TaxTMI 
TaxTMI 
2025 (1) TMI 373
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.... issued on 8.09.2013. After the search and seizure operation conducted on Prakash Industries Ltd. on 30.12.2012, the assessee company's case was centralized with Central Circle-14, New Delhi, vide an order dated 26.11.2013 passed u/s 127 of the Act by the Commissioner of Income Tax Kolkata-III. The issue under examination during the scrutiny was share premium received by the assessee. The appellant claims to have submitted details / documents / explanation as required by the learned assessing officer for the purpose of assessment in the case of the appellant under section 143(3) of the Income Tax Act, 1961 during the course of assessment proceedings. However, the learned assessing officer has completed the assessment proceedings under section 143(3) of the Income Tax Act, 1961 vide order dated 31.03.2015 at an income of Rs 2,72,85,750/- thereby making an addition of Rs 2,71,50,000/- on account share premium treated as unexplained under section 68 of the Income Tax Act, 1961 and Rs. 1,35,750/- on account of estimated brokerage as unexplained and undisclosed income. The assessee succeeded before the ld.CIT(A) against which the Revenue is in appeal, raising following grounds; ....
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....nd the consequential assessment made under section 143(3) of the Act is invalid and void ab initio." 4. As with regard to the admissibility of the legal ground raised by assessee we are guided by the decision of Hon'ble Bombay High Court in Peter Vaz vs CIT, [2021] 436 ITR 616 (Bom) where the following additional substantial question of law was framed by the Hon'ble Court:- "Whether in the facts and circumstances of the present case, it was open to the appellant/assessee to have supported the orders of the Commissioner (Appeals), based on the ground that the jurisdictional parameters prescribed under section 153C of the I.T. Act were not fulfilled, even without the necessity of filing any cross objections ?" 4.1 We find that while deciding the aforesaid question, the Hon'ble High Court analysed the provisions of Rule 27 of the ITAT Rules and held that an issue, which was not raised before the CIT(A) and which goes to the root of the jurisdiction of the Assessing Officer to initiate the proceedings, can be raised by way of a petition under Rule 27 of the ITAT Rules and the Tribunal should allow the assessee to raise such an issue in the appeal instituted by the Revenu....
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....oned in the notice? Did he try to find the address mentioned in the return? The last known address was the return address, as the return was filed on 28.09.2012 thus on incorrect address the notice is shown to be served. 8. Ld. Counsel has stressed on the fact that this notice shown to be served by affixation is invalid as no affidavit of the Inspector making affixture is filed and he has not even been examined on oath. He submitted that there is absence of two independent witnesses before whom affixture was made. Only one witness of department is self-serving. It was also submitted that in the absence of report of postal authority that notice is returned unserved there as no justification to serve by affixation. Revenue failed to produce any material on record that at the initial stage the notice u/s 143(2) of the Act was ever tried to be served through ordinary course/mode. He submitted that there is onus on AO to have recorded reason to believe that Assessee is intentionally hiding to avoid service or other reasons. Then the report should state names of persons who pointed to Assessee's place of business. The officer does not mention in his report that he knew the place o....
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....ion to the facts of case as assessment has been completed as a regular assessment u/s 143(3) of the Act and there is no case of the AO that on the basis of any satisfaction drawn out of any incriminating material found during the search or having any bearing on the income of the assessee the assessment was conducted. Rather in assessment order it is specifically mentioned that it was case of scrutiny assessment. When there is no case of issuance of any notice u/s 153A or 153C of the Act, the claim that the case of assessee is outcome of search assessment is not sustainable. At the same time, the case of the Assessing Officer is that the notice was duly issued and served by way of affixation by the jurisdictional AO. Thus, to defend the case of the AO on the basis of the judgement in the case of Ashok Chaddha (supra) cannot be appreciated. 12. To consider the question of service of notice u/s 143(2) of the Act was legal, it will be appropriate to reproduce the case which the AO has tried to make out and we consider it appropriate to reproduce the submissions received from the Office of the PCIT in response to the specific query of the earlier Bench to verify as to the date of iss....
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....t comes up from the assessment order that in paras 4 and 5 of the assessment order, the following facts have been narrated:- "4. Accordingly a satisfaction note was recorded by the Assessing Officer of M/s Prakash Industries Ltd. by giving finding that the documents belonging to M/s Rajnil Sales Pvt. Ltd were found at the premises of M/s Prakash Industries Ltd. and these were handed over to the Assessing Officer of M/s Rajnil Sales Pvt. Ltd. on the basis of which satisfaction was recorded by the A.O. before issuing notice u/s 143(2) in the case of the assessee. Having received and in possession of the documents and material for which 143(2) is invoked, based on the satisfaction and having verified the facts, the proceedings u/s 143(2) were initiated. 5. The assessee filed return of income originally u/s 139(1) vide acknowledgment по. 498720381280912 for the relevant year 2012-13 on 28.09.2012 declaring total Income at Rs. NIL. Later, the case was selected for scrutiny. The case was duly centralized with the Central circle-14, New Delhi. Accordingly, statutory notices u/s 143(2) was issued on 18/09/2013." 14. Thus, admitted case of the asses....
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....-13 in the case of M/s. Rajnil Sales Pvt. Ltd., PANAABCR3491C, Address: 2B, Grant Lane, 4th Floor, Room No. 91, Kolkata- 700 012 issued by the I.T.O. Ward-9(3), Kolkata, for service. I attempted to contact to M/s. Rajnil Sales Pvt. Ltd. at their Office Address: 2B, Grant Lane, 4th Floor, Room No. 91, Kolkata 700 012, for service the Notice u/s. 143(2) of the I.T. Act, 1961 on 03.09.2013 at 2.30 P.M., but the assessee could not be found at that address. Again, I attempted to contact the assessee in the same address on 09.09.2013 at 3 P.M. but again the assessee could not be found at the same address. Therefore, I served the Notice u/s. 143(2) of the I.T. Act, 1961 on 09.09.2013 at 3.30 P.M on the conspicuous place at the last known address, in the presence of Shir Amalendu Adak, Inspector of Income Tax. Sd/- (Manish Kaga) Inspector, attached to the O/o the I.T.O. Ward-9(3), Kol. Witness: A Adak Dated: 09.09.2013" 17. Now the said officer has merely mentioned 'Therefore, I served the notice..'. The report is silent of the exact places where the notice was allegedly affixed. There is no independent witness. There is no order sheet supporting t....
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....d not be sustained. On appeal to the Supreme Court: Held, affirming the decision of the High Court, on the facts, that the service of the notices was not in accordance with the law and, therefore, it could not be said that the assessees had been given a proper opportunity to put forward their case as required by Section 33B of the Income-tax Act. Held also, that the question whether the assessees had been served in accordance with the law or not was essentially a question of fact and though the High Court had jurisdiction to entertain their writ petitions challenging the service of notice, the assessees should not have been allowed to invoke the extraordinary jurisdiction of the court." 12. In case of A.A. Kochnadi v. Agriculture ITO, 110 ITR 406, their Lordships of Kerala High Court observed as under: "Where service of a notice on the assessee or his authorized agent or an adult member of his family is not possible, statutes authorize substituted service and such service attributes constructive knowledge of the assessee. To I.T.A. No. 7782/Del/2019 attribute such constructive knowledge, the substituted service must be in accordance with the pres....
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....ntify the same. In the absence of above material evidence, notice dated 5.3.2001 cannot be accepted as served on the assessee in accordance with law. Constructive knowledge of the above notice cannot be attributed to the assessee. In these circumstances, we hold that assessment made Under Section 144 was bad in law. The same is required to be set aside. The AO can issue fresh notice if so authorized under the law. The matter is restored to his file." 8. The principles laid down in the above decision applies to the facts of the assessee's case. In the case on hand there is no any evidence of any independent person having been associated with identification of place of the assessee, local person of area where the place of the assessee to be served is suggested are to be associated to identify the place of the assessee and such report may not be prepared by the process server and other persons sat in their office without involving local person of area. For obvious reasons it is very much necessary that local persons of the area are to be associated in the process of service of notice by affixture. This process of law has not been followed in serving the notice by way of a....
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....ed against the Revenue and in favour of the assessee. Ordered accordingly." 10. In the case of Wg. Cdr. Sucha Singh Vs. Income Tax Officer in ITA. No. 1605/Del/2012 dated 11th April, 2017 the co-ordinate bench of the Delhi Tribunal held as under:- "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 it is practicable, service has to be effected on the defendant in person or on his age....