TaxTMI 
TaxTMI 
2019 (9) TMI 365
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....o assessment framed by the learned ITO 2(1)(2), Agra determining total income at Rs. 2, 21, 60, 400/- as against Rs. 12, 45, 390/- originally returned by the assessee. 3. Before the learned CIT(A), assessee raised various grounds regarding validity of re-opening and also submitted that the additions on merits have wrongly been made. However, being unconvinced the learned CIT(A) rejected the appeal both on legal grounds as well on merits and confirmed the assessment order as such. 4. Being aggrieved, assessee has come in appeal raising the following grounds: 1. "BECAUSE, upon due consideration of facts and in law the Ld. CIT(A) was not justified in disposing off the appeal without serving any Notice upon the 'appellant' and also without adjudicating the merits of the case. 2. BECAUSE, even after observing in the appellate order that the appeal has been taken up for decision on merits but the Ld. CIT(A) has not considered the objections and submissions as was made through the grounds of appeal and without perusal of the assessment records available with the respondent. 3. BECAUSE, upon due consideration of facts and in the overall circumstances of the....
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....12. The 'appellant' craves leave to add, alter or vary the grounds of appeal before or at the time of hearing." 5. Before us, Shri Anurag Sinha, Learned A.R of the assessee stated at bar that assessee do not press grounds of appeal no.1 & 2 and above grounds may be treated as withdrawn. Assessee vide grounds of appeal No. 3 & 4 has challenged that no notice under section 148 of the Act was served upon the assessee and ex-parte assessment was completed without serving any notice under section 148 of the Act till the completion of assessment which renders the assessment order to be held void-ab-initio. 6. Assessee has furnished an Affidavit of Shri. Rajesh Kumar Agarwal, Partner of the assessee firm under Rule-10 of the ITAT Rules 1963 which after hearing both the parties has been taken on records and admitted for consideration. 7. It was submitted by the assessee that objection regarding no service of notice under section 148 of the Act was duly raised before the learned Assessing officer immediately after receipt of notice under section 142(1) of the Act vide Letter dated 25.11.2016 (APB-21) by submitting as under: Date: 25th November 2016 The Income Tax ....
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....s raised vide ground No-2 stating that the assessment order is void-ab-intio as no notice was served upon the assessee till the completion of the assessment, but again the same was rejected by the learned CIT(A) who though proceeded ex-parte but dealt with the grounds raised in memo of appeal. 10. It was submitted by the assessee that none of the authorities below have taken into consideration the fact that when assessee denies service of notice in its very first communication to the learned Assessing officer, in that eventuality the learned Assessing officer was under an obligation to show with evidence that notice dated 31.03.2016 has properly been served in accordance with the procedure prescribed under the Law and the jurisdiction to proceed with the assessment has been lawfully acquired. It was submitted that neither the learned Assessing officer nor the learned CIT (A) have brought any such evidence on records which may show that notice dated 31.03.2016 as claimed to have been issued ever got served upon the assessee. Thus, as per the submission of the learned Counsel, in absence of any evidence available with the revenue that the notice so claimed to be issued on 31.03.20....
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....peed Post. It was submitted that no evidence is on records nor submitted by the learnedSr. D.R in his Synopsis or before the Benchthat such notice sent by speed post. He invited out attention to Letter dated 03.10.2018 filed in 'ASK' (APB-137) and personally before learned Assessing officer04.10.2018 (APB-138) stating and informing the learned Assessing officer that upon Inspection of Assessment records it was found that no evidence exists on assessment records that notice was ever sent by speed post. It was also submitted before us, that even if any evidence is now brought on records at this belated stage in that case too the assessee since, was dis-possed from the cold storage on 11.05.2012 by virtue of order passed on 19.07.2011 by the Hon'ble Allahabad High Court and thus, on the date of issuance of notice assessee was not in possession of the cold storage therefore, notice if all issued was wrongly addressed and could not have even reached the assessee. He stated that report of notice server does state that cold storage was found closed even by him. He stated that all future correspondence was made by the learned Assessing officer at the residential address of partners, which ....
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....High Court Judgment in the case of Vankat Naicken TrustVs ITO (2000) 242 ITR 141 (Mad). 15. Now, as a matter of fact for the first time the department has come out clear to the assessee with its case that service of notice dated 31.03.2016 was made by Affixture on 31.03.2016 and has provided proof thereof in the shape of service report. Before adjudicating the validity of affixture, we would like to reproduce the report of affixture which is in hindi and reads as under: 15.1 On the same page of report another entry was made on the same day which is report by the Inspector of Income Tax, Shri. A.K Kaushik mentioning as under: 16. Now, in the lights of above report of affixture, the short question which arises for consideration in this case is as to whether there was enough reason available on records to have resorted for service by affixture which is an alternate mode of service to be resorted when service by other modes are not found possible and thus one of the last mode of service notice and if so, whether notice claimed to have been served by affixture has been duly served upon the assessee as per procedure prescribed under law, prior to the commencement or even upto co....
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....h other person as aforesaid refuses to sign the acknowledgement, or where the serving officer, after using all due and reasonable diligence, cannot find the defendant (who is absent from his residence at the time when service is sought to be effected on him at his residence and there is no likelihood of his being found at the residence within a reasonable time), and there is no agent empowered to accept service of the summons on his behalf, nor any other person on whom service can be made, the serving officer shall affix a copy of the summons on the outer door or some other conspicuous part of the house in which the defendant ordinarily resides or carries on business or personally works for gain, and shall then return the original to the Court from which it was issued, with a report endorsed thereon or annexed thereto stating that he has so affixed the copy, the circumstances under which he did so, and the name and address of the person (if any) by whom the house was identified and in whose presence the copy was affixed." 21. Order V, Rule 19 of the Code of Civil Procedure lays down the procedure for examination of serving officer which reads as under: "rule 19: Examina....
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....ered to the assesseei.e Firm. It is an admitted case of the revenue that when the notice server went to serve the notice under section 148of the Act at the cold storage the notice server found the cold storage to be closed and thereafter the notice server went to the residence of the Partner at B-23, Kamla Nagar, Agra, from the house a man came out who refused to accept the service of notice under section 148 of the Act. This unnamed man stated to be coming out of the house of partners can by no stretch of reasoning be said to be the agent of the assessee Firm who has been empowered by the Firm to receive service of notice or even of its partner either in terms of order III, Rule 2 of the Code of Civil Procedureand therefore, no notice was tendered either to the assessee or his agent nor was it refused either by the assessee or his duly appointed agent who has been empowered by the Firm to receive service of notice. Thus, refusals by un-named person found at the house of the partners do not amount to refusal by agent who has been empowered by the Firm or even by agent's agent to receive service of notice. Similar view was adopted by the ITAT, Delhi Bench in the case of Auram Jewell....
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....ngly we have no hesitation to quash the order of the learned Assessing officer directing service by Affixture, in absence of any material warranting circumstances for service to be made by Affixture. 27. From the chronology of the events as mentioned in the report of notice server it is abundantly clear that no valid reason have been brought on records for resorting to service by affixture as mandated in Order (V) rule 20(1) of the Civil Procedure Code. Thus, there was no reason to have believed that 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. Thus service by resorting to affixture was a premature decision on part of the learned Assessing officer without any basis brought on report of the notice server. 28. This service by affixture is also against the specific Rule 20(1) of Order V of the CPC. Rule 20(1) of Order V of the CPC has been considered by the Hon'ble Allahabad High Court in the case of Jagannath Prasad Vs CIT (1977) 110 ITR 27 (All) where the Hon'ble High Court had the occasion to consider the validity of order of the ITO directing service by affixtur....
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....ity concerned had reason to believe that the assessee was keeping out of the way for the purpose of avoiding service or that there were other good reasons to come to the conclusion that the summons could not be served in the ordinary way. Thus, the Hon'ble Court held that"a reading of the provisions of 0. 5, rr. 9, 12 and 20 of the CPC makes it amply clear that ordinarily the service has to be effected on the person concerned personally, but where the authority concerned is satisfied that there is reason to believe that the person concerned 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 authority can order that the summons be served by affixing a copy thereof in some conspicuous part of the house (if any) in which the person, who is to be served, is known to have last resided or carried on business. In the present case, admittedly, according to the respondents, substituted service was affected. With a view to resort to the method of substituted service, it is the duty of the Department to discharge the onus by showing that the authority concerned had reason to believe that the assessee....
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....bove. In the case of Auram Jewellery Exports (P) Ltd Vs ACIT (2017) 88 taxman.com 633 (Del) where on alleged refusal by the Chowkidar, whose name has not been mentioned in the report notice was served through affixture. The Bench while quashing notice under section 148 held that no effort was made by the assessee to serve notice upon the assessee rather paper work showing service has been completed within two days. 32. In the facts of the present case, enquiry about agent of the Firm Shri. Rajesh Agarwal was made on a single day at the residence where as per report of Inspector he was informed that "Shri Rajesh Agarwal is not at home "right now." Temporary unavailability of Rajesh Agarwal in day time at his residence cannot lead to the conclusion that either Shri Rajesh Agarwal was avoiding service of notice or there was no likelihood of his returning to his residence. Therefore, service by Affixture on temporary unavailability cannot lead to the conclusion that there is no likelihood of Rajesh Agarwal being found at his home at reasonable point of time. 33. Further, service as claimed to have been made by affixture is in violation to Rule 17, Order V of the CPC which specifi....
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....ice was made at the correct place as witnessed by independent witnesses. Accordingly, we do not find any infirmity in the order passed by learned CIT (Appeals). Hence, no interference is called for. In the result, appeal filed by the Revenue stands dismissed." 35. Again the ITAT Agra Bench in the case of M/s Electronic Glass Industries Vs ITO 5(1), Firozabad in ITA No. 403 & 495 /Agra/2003, vide its order dated 28.05.2010 quashed notice under section served by affixture where the allegation was that assessee upon being contacted on phone by the Inspector refused to receive Notice. The ITAT held that"After Considering the submissions and perusing the material on record, we find assessee deserves to succeed in these appeals. For both the years it has been claimed that notice was served through affixture. The learned Assessing Officer as well as learned CIT (A) who dismissed the appeal of the assessee have recorded the contents of inspector's report in their respective order. The contents of Inspector's report are reproduced here as under: "Thus it is apparent that Sh. Vishwa Deep Singh and Sh. Rashtra Deep Singh are avoiding to take delivery of notice. In These Circ....
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....Court in the case of CIT vsRamendra Nath Ghosh, 82 ITR 888 (SC). The Hon'ble Allahabad High Court also in the case of Jagannath Prasad and Others vs CIT, 1101 ITR 27 has held the service by affixture has to be made as per procedure laid down under Order V Rule 20 of the CPC as Provided under section 282 of the IT Act. E Hon'ble High Court has held that conditions requisite for the application of Order V Rule 20, were not existed. Order of ITO directing service by affixture was not valid. The ratios of these decisions are squarely applicable on the facts of the present case as in present case also no proper service has been made on the assessee. Notice as alleged by department affixed on the front door of the office of the assessee is without any independent witness. Therefore, we have no hesitation in holding that issuance of notice under section 148 was bad in law. Since we have held that issuance of notice under section 148 bad in law, the assumption of jurisdiction for completion of assessment is also bad in law. Accordingly, we set aside the order of Assessing officer for both the assessment year 1993-1994 and 97-98 where notice has been served through affixture which is not va....
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....f notice under section 22(2) of the Indian IT Act, 1922, was invalid in law." Hon'ble Calcutta High Court in Gajendra Kumar Banthia vs. UOI (1996) 222 ITR 632 (Cal.) held that "In terms of s. 282 of the IT Act a notice has to be served in the manner as is laid down in the CPC which provides that service of summons shall be made by delivering or tendering a copy thereof signed by the judge or such officer as he appoints in this behalf, and sealed with the seal of the Court. Therefore, delivering or tendering the same is the sine qua non for such service. Order V, r. 19 provides that where a summons is returned under r. 17, the Court shall, if the return under that rule has not been verified by the affidavit of the serving officer, and may, if it has been so verified, examine the serving 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 order such service as it thinks fit. In the instant case evidently the requirements under Order V r. 19, have been complied with. Hon'ble Kerala High Court in the case of M.....
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....uated with affidavit required under the Rule-19, Order-V of the Civil Procedure Code as neither the report has any witness and in absence of any verification on oath in such a report. 39. Now, coming to the validity of next mode of service which as per the claim of the Department was by speed post at the address of the cold storage addressed at "K.P Cold Storage, Ujrai, Khandoli, Hathras Road, Agra." 40. The claim of the Department is that such notice was sent by speed post also on the above mentioned address. Assessee has challenged that no such notice was ever sent by speed post, he invited attention to the affidavit dated 11.02.2019 filed under Rule-10 of the ITAT Rules 1963 to contend that as the department for the first time vide its synopsis has claimed that such a notice was sent by speed post and therefore, in compliance to such a assertion made by the department assessee has filed an affidavit denying service of notice. In such circumstances, as rightly contended by the learned AR the department should come out with evidence showing that a such a notice was ever sent by speed post. He placed reliance toVenkatNaicken Trust (supra) for the proposition that "when the....
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....apprised. It is also made clear to your good self that assessee will be filing this Letter before the Hon'ble ITAT in evidence of the contention that none of the above evidence is available on assessment records and therefore, no Notice dated 31.03.2016 claimed to have been sent by Speed Post was ever issued. Respectfully Submitted Dated: 03rd October 2018 Adv. AnuragSinha 41. In view of the above it was submitted that in absence of the any evidence available on records merely by a bare assertion service by speed post cannot be assumed more so when as per the own claim of the department the cold storage on the date of 31.03.2016 was found closed. 42. The learned Sr. D.R submitted that there exists evidence on records that such a notice was sent by speed post he invited attention to the stamp affixed on the notice dated 31.03.2016. He also submitted that there is a presumption of correctness in respect of official Act. He also submitted that assessee has not challenged issuance of notice dated 31.03.2016 only dispute being raised by the assessee is about its service which even if resolved in favour of the assessee will not render the assessment void-ab-int....
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....quately paid for being sent by registered post or speed post to the addressee. 46. Similar presumption is raised under section 114 of the Indian Evidence Act where it is stated that the Court may presume that the, common course of business has been followed in a particular case that is to say, when a letter is sent by post by prepaying and properly addressing it the same has been received by the addressee. Undoubtedly, presumption sunder sections 27 of the General Clauses Act as well as under section 114 of the Evidence Act raises rebuttable presumption in favour of the sender regarding proof of service but before being entitled for the advantage of the presumption under the aforementioned sections it has to demonstrated with evidence that the essentials thereof are fully met and due compliances have been made in respect of steps provided therein and in the process of claiming presumption onus is on the sender to prove with evidence that the required compliances were duly made and therefore the sender is entitled to advantage of presumption. 47. However, in the facts of the present case the revenue cannot claim advantage of above presumption as despite specific challenged by ....
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....ct, 1961. The Supreme Court held thatthe scheme of 1961 Act in so far as the notice for re-assessment was concerned was quite different than thatcontained under Section 34 of the Income Tax Act, 1922. The Supreme Court held that a clear distinction hasbeen made between "issue of notice" and "service of notice" under the Act. The Supreme Court held that oncea notice is issued within the period of limitation, the Income Tax Officer gets the jurisdiction to proceed toreassess and make the assessment order. The mandate of Section 148(1) of the Act is, that reassessment shallnot be made until there has been a service of notice which is a condition precedent to making an order ofassessment. In the facts of present case notice has not been served till the completion of assessment as clearly stated in the ground of appeal. Thus, the case in a way advances the case of assessee where the Hon'ble Supreme Court has held that the mandate of Section 148(1) of the Act is, that reassessment shall not be made until there has been a service of notice which is a condition precedent to making an order of assessment. 49. Now, the question for consideration would be, when can be notice under Section ....
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.... or by registered post etc., by which the officer issuing notice may not have control over the said notice after issuance of the said notice. It must be properly stamped and issued on the correct address to whom it has been addressed. Mere signing of notice cannot be equated with the issuance of notice as contemplated under Section 149 of the IT Act. 53. Thus, we hold that notice claimed to have been sent by speed post was no notice in the eye of law in absence of any evidence of its being put to the process of post for delivery having been brought on our records. 54. Though we have already held service claimed to have been made by speed post to be invalid in law. In addition to the above, there is one more objection raised by the learned A.R and duly rebutted by the learned Sr. D.R whichrenders the service by speed post invalid. Vide its Affidavit dated 11.02.2019 assessee has submitted as under: "BEFORE THE HON'BLE INCOME TAX APPELLATE TRIBUNAL, AGRA BENCH, AGRA ITA No.145/Agra/2018 Assessment Year 2009-10 Affidavit under Rule 10 of Income tax Appellate Tribunal Rules, 1963 AFFIDAVIT OF SHRI RAJESH KUMAR AGARWAL AGED ABO....
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.... in consequence thereof the Hon'ble Allahabad High Court inter alia held Respondent No. 5 & 6 being the 'Deponent' and his father who acquired the Cold Storage from M/s Dass Cold Storage (P) Limited to be not entitled to retain the possession of the Cold Storage. Xerox copy of the Judgment by the Hon'ble Allahabad High Court is enclosed herewith and marked as ('Annexure-'D') to this Affidavit. 6. The 'Deponent' confirms that above mentioned facts stood acknowledged by the 'UPFC' who in response to an application filed under the Right to Information Act vide Letter dated 09.02.2011 has confirmed to the facts stated in Para 1 to 5 of this Affidavit. Xerox copy of the Information as provided under the RTI Act is enclosed herewith and marked as ('Annexure-'E') to this Affidavit. 7. That vide Judgment dated 19.07.2011 the Hon'ble Allahabad High Court in Company Petition Number 29 of 1995 titled as M/s Seema Ice & Cold Storage (P) Ltd Vs Bank of Baroda & Others directed that the Official Liquidator to take over the actual physical possession of the moveable and immovable assets of the Company and it was specifically directed by the Hon'ble High Court that in no case S/S....
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....rtners have decided to change the address of the Registered office to Chamber No.7, Manu Video Complex, Opposite Central Excise & Customs office, WazirPura Road, Agra.Copy of the Supplementary Deed is enclosed herewithand marked as 'Annexure-'J' to this Affidavit. 13. The 'Deponent' confirms that similar change got effected in Bank Account of the 'Firm' and in evidence thereof Bank Statement is filed herewith. Copy of the Bank statement is enclosed herewithand marked as Annexure-'K' to this Affidavit. 14. The Deponent' confirms that accompanied with the Supplementary Deed as referred above, an Application was filed on 05.03.2016 with the Income Tax PAN service Unit managed by 'NSDL' making request for the change in Address. Copy of the Acknowledgementas issued is enclosed herewithand marked as Annexure-'L' to this Affidavit. 15. That the 'Deponent' confirms that in pursuance of the Application so made seeking change of address in PAN the address of the Firm got changed and which stood communicated to the 'Deponent' vide Letter bearing barcode of 16.03.2016 issued by Income Tax PAN Service Unit. Copy of the Letteras issued is enclosed herewithand marked as....
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....discontinued its operation. He also submitted that Mr. Chetan Singh to whom possession of the Cold Storage was given was occupying cold storage on behalf of the assessee Firm or its Partner Shri. Rajesh Agarwal and no reliance can be placed to the change effected in address of the Firm without getting it registered in the records of Registrar of Firms and Register maintained by the Registrar as required vide section 61 and 62 of the Indian Partnership Act. 56. In rejoinder it was replied that to the investigation wing no such change was intimated as no such question was put forward in the questions posed to the assessee. It was also submitted that from the reading of the minutes it is abundantly clear that Chetan Singh was the security supervisor of M/s Industrial Security & Investigation Services (P) Ltd. an independent agency which by no means can be connected to the assessee. With regard to the learned DR's objection that change was not intimated to the Registrar of Firms, it was submitted that such a condition only applies to Firms which are registered with the Registrar of Firms and assessee Firm being unregistered Firm is under no legal obligation to intimate such a change....
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....dgment passed by the Hon'ble Delhi High Court in the case of Veena Devi Karnani Vs ITO 2019 (1) TMI 596 wherein the Hon'ble Delhi High Court vide Judgement dated 14.09.2018 The assessee has relied upon a screenshot of the PAN database at the stage when the petition was filed to say that the Revenue always had the wherewithal to access the correct address, PAN number and all other relevant details including the e-mail ID as well as the bank account. The omissions of the Assessing officer deserve, therefore, to be not only adversely noticed but appropriately reflected in his or her confidential reports and appropriate proceedings initiated by the Revenue authorities, which is so directed. The concerned Commissioner, Principal Commissioner or other superior authorities, as the case may be, are directed to file a report in this regard within eight weeks from today. - reassessment notice as well as the order under section 144/147, and the consequential action, i. e., attachment of the assessee's accounts are hereby quashed. 59. Reliance in this regard was rightly placed to the Judgments of the Jurisdictional High Court in the cases of Suresh Kumar SheetlaniVs ITO 1(3), Agra (2018....
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....orted by the decisions of Hon'ble Madras High Court in the case ofThangam Textiles v. First ITO (1973) 90 ITR 412 by decision of Hon'ble Mysore High Court in the cases of Lakshmibai v. ITO (1972) 86 ITR 804 and C.T. Rajagopal v. State of Mysore (1972) 86 ITR 814 and by the decision of Hon'ble Bombay High Court in the case of S.K. Manekia v. CST (1977) 39 STC 426 (Bom.) and in the case of CST v. ShrimalSakharchand (1984) 57 STC 224, 235 (Bom.). 62. Respectfully following the various decisions referred to in aforesaid para, we, after having held the service of notice under section 148 to be no service in the eye of law, are of the opinion that all subsequent proceedings including the ex parte assessment framed on 21.12.2016 in assessee's case are illegal and void ab initio. 63. Since, we have held assessment order to be illegal and void-abinitio. therefore, there was no need to hear the parties in respect of other grounds raised in the memo of appeal pertaining to legality of assessment on legal and factual grounds. Those grounds are thus not adjudicated upon. 64. In the result, the appeal of the assessee is allowed. Order pronounced in the open court on 22/03/2019__ =....