TaxTMI 
TaxTMI 
2022 (8) TMI 673
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....fixture on 30.09.2013. Subsequently, notice u/s. 142(1) was issued calling for books of account and other details to which the AR of the assessee appeared before the Assessing Officer and filed the requisite details as called for. 3. During the course of assessment proceedings, the Assessing Officer noted from the details filed by the assessee that the assessee has introduced capital of Rs. 14,35,98,259/- which is as per Schedule-I of the balance sheet. Similarly, as per Schedule-II of the balance sheet, the assessee claimed to have taken unsecured loan of Rs. 95,31,364/-. On being asked by the Assessing Officer to explain the source of capital introduced and unsecured loan taken, the assessee filed the reply, the relevant portion which has been reproduced in the body of the assessment order and which reads as under: "I am herewith submitting the following information/clarification required by you. 1. Source of capital introduced: During the year a sum of Rs. 14,35,98,259/- has transferred from M/s. Sujana Universal Industries Ltd. A/c to my capital Account to obtain from banks. However no physical capital was introduced by me during the year. 2. Note ....
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....mes, the assessee is not willing to explain). Part of these amounts are clearly camouflaged under unsecured loan & capital by the assessee. He inferred that it could be possible that the assessee sold the goods in cash or keeping undisclosed sundry debtors out of the books. According to the Assessing Officer, when the real dues to M/s. Sujana Universal Industries Limited are taken into account, an amount of Rs. 39,93,38,544/- is excess of liability over assets and therefore he brought this amount to tax as unexplained asset/undisclosed investment in the hands of the assessee. 5. The Assessing Officer further noted that the assessee did not furnish books of account, vouchers/bills, LRs/DCs for the expenditure claimed in the P & L A/c. He, therefore, made an addition of Rs. 9,91,15,015/- being 10% of the entire expenditure of Rs. 99,91,50,156/- claimed by the assessee. Accordingly, the Assessing Officer determined the total income of the assessee at Rs. 51,77,82,379/-. 6. Before the learned CIT(A), the assessee apart from challenging the addition on merit, challenged the validity of the assessment in absence of nonservice of notice u/s. 143(2) of the I.T. Act. However, the lear....
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....between the two Concerns as submitted above have been accepted. 6.4.2 Neither the so called adjustments made by way of transferring the payable to capital account, unsecured loans and others nor the entries on account of purchase returns and reduction in sundry debtors have been reflected in the accounts for Asst. Year 2013-14. This shows and gives credence to the assessee's claim that the entries/adjustments are made in the balance sheet without making entries in the ledger accounts. The initial submissions before Assessing Officer are also not correct. 6.5 The Assessing Officer in the remand report raised doubts as to whether and the whether material filed is additional evidence or not. The same is non issue and whether the same is filed before the Assessing Officer during the assessment proceedings or not, the same needed to be examined w.r.t. submissions of the assessee. The Assessing Officer in the Remand Report only reiterated the contents/findings of the assessment order. The evidences filed as well as the explanation given have not been examined by the Assessing Officer. The contention raised by the assessee in the rejoinder fairly depicts the factual ....
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..... The Ld. Commissioner of Income-tax (Appeals)-7 Hyderabad ['CIT (A)'], failed to note that no notice u/s. 143(2) of the Income Tax Act, 1961 ('Act') was served on the appellant as enjoined u/s. 282 of the Act and therefore the entire assessment made u/s. 143(3) of the Act is void ab initio, invalid, bad in law and without jurisdiction and must be annulled. 2. The CIT(A) erred in holding that the notice u/s. 143(2) of the Act was a valid notice and that the consequent proceedings were validly initiated. 3. The CIT(A) failed to note that the provisions of Section 292BB were not applicable as the notice u/s. 143(2) of the Act were not served on the appellant as required and in accordance with the provisions of the Act and therefore the entire assessment proceedings lacks credence and hence invalid, bad in law and void ab initio and therefore the assessment should be annulled. 4. The CIT(A) ought to have clearly held on Ground No. 6 raised by the appellant before him that excess of liabilities over assets cannot have the characteristic of unexplained investment or cash credit and therefore on this ground also the entire addition of Rs. 39,93,....
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....he assessee is presently not available at the above address and his whereabouts are not known. Since the assessee's returned income for the A.Y. 2012-13 exceeds Rs. 20 lakhs, the jurisdiction over the case vests with ACIT, Circle 11(1) Hyderabad. As directed letter to the ACIT, Circle 11(1) Hyderabad transferring the scrutiny record prepared and put up for signature"..................................." 11. The learned AR submitted that from a bare reading of the assessment order as well as the order sheet entries dated 30.09.2013, it is clear that the notice u/s. 143(2) of the Act, was affixed at the premises at H. No. 2-4-96/1 Nacharam, Hyderabad. The learned Counsel for the assessee referring to the report of the Inspector, copy of which is placed at page No. 14 of the Paper Book filed by the Revenue drew the attention of the Bench to the same which is as under: 12. The learned Counsel for the assessee submitted that as per the Assessing Officer in the order sheet entries, the notice was allegedly served on the assessee on the last known address as per the return of income for the A.Y. 2012-13. However, the notice was allegedly served by affixture at ....
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.... Explanation-For the purposes of this section, the expressions "electronic mail and "electronic mail message" shall have the meanings as assigned to them in Explanation to section 66A of the Information Technology Act, 2000 (21 of 2000)" 15. Referring to the above, he submitted that the notice was required to be served in accordance with the procedure laid down by the Civil Procedure Code (CPC). Further, the notice cannot be served by affixture at the very first instance. 16. The learned Counsel for the assessee again referring to the report of the Inspector while serving the notice through affixture drew the attention of the Bench to the same and submitted that the names of the witnesses do not disclose their complete name and address and names of their father etc., Therefore, the finding recorded by the learned CIT(A) that the notice u/s. 143(2) is deemed a valid notice is incorrect. The learned Counsel for the assessee also relied on the following decision to the proposition that when the notice issued u/s. 143(2) by affixture was not in accordance with law, the entire assessment proceedings have to be quashed: a) ITAT Delhi Benches in ITA No. 1605/Del/2012 in ....
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....t notings, on 19/12/2014, 06/01/2015, 16/01/2015, 04/03/2015 and 20/03/2015 either the assessee or the AR appeared. The assessment order was passed on 27/03/2015. Throughout the assessment proceedings the assessee did not contest the issue of non-service of notice u/s. 143(2). It is humbly submitted that the issue is covered ule. 292BB of the I.T. Act which is reproduced below: "Notice deemed to be valid in certain circumstances. 292BB. Where an assessee has appeared in any proceeding or cooperated in any inquiry relating to an assessment or reassessment, 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 time in accordance with the provisions of this Act and such assessee shall be precluded from taking any objection in ay proceeding or inquiry under this Act that the notice was- (a) Not served upon him; or (b) Not served upon him in time; or (c) Served upon him in an improper manner; Provided that nothing contained in this section shall apply where the assessee has raised such objection before the completion of such assessment or reassess....
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....des the manner of service of notice to the assessee by ordinary or by alternative means of service. For ready reference, we reproduce Order 5 Rule 9 and Order 5 Rule 17 of the C.P.C. which reads as under: "1 [9. Delivery of summons by Court.--(1) Where the defendant resides within the jurisdiction of the Court in which the suit is instituted, or has an agent resident within that jurisdiction who is empowered to accept the service of the summons, the summons shall, unless the Court otherwise directs, be delivered or sent either to the proper officer to be served by him or one of his subordinates or to such courier services as are approved by the Court. (2) The proper officer may be an officer of a Court other than that in which the suit is instituted, and, where he is such an officer, the summons may be sent to him in such manner as the Court may direct. (3) The services of summons may be made by delivering or transmitting a copy thereof by registered post acknowledgment due, addressed to the defendant or his agent empowered to accept the service or by speed post or by such courier services as are approved by the High Court or by the Court referred to in s....
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....sent 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." 20. A perusal of the above rules of the procedures mentioned in CPC cited (Supra) shows that before resorting to alternate mode of service namely by affixture or by publication or by beating of drums, it is essential to resort to other routine way of service of notice by ordinary post or by registered post with acknowledgement due. How....
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....ng Officer. 25. In our considered opinion, there was no requirement of law to issue 2nd notice u/s. 143(2) as has been done in the present case on 22.10.2013 and 10.7.2014. Further as per law notice u/s. 143(2) is required to be served within a period of 6 months from the end of the financial year in which the return is furnished. In the present case as is clear no notice was served on the assessee within six months of issuance of notice from the end of financial year i.e. before 30.09.2013. In our considered opinion, the Assessing Officer has resorted to affixture of notice by the Ward Inspector on 30.9.2013. The reading of the content of the subsequent notice 22.10.2013 clearly shows that the return of income was filed by the assessee on 30.09.2012 for the A.Y. 2012-13 but there was no reference of earlier notice, if any, issued by the Assessing Officer for fixing the date of hearing as 15.10.2013 or nonappearance of assessee on 15.10.2013 despite service of notice on 30.9.2013. 26. We find an identical issue had come up before the Delhi Bench of the Tribunal in the case of Wg. Cdr. Sucha Singh vs. Income Tax Officer in ITA No. 1605/Del/2012 where the Tribunal after conside....
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....ittedly it was not sent along with acknowledgement due. 25. So, from the entire material available on record we have no hesitation in holding that there has been no valid service of notice under S. 148 of the act upon the assessee as the same was neither tendered to the assessee or his agent, nor the same was refused by either of them. "5.3 Coming to the facts of the case, it is undisputed that the property located at 123, Hargobind Enclave, Delhi was sold by the assessee during assessment year 2008-2009. It is also undisputed that the return of income for assessment year 2009-2010 was filed by the assessee on 04/09/2009 whereas the notice under section 143(2) was dated 14/09/2009 and was served by affixture on 24/09/2009 and, thus, the last known address before the issue of service of notice was H - 234, Naraina Vihar, Naraina, New Delhi i.e. the address mentioned in the return of income for assessment year 2009-2010. The remand report of the AO also admits that all the notices under section 143(2) remained un-served. Thus, the service of the very first notice has, undisputedly, been done by way of affixture whereas order V, rule 12 of CPC provides that wherever ....
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....1 read with order V rule 12 and order V rule 17 of the CPC. Therefore, on the facts and circumstances of the case, we have no option but to quash the entire assessment proceedings. Accordingly, we quash the assessment proceedings and allow the appeal of the assessee on the legal issue. In view of our adjudication in favour of the assessee on the legal issue, the other grounds become academic in nature and are not being adjudicated upon". 27. We find the Delhi Bench of the Tribunal in the case of Sumanglam Sewa Awam Education Samity Vs. ACIT (Supra) while deciding an identical issue has quashed the re-assessment proceedings in absence of proper service of notice by observing as under: "6. we have considered the rival submissions and have perused the facts on record. Undisputedly, notice u/s. 148 was issued on 26.03.2007 and was served upon the assessee through affixture on 16.04.2007. This fact has been recorded by the AO also on Page 2 of the Assessment Order. There is no other evidence on record to even suggest that efforts were made earlier to serve the notice on the assessee. The short question which arises for consideration in this case is as to whether notice under....
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....dant refuses to accept service, or cannot be found.-Where the defendant or his agent or such 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." Order V, Rule 19A provides for simultaneous issue of summons fo....
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....where no other agent is expressly authorized to make and do such appearances, applications and acts" 8. Thus a bare reading of the provisions of the Income visions of the Income Tax Act, 1961 and the Code of Civil Procedure reproduced herein above it is seen that as per order V, Rule 12 of the Code of Civil Procedure, wherever it is practicable per Order V, Rule 12 of the Civil Procedure Code, wherever it is practicable the service has to be erected on defendant in person or on his agent. Admittedly, in the present case, notice under section 148 of the Act was not tendered to the assessee nor the same Was refused at all by the assessee. It was refused by the servant of another person Who by no stretch of imagination can be said to be the agent of the assessee and admittedly no notice was tendered either to the assessee or his agent nor was the same refused either by the assessee or his agent. Under Order V, Rule 17 of the Code of Civil Procedure, the affixation can be done only when the assessee or his agent refuses to sign the acknowledgement or could not be found. Here, in the present case, it is very much apparent from the records that no effort was made by the Income-t....
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....er 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. Rule 19 provides that where a summon 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 examined by another Court, touching his proceedings and may make such further enquiry in the matter as it thinks fit; and shall either declare that the Summon has been duly served or order such service as it thinks fit. At this stage, the attention is also drawn to Rule 20 which provides the circumstances under which the substituted service can be effected. For the benefit of this order, the provisions of Rule 20 are being reproduced 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 to be served by affixing a copy thereof i....