 263 of Income Tax Act, 1961. There the ITI who had to serve notices u/s. 33B of the said Act claimed to have served notices by affixing them on assessee's place of business, but in his report did not mention the names and addresses of the proceedings, who identified the place of business of assessee nor did he mention in his report or in the affidavit filed by him that he personally know the place of business of assessees. Assessees, however, claimed that they had closed their businesses long before the notices were issued. In the Writ Petition filed by assessee, the High Court held that there was no proper service on assessee and the orders of Commissioner pursuant thereto could not be sustained. The Hon'ble Supreme Court uph....
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....the prescribed methods for service of notice was at least attempted to. The Ld.CIT clearly states that no opportunity of being heard was given to assessee. 15. Apart from not giving an opportunity to assessee, Ld.CIT also did not verify the record properly. The proceedings u/s. 153C were initiated as the department has seized certain documents in search of M/s. MBS Jewellers Pvt. Ltd. Obviously, AO could not have completed the assessment, without examining these documents, as the very basis for issuing of notices u/s. 153C for the impugned year was the said sale deed copies. Moreover, AO issued a show cause notice, as discussed in the arguments of Ld. Counsel and assessee had given a detailed reply. It was further submitted that assessee has given GPA to one Shri Koteswara Rao and subsequently cancelled the same within two years. The said GPA copies were enclosed to letter by assessee in the course of assessment proceedings itself. The copies of sale documents obviously pertain to the period after GPA was cancelled. Therefore, as presumed by assessee and may be in the eye of law, they are not valid documents. Not only that assessee has also clearly stated that he has not sold an....