TaxTMI 
TaxTMI 
2019 (9) TMI 365
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....)(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 case 'appellant' denies its liability to be assessed in terms....
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....efore 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of the assessee stated at bar that assessee do not press grounds of appeal no.1 & 2 and above grounds may be treated as withdrawn.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 Officer-2(1)(2), AaykarBhawan, Agra Re: - K.P. Cold Storage, Agra-Notice under section 142(1) dated 04.11.2016- A.Y 20....
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....oceeded 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 31.03.2016 got served upon the assessee the consequent assessment framed in pursuance of notice dated 31.03.2016 is liable to be held voidab- intio. 11. Assessee drew our attention to his Paper Book to show that despite his best and....
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.... '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 notices were duly served and there is no evidence on records that any notice issued in future correspondence by the learned Assessing officer got served upon the cold storage address. 12. Learned Sr. D.R submitted that notice....
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.... 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 completion of the reassessment proceedings or not and whether the consequent assessment is valid in the eyes of law. 17. Before deciding the issue, it is considered expedient to reproduce here relevant portion of section 148(1), sect....
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....e 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: Examination of Serving Officer: "Where a summons is returned under rule 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 exam....
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...., 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 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 assess....
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....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 affixture. The Hon'ble Court held that "We have already extracted rule 20. Before action under rule 20 can be taken two conditions must exist, one that the court has 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....
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.... 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 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. In spite of a specific averment having been made in the petition, nothing has been disclosed in the return to show that the above men....
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....ve 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 specifically requires that the name and address of the person (if any) by whom the house was identified and in whose presence the copy was affixed has to be mentioned in the report of the process server who affixed the notice. In this case from the report as reproduced above there is no mention of any name of the person who iden....
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....onic 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 Circumstances I affix the original notice on te front door of office of the firm M/s Electronic Glass Industry situated at Arya Nagar, Firozabad, ShriDeewan Singh, S.N. accompanied with me who identified the office of M/s Electronic Glass Industry. I affix the original notice in the presence of Sh. Deewan Singh Notice server of the o....
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.... 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 valid in the eyes of law." 36. Similar view was adopted by the ITAT, Delhi Bench in the case of Wg. Cdr. Sucha Singh, C/o Manoj Kumar Kanth Vs ITO 2017 (7) TMI 1046 - ITAT Delhi to which one of us was the party: "Non service of notice - validity of assessment - service by way of affixture - Held that:- For resorting to affixture, efforts h....
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....ring 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.O. Thomas vs. CIT (1963) 47 ITR 775 (Ker.) quashed re-assessment holding that"There is no verification of the service under r. 17 of O. V by an affidavit by the serving officer as enjoined by r. 19 of O. V. Curiously enough, the learned ITO has declared the notice to have been served on 29th March, 1954, even without previously obtaining a sworn stat....
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.... 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 assessee pleads that he was not properly served with notice, burden is on the Department to prove such service with relevant material."He submitted that after receipt of Synopsis dated 26.09.2018 inspection of assessment record as was requested long back vide application dated 02.01.2018 (APB-136) was allowed and carried out by the learned A.R and upon ....
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....vailable 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-intio and for this proposition he placed reliance to the learned Third Member Bench decision of Agra ITAT in the case of ITO Vs Lal Chand Agarwal(2012) 134 ITD 91 (Agra) for the proposition that non service of notice will not render assessment void-ab-intio but in such a case set-aside is a proper course of action. He also relied upon Apex Court in the case of R.K. Upadhyaya v. Shanabhai P. Patel (1987) 166 ITR 163 to submit that an assessment framed in pursuance to a notice iss....
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.... 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 the assessee no evidence has been brought on our records in the shape of any acknowledgement issued by the postal authority against booking of such an article being notice dated 31.03.2016 claimed to have been sent by speed post; no evidence is on records that notice dated 31.03.2016 was put to the process of post on 31.03.2016; no evidence is available on records of assessment in the shape of tracking report in respect of notice purported to have been sent by speed post to prove that either the alleged ....
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....e 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 148 of the IT Act can be said to have been issued? At this stage, it would be appropriate to notice Section 149(1) of the IT Act. The term 'shall be issued' used in Section 149 of the IT Act is extremely important. 50. The expression "issue" has been defined in Black's Law Dictionary to mean "To send forth; to emit; to promulgate; as, an officer issues order, process issues from court. To put into circulation; as, the treasury issues notes. To send out, to send out officially; to deliver, for ....
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....st 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 ABOUT 47 YEARS SON OF LATE SHRI MAHESH CHAND AGARWAL PARTNER M/S K.P. COLD STORAGE, CHAMBER NO.7, MANU VIDEO COMPLEX, WAZIRPURA ROAD, AGRA. (Hereinafter referred to as the 'Deponent') I, the Deponent named above in its capacity as a Partner in Firm M/s K.P. Cold Storage having its office at Chamber No.7, Manu Video Complex, Wazirpura Road, Agra (the appellant in ITA No. 145/Agra/2018 for Assessment Year 2009-10) which is pending before this Hon'ble Tribunal. Since there are certain facts which are not borne out from records, therefore, it is consider....
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....med 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/Shri. Mahesh Chand Agarwal (Father of the Deponent & Partner in M/s K.P Cold Storage) and Rajesh Agarwal (Deponent') shall remain in possession of the Property of the Company. Copy of the Hon'ble High Court order dated 19.07.2011 is enclosed herewithand marked as ('Annexure-'F') to this Affidavit. 8. That in compliance to the directions of the Hon'ble Allahabad High Court the 'UPFC' took over the possession of the Assets of the Company i.e Land & Building, Plant &Machinery and further sealed and locked the doors of Machine Rooms, Chambers and Main Gate of the Cold Storage at Village Ujrai, Khandauli, Agr....
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....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 Annexure-M' to this Affidavit. 16. That consequent to the above change the Jurisdiction of the Firm also changed from Range-4, Agra to Range-1, Agra and more specifically to ACIT, Circle-1(1), Agra as is evident from the e-filing portal of the Income Tax Department in print out obtained mentioning Site Last updated 01.04.2016. Copy of the Jurisdiction detail available on Income Tax Department web-site is enclosed herewithand marked as Annexure-'N' to this Affidavit. 17. The 'Deponent' therefore, affirms that on the date of 31.03.2016 on which the alleged Notice under section 148 is said to have been issued by the Assistant Commissioner of Income ....
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.... 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 to the Registrar. It was submitted that change was intimated and effected in Bank and Income Tax PAN Data base. 57. We are of the opinion that there is no dispute to the facts stated on oath verifiable with credible evidences that much prior to the date of issuance of notice on 31.03.2016 assessee was removed from possession of the cold storage building at Ujrai, Khandoli, Hathras Road, Agra in compliance to the orders passed the Hon'ble Allahabad High Court as referred above. There is also no dispute to the fact thatK.P Cold Storage which had its office at UjraiKhandoli, Hathras Road, Agra got the address of the Firm changed and such change was reduced into writing in the document named as supp....
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....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) 96 taxmann.com 401 (Allahabad) (APB 139 to 143)while reversing the order passed by the ITAT, Agra Bench held that when department had correct address of assessee furnished in return of income, sending notice at incorrect address available with bank and then drawing presumption of service of notice on ground that notice was not received back unserved, could not be sustained [Paras 19 and 20] 60. After careful consideration of the provisions of section 148 of the Act, which prescribes the service of a valid notice under section 148 on the assessee before making the assessment, reassessment or recomputation under section 147 of the Act, we are of the opinion that a valid service of a valid notice unde....