TaxTMI 
TaxTMI 
2018 (4) TMI 1416
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.... company dealing in the same activities and thus, assessee was not fulfilling the basic conditions of section 10B of IT Act. 2. That on the facts and circumstances of the case and in law the Ld. CIT(A) erred in ignoring the findings of the AO with respect to manufacturing process, consumption of electricity, deployment of labour production vis-a- vis consumption of raw material etc. 3. That on the facts and circumstances of the case and in law the Ld. CIT(A) erred in deleting the addition of Rs. 73,89,823/- being the price of 46,401 Kg of finished product not accounted for by the assessee by ignoring the fact that there was difference of 46,401 Kg in consumption and production pattern." 4. The assessee has filed the cross objection on the following ground : "1. That having regard to the facts and circumstances of the case, the Ld. CIT(A) erred in law and on facts in confirming the action of Ld. A.O. in assuming the jurisdiction to pass the impugned assessment order under section 143(3), more so when jurisdictional notice under section 143(2) was not served within the statutory allowable period, much less in accordance with law." 5. Briefly, the facts of the case are that re....
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....xplained that the A.O. assumed jurisdiction to frame the assessment under section 143(3) without complying with the mandatory requirement of service of notice under section 143(2) within the mandatory period of 12 months from the end of the month in which the return of income was filed as per the proviso to Section 143(2) of the I.T. Act, 1961. Copy of the acknowledgment of filing of the return was filed to prove that return was filed on 31st October, 2005. Copy of the notice under section 143(2) dated 27th October, 2006 was filed which was dispatched on 30th October, 2006 at 12.12. P.M. and served/received on 2nd November, 2006. The assessee objected to the assumption of jurisdiction under section 143(2) before A.O. and contended that notice was served on 2nd November, 2006. This objection was raised during the course of assessment proceedings vide letter sent through UPC/ Registered Post. Copies of the same were also filed before Ld. CIT(A). Assessee requested that departmental record may be inspected and could find that it contain envelope showing the receipt of registered post dated 27.11.2007. Surprisingly, the Department assessment record does not contain the assessee's lette....
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....section 143(2) dated 27th October, 2006 was sent through the registered post on 30th October, 2006. Another copy of the notice was also served upon the assessee on 30th October, 2006 by affixture on the last known address of the assessee which is valid service. Copy of the service through affixture was filed with remand report. The A.O. also stated that when letter dated 17.11.2007 was sent, why it was sent again on 27.11.2017 is not explained. It was stated that letter dated 27.11.2007 is not available on record. The A.O. also referred to Section 292BB of the Finance Act, 2008, in which it has been made clear that where an assessee appeared in any proceedings or cooperated in any inquiry relating to assessment or re-assessment, it shall be deemed that any notice under any provision of this Act, which is required to be served upon him, has been duly served upon him, in accordance with the provisions of law, and such assessee shall be precluded from taking any objection in any proceedings or inquiry under this Act that the notice was not served upon him within time. It was, therefore, submitted that additional evidence may not be admitted as notice under section 143(2) have been ser....
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...., it does not operate against the assessee as Section 292BB of the Act is prospective in nature as held by the Hon'ble Delhi High Court in the case of Mani Kakkar 18 DTR 145 and by the Special Bench of the Tribunal in the case of Kuber Tobacco Products Pvt. Ltd., 120 TTJ 577 (Del.). The assessee raised the issue of non-service of the notice under section 143(2) at assessment stage itself by sending the objections through registered post as well as by UPC which the assessee sought to admit as additional evidences. The assessee submitted that since the provisions of Order-V, Rule-20 CPC have not been strictly complied with, service of notice under section 143(2) by affixture was invalid and there being no evidence on record to show that notice sent by registered post was served upon the assessee, the assessment was liable to be quashed. It is the duty of the A.O. to make diligent efforts in finding-out the assessee and in making service upon him either in person or by Registered Post Acknowledgment due at correct address only. The report of the Inspector discloses that first time effort was made on 30th October, 2006 and that too at incorrect address. Therefore, no effort was made to....
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....T. Act, no notice under clause (ii) shall be served upon the assessee after expiry of 12 months from the end of the month in which the return is furnished. In this case, assessee filed return of income on 31st October, 2005. Therefore, the notice under section 143(2)(ii) could have been served upon the assessee on or before 31st October, 2006. The A.O. in the assessment order did not mention as to when the notice under section 143(2) have been served upon the assessee through post. The A.O. in the assessment order also did not mention as to whether assessee has been served with the notice through affixture through the Process Server of the Department. The assessee filed copy of the notice under section 143(2) dated 27th October, 2006 which were dispatched on 30th October, 2006 at 12.12 P.M. and served/received on 2nd November, 2006. The submission of the assessee and relevant documents were forwarded to the A.O. for filing the remand report. However, there is no rebuttal from the side of the A.O. to dispute the above statement of the assessee. It is, therefore, an admitted fact that though the notice under section 143(2) dated 27th October, 2006, was issued but it was dispatched on....
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....lity that the correct address of the assessee might not have been written on the envelope and, therefore, the question of service of notice on the assessee did not arise. The contention of the assessee was accepted by the Commissioner (Appeals) and it was held that there was no valid service of notice on the assessee and, therefore, the assessment framed was invalid. This was upheld by the Tribunal. On appeal to the High Court: Held, dismissing the appeal, that the assessee had filed an affidavit stating that it had not received the notice and the Tribunal rightly held that under these circumstances, the burden was upon the Department to prove that notice was served upon the assessee within the prescribed time. The Department had failed to prove its case in this regard. The Tribunal was right in setting aside the order of assessment. No substantial question of law arose from its order." 14.1. The Hon'ble Punjab & Haryana High Court in the case of CIT vs. Cebon India Ltd., (2012) 347 ITR 583 (P&H) held as under: "The assessee's return for the assessment year 1996- 97 on November 30, 1996, was processed under section 143(1)(a) of the Income-tax Act, 1961, on May 30,1997, and....
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....ffixture. It has come for the first time in the remand report of the A.O. before Ld. CIT(A). It is not explained why notice was sent through the Process Server on the same day of dispatch on 30th October, 2006 for affixture when it was also dispatched by registered post. The A.O. did not take any step to serve the notice upon assessee personally through ordinary process. It may be noted that it was a one day prior to the last date when notice was dispatched on 30th October, 2006. There is no order available on record of the assessment if the A.O. has authorised the Process Server of the Department to serve the assessee by affixture and no reasons have been assigned in the notice sent for service through affixture without following the procedure provided under the Act. The procedure for substituted service through affixture have been provided under Order-V, Rule-20 CPC and the same reads as under : 20. "Substituted service.-(!) Where the Court is satisfied that there is reason to believe that the defendant is keeping out of the way for the purpose of avoiding service, or that for any other reason the summons cannot be served in the ordinary way, the Court shall order the summons t....
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....t also that if he was not found, proper and reasonable attempts had been made to find him either at that address or elsewhere. A notice by affixture without reasonable attempts to find the assessee is not a proper notice." 15.4. The Hon'ble Madras High Court in the case of Kiran Machines vs. ITO & Another (2007) 295 ITR 4 (Mad.) (HC) held as under : "Held that in this case, admittedly, the A.O. had not recorded any satisfaction in his order that notice could not be served personally, before causing service of notice by affixture. Under Order 5, rule 20(1 A), the Assessing Officer could have ordered publication in a newspaper if the address of the petitioner was not known or could not be furnished by his representative. But that too had not been done in this case. When an order of assessment levying tax is being passed, it is incumbent upon the Assessing Officer to serve the notice in accordance with the provisions. But in this case, that had not been done. Thus, the principles of natural justice had been violated and on this ground, the assessment order was liable to be set aside." 15.5. Since the conditions of Order-V, Rule-20 CPC have not been satisfied in this case, therefor....
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....ee has been served with the notice under section 143(2) within the period of limitation and the alleged service of the notice through affixture is invalid and void abinitio itself. Since no notice under section 143(2) have been served upon the assessee within the statutory period, therefore, the same is invalid, consequently, the assessment order gets vitiated and is null and void. We, accordingly, set aside the orders of the authorities below and quash the assessment itself. The additions stand deleted. 16. In the result, cross-objection of the assessee allowed. ITA.No.2907/Del./2010 - A.Y. 2005-2006 (Revenue Appeal): 17. In view of the above order on Cross-Objection, we decide the Departmental appeal briefly as under. 18. On ground Nos. 1 and 2, Revenue challenged the deletion of addition of Rs. 1,57,41,762 claimed under section 10B of the I.T. Act. According to A.O. assessee has not carried out manufacturing activity of his own but has purchased hot mix masala which is exported and claimed exemption under section 10B of the I.T. Act. 19. On the other hand, the case of the assessee is that it carried out manufacturing activity which was supported by contemporary evidences. T....
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....l be called hence forthwith, in short as 'PB', on page 17, there is a note to the Balance Sheet that the appellant was registered under Central Excise. It is further noticed that inspection charges have been paid in connection with the visit of the excise officials as is evident from PB 138-141. The manufacturing process has been outlined by the appellant to the Assessing Officer, which is at PB-88. I also find that excise records have been verified by the excise officials and such records bear the signature of excise officials, which clearly establish that assessee was a manufacturer of hot mix masala. (ii) The appellant has consistently pleaded (PB-89) that appellant was manufacturing hot mix masala and that there was adequate installed capacity of the grinding machine and that production of hot mix masala was to the tune of Rs. 149.47 tonnes (PB-122). So much so, the appellant gave detailed explanation regarding the manufacturing activity undertaken and rebutting all the objections of the AO. (iii) I find that the AO's observation that assessee purchased grinding machine on 11.06.2004 is factually not correct, in view of the challan of the machine which shows that the machin....
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....the AO was not justified in denying the exemption u/s 10B. Accordingly, disallowance of exemption u/s 10B made by AO is hereby deleted." 20. After considering the rival submissions, we do not find any merit in this grounds of appeal of the Revenue. The Ld. D.R. merely relied upon order of the A.O. and has not pointed out any infirmity in the order of the Ld. CIT(A). There is no challenge to the additional evidences admitted by the Ld. CIT(A) in the Departmental appeal. The assessee produced sufficient documentary evidences before Ld. CIT(A) to prove that it manufactures hot mix masala and exports them and claimed exemption under section 10B of the I.T. Act. The claim of assessee is supported by documentary evidences as well as excise records checked by the Excise Authorities. The A.O. in the remand report admitted that the documents submitted by the assessee before Ld. CIT(A) were evident that manufacturing was being done at the premises of the assessee. In view of the admission of the A.O. that assessee is manufacturing hot mix masala and thereafter, it is exported by assessee, supported by documents, the Ld. CIT(A) correctly deleted the addition. Ground Nos. 1 and 2 of appeal of....