Income Tax Appellate Tribunal - Mumbai
Dnyaneshwar Trading & Investment ... vs Dcit 1(1)(1), Mumbai on 14 March, 2019
IN THE INCOME TAX APPELLATE TRIBUNAL,
MUMBAI BENCH "D", MUMBAI
BEFORE SHRI RAJESH KUMAR, ACCOUNTANT MEMBER AND
SHRI RAM LAL NEGI, JUDICIAL MEMBER
ITA No.6807/M/2016
Assessment Year: 2008-09
M/s. Dnyaneshwar DCIT 1(1)(1),
Trading & Investments Mumbai
Pvt. Ltd.,
1B, 1st Floor,
Vs.
Court Chambers, 35,
Sir V.T. Road,
New Marine Lines,
Mumbai - 400 020
PAN: AACCD6513G
(Appellant) (Respondent)
ITA No.7536/M/2016
Assessment Year: 2008-09
ACIT 1(1)(1), M/s. Dnyaneshwar
579, Aayakar Bhawan, Trading and Investment
M.K. Road, Pvt. Ltd.,
Mumbai - 400 020 1-B, 1st Floor,
Vs.
Court Chamber, 35,
Sir V.T. Road,
New Marine Lines,
Mumbai - 400 020
PAN: AACCD6513G
(Appellant) (Respondent)
Present for:
Assessee by : Shri Mahesh O. Rajora, A.R.
Revenue by : Shri D.G. Pansari, D.R.
Date of Hearing : 21.02.2019
Date of Pronouncement : 14.03.2019
ORDER
Per Rajesh Kumar, Accountant Member:
The above titled cross appeals one by the assessee and the other by the Revenue have been preferred against the order 2 ITA No.6807/M/2016 ITA No.7536/M/2016 M/s. Dnyaneshwar Trading and Investment Pvt. Ltd.
dated 31.08.2016 of the Commissioner of Income Tax (Appeals) [hereinafter referred to as the CIT(A)] relevant to assessment year 2008-09.
ITA No.6807/M/2016 (Assessee's appeal)2. The grounds raised by the assessee are as under:-
"1. (a) The Commissioner of Income Tax(Appeals) - 2, Mumbai [hereinafter referred to as 'the CIT(A)'] erred in confirming the action of AO in reopening of the assessment by invoking the provisions of section 147 read with section 148 of the Income Tax Act,1961 ("the Act").
The Appellant submits that the notice issued u/s 148 of the Act and reopening of assessment u/s 147 of the Act is bad in law, illegal, ultra- virus and contrary to the provision of the Act and shall be quashed.
(b) The CIT(A) erred in confirming the assessment order u/s 147 of the Act passed by the AO, without valid service of notice u/s 148 of the Act.
The Appellant submit that there is no valid service of notice u/s 148 of the Act on the Appellant hence the reopening of assessment is bad in law, illegal, ultra-virus and contrary to the provision of the Act and same shall be quashed.
(c) The CIT(A) erred in confirming the re-opening of the assessment u/s 148 of the Act on the basis of general statement recorded of third parties, and those statements were also subsequently retracted by such parties.
(d) The CIT(A) erred in confirming the action of AO in passing the assessment order u/s 147 of the Act without disposing of Appellant's objection against reopening of assessment u/s 148 of the Act.
(e) The CIT(A) erred in confirming the action of AO in reopening the assessment u/s 148 of the Act, without obtaining the requisite prior approval/sanction as required u/s 151 of the Act and without providing the same to the Appellant in spite of repeated demand by the Appellant during the reassessment proceedings.
(f) The CIT(A) erred in confirming the action of AO in issuing the notice u/s 148 of the Act after expiry of four years from the end of relevant assessment year. The Appellant submits that in its case assessment proceeding has been completed u/s 143(1) of the Act after considering full details/disclosure filed by the Appellant; hence, the same cannot be reopened after expiry of four years from the end of relevant assessment year."
3. The sole issue raised by the assessee is against the order of CIT(A) upholding the order of AO on re-opening of assessment 3 ITA No.6807/M/2016 ITA No.7536/M/2016 M/s. Dnyaneshwar Trading and Investment Pvt. Ltd.
u/s 147 r.w.s 148 of the Act which is bad in law and void on the ground that there has not been any proper and valid service of notice issued u/s 148 of the Act.
4. The facts in brief are that the assessee is engaged in the business of trading in shares, securities, investments and finances etc. The return of income was filed on 30.9.2008 declaring an income of Rs.4,30,11,335/- which was processed u/s 143(1) of the Act. Thereafter the assessment was re-opened by the AO u/s 147 of the Act by issuing notice u/s 148 of the Act on 31.3.2015 and served through affixture on the same day on the business premises of the assessee. Notice u/s 143(2) of the Act was issued on 19.2.2016 besides issuing notice u/s 142(1) from time to time. The assessee objected to the re- assessment proceedings as initiated u/s 147 of the Act vide letter dated 14.1.2016 filed on 15.1.2016 wherein the assessee denied to have received any notice u/s 148 and requested the AO to provide a copy of the notice issued u/s 148 along with proofs of service of notice. The AO disposed of the objections of the assessee vide letter dated 18.1.2016. In the said letter the AO stated that pursuant to approval of Addl. CIT Mumbai dated 30.3.2015, the notice was issued u/s 148 on 31.3.2015 which served through affixture on the assessee premises by the income tax inspector who was deputed to serve the notice personally and manually as the office of the assessee was closed. The notice was served through affixture as it was getting time barred on 31.3.2015. Thereafter the reasons were requested by the assessee and duly provided. The case of the was re-opened following a survey on the Capri Group on 9.10.2014 during 4 ITA No.6807/M/2016 ITA No.7536/M/2016 M/s. Dnyaneshwar Trading and Investment Pvt. Ltd.
which it came to light that the assessee has received share application money from various companies to the tune of Rs. 32.85 Cr in the current financial year and issued shares at a very high premium which were bought back by the Capri Group at very low rates. Finally the assessment was framed by the AO brushing aside the contentions of the assessee that re- assessment proceedings were bad in law for the want of service of notice u/s 148.
5. In the appellate proceedings the ld CIT(A) also dismissed the appeal on the legal issue of re-opening of assessment while allowing the appeal of the assessee on merits. The ld CIT(A) observed and held as under:-
"(e) Notice not served to the appellant The Appellant had contended that the notice u/s 148 of the Act was not served to the appellant and therefore the entire re-assessment proceeding is invalid. On the other hand, the AO in the assessment order vide para 2 of the page 2 categorically mentioned vide letter dated 18/01/2016 rebutted all the objections raised by the appellant by passing a speaking order u/s 147 and further the reasons for reopening was also provided to the appellant company on 22/01/2016.
Therefore, I am of the opinion that the objections raised by the appellant company is not found to be in order. Hence, the contention of the appellant is rejected.
In view of the above, the ground No.1 is dismissed."
6. The ld AR vehemently argued before us that re-assessment proceedings are bad in law and void ab-initio as there was no valid service of notice issued u/s 148 of the Act. The ld AR submitted that the AO issued the notice u/s 148 on 31.3.2015 and served the notice through affixture on the same day as stated in the letters of the assessee dated 18.1.2016 and 22.1.2016. The ld AR took us through the report of the inspector who was deputed to serve the notice in which the inspector stated that upon finding the office premises closed he was not 5 ITA No.6807/M/2016 ITA No.7536/M/2016 M/s. Dnyaneshwar Trading and Investment Pvt. Ltd.
left with any option but to serve the notice by affixture on the front door of the office. The ld AR controverted the report of the inspector by referring to the attendance report filed at page no. 781 extracted from biometric machine which clearly mentioned that office was opened till 8.36 p.m. Shri Suresh Gatani left the office at 8.36 p.m whereas Shri Ashok Aggarwal left at 8.34 p.m. The ld AR contended that the service of notice was in clear violation of the provisions of section 282(1)(b) of the Act which provides for service of notice as per the provisions of Civil Procedure Code by affixture of notice. The ld.AR argued that the notice can only by served through affixture when the assessee is avoiding the service or after due diligence, the revenue can not find the assessee. The ld AR submitted that in the instant case it is not the case of the AO that assessee is trying to avoid service or was not traceable nonetheless affixture mode was taken up to serve the notice only because the it was the last date for service of notice issued u/s 148 as the case was getting time barred on 31.3.2015. The ld AR argued that AO has not been able to demonstrate that the despite the best efforts or due diligence by the AO, the assessee could not be found out which led service of notice through affixture. The ld AR further stated before the bench that for nearly 10 months after the affixture of notice, no letter/notice/correspondence was issued to the assessee regarding the re-assessment proceedings despite the fact the office of the assessee is just behind the Ayakar Bhawan. The first notice was on 12.1.2016 u/s 142(1) stating therein that assessee has not filed any return of income in compliance to notice issued u/s 148 issued on 31.3.2015 and directed the assessee to file the same failing which the assessment would be 6 ITA No.6807/M/2016 ITA No.7536/M/2016 M/s. Dnyaneshwar Trading and Investment Pvt. Ltd.
framed ex-parte. The ld counsel contended that these foregoing facts unequivocally proved that there is no valid service of notice issued u/s 148 dated 31.3.2015 nor within a reasonable period of time thereafter and thus the proceedings are invalid , null and void and may be quashed. In defence of his arguments the ld AR relied on the following decisions:
1. Heaven Distillery (P) Ltd Vs Income Tax Officer (2017) 185 TTJ 0197 (Mumbai)
2. Sanjay Kumar Mishra Vs ACIT (2006) 100 TTJ 862(Jab)
3. Sanjany Badani Vs DCIT (2014) 35 ITR(T) 536 (Mumbai Tri)
4. Ketan Shah Vs ACIT (2010) 7 taxmann.com 88(Mum)
5. World Wide Exports (P) Ltd Vs ITO (2004) 91 ITD519 Delhi
6. CIT Vs Hotline International Pvt. Ltd. (2008) 296 ITR 333 (Delhi).
7. Per Contra, the DR submitted that the AO has followed the due procedure laid down in the Act for service of notice and therefore the contentions of the assessee that there is no proper service of notice issued u/s 148 of the Act have no legal strength. The DR submitted that the notice u/s 148 of the Act was issued 31.3.2015 after obtaining necessary approval of the Addl. CIT granted on 30.3.2015. Thereafter the inspector Income tax Shri Jagdish Jethanandani was assigned the duty to serve the notice on the assessee. Mr Jagdish Jethannandani visited the office of the assessee. Upon finding the office closed, the inspector served the notice by way of affixture on the front door of the office No. 1-B, Court Chambers, 35, V.T. Marg, New 7 ITA No.6807/M/2016 ITA No.7536/M/2016 M/s. Dnyaneshwar Trading and Investment Pvt. Ltd.
Marine Lines, Mumbai as per the report of the inspector dated 31.3.2015. The ld DR defended the service of notice by affixture on the ground that that was the last of service and therefore the revenue has no alternative but to affix the notice on the premises of the assessee. In any case the notice issued u/s 148 of the Act was duly served on the assessee and therefore the appeal of the assessee may be dismissed.
8. We have heard the rival submissions of both the parties and perused the material placed before us carefully including the decisions relied upon by the ld Counsel of the assessee. In the instant case, the issue is whether the notice affixed on the door of the assessee on 31.3.2015 on the last day of limitation for service of notice under the provisions of section 151 of the Act is a valid service specially when no efforts were made by the revenue to serve the notice through the normal course and straightway affixed the notice. The report of the inspector cited the reasons that 31.3.2015 being the last day on which the notice could be served on the assessee to avoid the limitation.
So there was no option but to affix the notice when the office was found closed. Now in order to understand the process to be followed in issuing the notice and in effecting the service, we will first refer to the various documents filed before us in that context. The issue of notice u/s 148 on 31.3.2015 after the approval of Addl. CIT on 30.3.0215 are undisputed. The said notice was served by way of affixture is also not disputed. Let's refer to the report of the Income Tax Inspector dated 31.3.2015 of the inspector income tax Mr Jagdish Jethanandani which is extracted below:-
8 ITA No.6807/M/2016 ITA No.7536/M/2016M/s. Dnyaneshwar Trading and Investment Pvt. Ltd.
"To, The Dy. Commissioner of Income-Tax-l(l)(l), Mumbai.
Respected Sir, Sub: Report regarding service by affixture Notice U/s 148 of the Income Tax Act, 1961 dtd. 31.03.2015 In the case of M/s. Dnyaneshwar Trading & Investment P Ltd. [P.A. No. AAACD6513G] Add: 1-B. Court Chambers, 35, Vithaldas Thacekary Marg New Marine Lines. Mumbai-20.-Reg.
Kindly refer to the above subject matter.
As directed by you, I, Jagdish Jethanandani, Inspector of Income Tax Mumbai visited the premises addressed above today evening i.e on 31.03.2015 and found that the office was closed. I was left with no option but to serve the notice by affixture. The notice was affixed on the front door of office No. 1-B, Court Chambers, 35, Sir V.T. Marg, New Marine Lines, Mumbai-400 020. (Office address of the Assessee). This is for your kind information."
9. It is clear from the above report that when the inspector visited the office of the assessee in Marine Lines, Mumbai, the office was closed and he has no option but to affix the notice which was affixed on the front door of the assessee. Thus it is abundantly clear from the above said letter that no due efforts or diligence was made by the AO to serve the notice and straightway made affixture. Section 282(1)(b) of the Act provides for service of notice by way of post or by courier or such other mode as may be approved by the Board or in such other manner as provided in the Civil Procedure Code. The provisions of Civil Procedure Code envisages the circumstances when the service can be affected by affixture. The order V of CPC Rule 12 of CPC provides that that the service, wherever practicable shall be made on the defendant in person or on an agent empowered to 9 ITA No.6807/M/2016 ITA No.7536/M/2016 M/s. Dnyaneshwar Trading and Investment Pvt. Ltd.
accept service. The order V of CPC Rule 17 provides service of notice by way of affixture on the defendant on his residence or place of business on the outer door if defendant refuses to accept the service or can not be found. The serving officer can affix the notice on the out door of the house/residence where the defendant ordinarily resides or carries on business. The serving officer then report the circumstances under which the notice was affixed and name and address of the person by whom the house/place of business was identified and in whose presence the copy of the notice was affixed.
As is clear from the above that the inspector income tax stated in his report that only upon finding the door closed he has no option but to make affixture of the notice on the out door of the assessee. There is no doubt that the AO has not made any due effort or diligence to serve the notice and affixed the same on the date of issuance of the said notice. There is nothing on records that the assessee was hiding or avoiding the service of notice and there is also no evidence on records that the service could not be made through ordinary ways/means. In this the case the ordinary means of service of notice were not used or exhausted and the service was made directly through affixture at the last minutes on 31.3.2015 to avoid limitation expiring on 31.3.2015. Thus there is merit and force in the arguments of the ld AR that there is no valid service of notice and the proceedings are null and void as the notice issued u/s 148 was not served upon the assessee. Now we shall evaluate the facts of the assessee's in the light of various decisions referred to during the course of the hearing. In the case of Heaven Distillery (P) Ltd(Supra) the coordinate bench has held that :-
10 ITA No.6807/M/2016 ITA No.7536/M/2016M/s. Dnyaneshwar Trading and Investment Pvt. Ltd.
"7. We have carefully considered the rival submissions. The grievance of the assessee is essentially arising from the provisions of section 282 of the Act dealing with provisions relating to the service of notice. It is sufficient to note for the present, that sub-section (1) of section 282 of the Act prescribes that a notice under this Act may be served on the person therein named either by post or as if it were a summons issued by a Court under the Code of Civil Procedure, 1908 ( 5 of 1908). Factually speaking, para-1 of the assessment order makes it clear that the notice under section 143(2) of the Act issued on 29/11/2001 has been served on 29/11/2001 by affixture. The plea raised by the assessee is that service of notice by affixture could have been resorted to only when the Assessing Officer discharges his initial onus by showing that he had reason to believe that assessee was intentionally hiding itself for the purpose of avoiding service or there were other good reasons to come to the conclusion that the notice could not be served in the ordinary way.
7.1 . At the time of hearing, the Ld. Representative for the assessee had relied upon the judgment of the Hon'ble Delhi High Court in the case of CIT vs. Hotline International Pvt. Ltd., 296 ITR 333(Del), which upholds the proposition that service of notice by affixture can be done only when assessee or his agent refuses to sign acknowledgement or could not be found. In the case before the Hon'ble Delhi High Court, the Assessing Officer issued notice under section 148 of the Act on the assessee company through the Inspector, who found that the factory was closed due to Holi festival holidays. As security guard refused to receive notice, it was served by affixture and notice was also sent by registered post which remain uncomplied with. The assessment so completed was sought to be challenged on the ground as being bad in law as no proper service of notice under section 148 was effected by the Assessing Officer on the assessee. In this background, the Hon'ble High Court examined the provisions of section 282 of the Act and also Order -V, rule 12 of the Code of Civil Procedure 1908 and observed that wherever it is practicable the service has to be effected on an assessee in person or an agent. Further, it has been observed that under Order-V, rule 17 of Code of Civil Procedure 1908 service by affixture can be done only when the assessee or his agent refuses to acknowledge the notice or assessee could not be found. Further, the Hon'ble Delhi High Court, in the case of CIT vs. Chandra Agencies, 202 Taxman 106 (Del) has observed that the service of notice by affixture can be resorted to only when Revenue has discharged initial onus by showing that there was reason to believe that the assessee was intentionally avoiding the authorities for the purpose of avoiding service of notice or that there were other good reasons to come to the conclusion that summons could not be served in the ordinary way. Before us, the Ld. Representative for the assessee has also relied upon the judgment of the Hon'ble High Court of Andhra Pradesh in the case of CIT vs. Godavari Electrical Conductors, ITA No.249 of 2003 dated 29/10/2014; wherein the decision of the Tribunal, inter-alia, holding that the issuance of notice straightway through affixture was not proper, has been approved.
7.2. In the background of the aforesated legal position, we may now examine the fact position in the instant case. In the present case it is undeniable that the notice under section 143(2) dated 29/11/2001 has been directly served through affixture. The CIT(A) has observed that there was good reason for the Assessing 11 ITA No.6807/M/2016 ITA No.7536/M/2016 M/s. Dnyaneshwar Trading and Investment Pvt. Ltd.
Officer to take this step because of the need to avoid time lag as otherwise the service of notice was becoming time barred. In our considered opinion, the aforesaid cannot be considered to be a reason to justify the service of notice by affixture after by-passing the normal procedure of service of notice. In fact, in the context of such plea of the CIT(A), the judgment of the Hon'ble Delhi High Court in the case of CIT v. Dewan Kraft System (P) Ltd., 165 Taxman 139 (Del) has been rlied upon. In this case, the' notice was served on the assessee by affixture and it was the case of the Assessing Officer that the notice under section 143(2) sent by speed post could not be served and, therefore, an Inspector was deputed, who went to the office premises of the assessee and on finding the same locked, the notice was served by affixture. The assessee contended that the notice was invalidly served and the Tribunal took note of the fact that the notice was issued at the very last minute to ensure that the case did not become time barred and no efforts were made by the Assessing Officer to find out the whereabouts of the assessee to serve the notice, but a short cut was taken by the Inspector by resorting to service by affixture. The Tribunal upheld the plea of the assessee and observed that the Revenue had failed to discharge the onus to prove that the notice was in fact served upon the assessee within the prescribed period. The Hon'ble Delhi High Court upheld the decision of the Tribunal by making the following discussion.
"11. We have examined the copies of the notices issued by the Assessing Officer and find that the notices was issued at the last minute. Since the office of the assessee was closed, no efforts were made by the Assessing Officer to find out the whereabouts of the assessee to serve it but a short cut was taken by the Inspector who resorted to affixation, which was carried out in the absence of any independent witness. It appears to us that the entire exercise of sending the Inspector and resorting to affixation was carried out only to ensure that the case does not become time-barred, knowing fully well that the notices have been issued at the very last minute and could not have been served on the assessee without undertaking some out of the ordinary exercise as has been done in the present case. "
7.3 In the present case too, there is nothing to suggest that the assessee was intentionally hiding from the authorities for the purpose of avoiding service or there was any other good reason to conclude that the notice could not be served in an ordinary way. The inaction or delay on the part of the Assessing Officer in issuing notice under section 143(2) of the Act cannot be a ground to straightway effect service by affixture. Thus, in the instant case, the ordinary process not having been exhausted or carried out by the Assessing Officer, he was not justified in directly resorting to service of notice by an affixture merely because he had issued the notice at the last minute i.e. on 29/11/2011 so as to avoid the limitation expiring on 30/11/2001. Under these circumstances, we find ample force in the plea of the assessee on the issue of wrong assumption of jurisdiction by the Assessing Officer by issuing the instant notice under section 143(2) of the Act.
7.4. Before us, another plea raised by the Revenue is that the assessee had appeared before the Assessing Officer on 10/12/2001 and that on that basis it is sought to be canvassed that, in any case, assessee was aware of the notice under section 143(2) of the Act having been served on 29/11/2001. On this aspect, the Ld. Representative for the assessee pointed out that the appearance by the assessee 12 ITA No.6807/M/2016 ITA No.7536/M/2016 M/s. Dnyaneshwar Trading and Investment Pvt. Ltd.
on 10/12/2001 was in compliance of notice issued by the Assessing Officer on 06/12/2001 in the name of the Director of the assessee company, a copy of which has been placed in the paper book at page 1. It was therefore, contended that it is wrong on the part of the Revenue to contend that assessee attended before the Assessing Officer on 10/12/2001 in response to the notice issued under section 143(2) of the Act dated 29/11/2001. We find the aforesaid plea of the assessee quite potent and is in fact supported by the material on record. The Ld. Representative for the assessee had referred to a communication dated 10/12/2001 addressed to the Assessing Officer, wherein it has been communicated that the notice was received on 10/12/2001 itself, which ostensibly is the notice dated 6/12/2001 addressed to the Director of the company. Therefore, the aforesaid plea of the Revenue is misplaced and is hereby rejected.
7.5. Apart therefrom, the Ld. Representative for the assessee pointed out that the defect in the service of notice namely non-service of notice by proper means and directly by affixture is not a curable defect and he has assailed the reliance placed by the Ld. Departmental Representative on the provisions of section 292BB of the Act in this regard. In our considered opinion, section 292BB, in any case, does not come to the rescue of the Revenue in the present case because it has been introduced by Finance Act, 2008 w.e.f. 01/04/2008 and it would not apply in the instant case. The Hon'ble Bombay High Court in the case of CIT v. Salman Khan, Income Tax Appeal (L) No.2362 of 2009 dated 1st December, 2009 has held that section 292 BB of the Act introduced w.e.f. 01/04/2008 is prospective in nature and would not apply to the assessment years earlier than assessment year 2008-09. Therefore, the aforesaid plea of the Revenue is also misplaced and is rejected.
7.6. Before parting, we may also refer to reliance placed by the Ld. Departmental Representative on the judgment of the Hon'ble Delhi High Court in the case of CIT vs. Vision Inc., 21 taxmann.com 515 (Del) to emphasize that once assessee has participated in assessment proceedings in pursuance to the notice issued for hearing, it amounted to a valid service of notice. In the case of Vision Inc.(supra), the relevant facts were that in the absence of partners of assessee firm notice under section 143(2) of the Act was served on the employee of the firm at official address. In the appellate proceedings, assessee raised an objection that in the absence of proper service of notice under section 143(2) of the Act, assessment order deserves to be set-aside. The aforesaid stand of the assessee did not prevail with the Hon'ble Delhi High Court. The Hon'ble High Court noted that notice has been served at the assessee's premises and since at the relevant point of time the partners were out of station, notice was served on employee of the firm. The Hon'ble High Court specifically noted that assessee has participated in assessment proceedings pursuance to the notice being disputed by the assessee. In this background, the Hon'ble High Court noted that even if one was to proceed on the assumption that notice was served neither on the two partners of the assessee firm and that it was served on some person, who was not specifically authorized to receive the notice, yet service of notice could not be invalidated because the very same notice had been complied with by the assessee. Notably, the Hon'ble High Court noticed that the notice issued on 30/12/2004 had fixed the hearing on 05/01/2005 before the Assessing Officer. On 05/01/2005 assessee participated in the proceedings before the Assessing Officer and according to the Hon'ble High 13 ITA No.6807/M/2016 ITA No.7536/M/2016 M/s. Dnyaneshwar Trading and Investment Pvt. Ltd.
Court such participation was to be attributed to the service of the notice on 30/12/2004 albiet upon a person not authorized to receive the same. This fact- situation lead the Hon'ble High Court to conclude that the service of notice could not be invalidated. In our considered opinion, the said judgment of the Hon'ble Delhi High Court does not help the case of the Revenue herein because the fact- situation in the present case stands on an entirely different footing. In the present case, it is quite clear that the appearance by the assessee on 10/12/2001 was not in compliance of the notice issued by the Assessing Officer on 29/11/2001, but it was in compliance of a notice issued by the Assessing Officer on 06/12/2001 in the name of the director of the assessee company . Therefore, to say that the assessee company had come to know about the assessment proceedings in on terms of the notice issued under section 143(2) of the Act dated 29/11/2001 is facts a misnomer Therefore, in our view, the ratio of the judgment of the Hon'ble Delhi High Court in the case of Vision Inc. (supra) is not applicable to the facts of the present case.
7.7. In conclusion, it has to be held that the notice under section 143(2) of the Act has not been served within the time and the mode prescribed under the Act and as a consequence, the impugned assessment framed under section 143(3) of the Act is void ab-initio. Accordingly, the assessment order dated 10.11.2003 is liable to be quashed. We hold so.
7.8. In the result, the plea of the assessee is allowed and since assessment order has been quashed, all other Grounds raised by the assessee relating to merits of the addition become academic and are dismissed as infructuous.
8. Resultantly, appeal of the assessee is allowed, as above."
In the case of Sanjay Kumar Mishra Vs DCIT(Supra ) the coordinate bench held as under:
"14. We have gone through the record of the case and asked the copy of the order sheet from the learned Departmental Representative but the learned Departmental Representative did not give us the photocopy of all the order sheets and only the first page was handed over to us. We have also noted from r. 19A of the CPC, 0. 5 that it is mandatory on AO to serve the notice through registered post AD addressed to the assessee along with notice being served personally unless and until the AO did not record the finding that the service of notice through registered post on the facts and circumstance of the case is not necessary. Learned Departmental Representative could not bring any evidence or proof that the notice has been sent to the assessee through registered post AD nor any evidence has been produced that the AO has given finding that sending of the notice through registered post is not necessary. Even no such finding has been recorded on the order sheet. From the first page of the order and from the impression of the ink/writing it appears as if the entry dt. 15th Feb., 1999 to 31st March, 1999 has been made at one go. Therefore, we find force in the submission of the learned Authorised Representative that no notice has been served on the assessee prior to 31st March, 1999 and it was only notice issued on 30th March, 1999 the copy of which is available at p. 6 has been served on the assessee for the first time on 31st 14 ITA No.6807/M/2016 ITA No.7536/M/2016 M/s. Dnyaneshwar Trading and Investment Pvt. Ltd.
March, 1999 and since the assessment was getting time-barred, the AO has tried to bring the evidence on record that the notice has been served on the assessee prior to 31st March, 1999. Genuinenity of the photocopy of the notice available at p. 6 of the paper book has not been denied by the learned Departmental Representative in the open Court.
15. We have also gone through the case laws also in this regard. Hon'ble Delhi High Court in the case of R.L Narang vs. CIT (1982) 136 ITR 108 (Del), has held as under :
"The above two modes of serve are alternative and it is the option of the Department to adopt either of the two. As regards the former the provisions of s. 27 of the General Clauses Act, 1897, become relevant.
Sec. 27 of the General Clauses Act, provides that where any Central Act or Regulation authorities or requires any document to be served by post, then unless a different intention is drawn, the serve shall be deemed to be effected properly if a correctly addressed and stamped letter containing the document is dispatched by registered post; and unless the contrary is proved, such a letters would be deemed to have been delivered in the ordinary course of post. The IT Act is a Central Act and s. 282 provides for service by post. As such the provisions of s. 27 of the General Clauses Act, 1897 are applicable. From perusing s. 27 of the General Clauses Act, it is apparent that in order to presume service having been effected, the document or letter should be sent by registered post. A notice sent under certificate of posting and not by registered post would not amount to proper service."
16. Delhi Bench of Tribunal in the case of Jain Marbles vs. IAC (1989) 33 777 (Del) 526 held as under:
"Rule 19A in 0. 5 which lays down that the Court shall, in addition to, and simultaneously with, the issue of summons for service in the manner provided in rr. 9 to 19 also direct the summons to be served by registered post AD. The proviso to r. 19A(1), however, empowers the Court to dispense with registered post AD serve in appropriate causes. But for that, in the fitness of things a special order in writing may be necessary. Further, there is and can be no presumption in law as to the exact date of service of a notice purported to be sent under registered cover much less any presumption of valid service.
17. Hon'ble Punjab & Haryana High Court in the case of Ramesh Khosla vs. ITO (1984) 41 CTR (P&H) 138 : (1985) 154 ITR 556 (P&H) held as under :
"Under s. 282 of the IT Act, 1961, the IT authorities can adopt any one of the two alternative modes of service of notices, i.e., by post or in the manner provided in the CPC for the service of summons. The words "issue" and "service" are not synonymous, yet in the light of the provisions of s. 114 of the Indian Evidence Act, 1872, and s. 27 of the General Clauses Act, 1897, a notice is deemed to have been served on the addressee if it has been sent through prepaid registered posts or letter. Even in case where the addressee has refused to accept the registered envelope tendered to him by the postman, he is to be imputed with the knowledge 15 ITA No.6807/M/2016 ITA No.7536/M/2016 M/s. Dnyaneshwar Trading and Investment Pvt. Ltd.
of the contents thereof and in spite of that refusal, the notice or the contents of the envelope are to be deemed to have been duly served on the addressee.
18. Hon'ble Orissa High Court in the case of ITO vs. Manmohan Lal (1988) 72 CTR (Oh) 109 : (1988) 173 ITR 10 (Ori) held as under :
"On a reference to 0. 5 of the Code, it appears that rr. 9 to 19 deal with service of summons through a process server. Rule 19 A deals with simultaneous issue of summons for service by post in addition to personal service. Sub-r. (1) thereof makes provision for service of summons by registered post with AD simultaneously with the issue of summons for service in the manner provided in rr. 9 to 19 by a bailiff. According to sub-r. (2), service of summons by registered post with AD shall be deemed to be sufficient it is delivered either to the defendant or his agent authorised to receive the notice. In case it is refused either by the addressee or by his authorised agent, it will be presumed that the notice has been duly served. According to the proviso below sub-r. (2), if the notice is properly addressed, prepaid and duly sent by registered post with AD, a declaration by the postal employee that the notice was refused shall be presumed even through the acknowledgement slip has been lost or mislaid or for any other reason has not been received by the Court within 30 days from the date of issue of the notice."
19. Hon'ble Calcutta High Court in the case of Keshab Narayan Banerjee vs. CIT (1999) 156 CTR (Cal) 109 : (1998) 101 Taxman 512 (Cal) has held that :
"the minimum that was required to (be) shown for establishing proper service by registered post was an endorsement that an attempt was made to serve the assessee and that either he was not available at his residence or that there was no one willing to accept the service on his behalf."
Tribunal, Jaipur Bench in the case of Prakash Chand Lunia vs. ITO (1996) 54 TTJ (Jp) 383 : (1996) 56 ITD 1 (Jp) has held that :
"Sec. 27 of the General Clauses Act, 1897, however lays down that if a letter has been duly posted with necessary and address of the addressee thereupon then there may arise a rebuttable presumption to the effect that letter was delivered or tendered to the addressee rebuttable presumption such presumption may come either from the endorsement of the postman himself or through the addressee.
Where the postman has returned the posted letter with the endorsement 'left', such endorsement itself suggests that delivery or tender of the letter could not be made on the addressee. The very endorsement itself, thus, would rebut the presumption created under s. 27 of the General Clauses Act, 1897 in favour of the service of the posted letter on the addressee."
20. As observed by the Hon'ble Calcutta High Court in Tripura Modern Bank Ltd. vs. Basen & Cross-objection AIR 1952 Cal 781, in the case of service by affixation, it is not sufficient to state in the affidavit of service that the process server was satisfied upon enquiry that the defendant could not be found at his residence within a reasonable time. Facts must be stated in the affidavit to show that enquiries were 16 ITA No.6807/M/2016 ITA No.7536/M/2016 M/s. Dnyaneshwar Trading and Investment Pvt. Ltd.
made and whether it was reasonable under the circumstances to assume that the defendant could not be found at his residence within a reasonable time. The Court must be satisfied that the process server was justified in coming to such a conclusion and in the absence of particulars it cannot do so. CIT vs. Hyderabad Deccan Liquor Syndicate (1974) 95 ITR 130 (AP).
21. In case of Kunj Behari (supra), the Hon'ble Punjab & Haryana High Court has held that the condition for service by affixture was not satisfied. Therefore, the service made on assessee were not valid. Hence, the appeal of the assessee was allowed.
22. In the case of Ramendra Nath Ghosh (supra), the Hon'ble Supreme Court has confirmed the order of High Court by holding that on the facts that service of notices was not in accordance with law and, therefore, could not be said that the assessee had been given a proper with law and, therefore, could not be said that the assessee had been given a proper opportunity to put forward their case, as required by s. 33B of the IT Act. The facts in this case were that the Inspector of income-tax who had to serve notices under s. 33B of the IT Act, 1922, claimed to have served the notices by affixing them on the assessee's place of business but in his report did not mention the names and addresses of the persons who identified the place of business of the assessees. The assessees, however, claimed that they had closed their business long before the notices were issued. On writ petitions filed by the assessees, the High Court held that there was no proper service on the assessee and the orders of the CIT pursuant thereto could not be sustained.
23. In view of the aforesaid discussion, we are of the view that the notice has not been served on the assessee in this case in accordance with s. 282 of the IT Act earlier to 31st March, 1999. In the absence of service of notice, the assessment order passed on 31st March, 1999 is a nullity and cannot be sustained in the eyes of law. We, therefore, set aside the order of the CIT (A) on this issue and annul the order passed by the AO.
24. We have already held that the order passed by the AO is barred by limitation. We cannot direct the AO to make a fresh assessment because that would tantamount to extending the limitation for which we are not competent. Our aforesaid view is duly supported by the decision of the Hon'ble Supreme Court in the case of Hope Textiles Ltd. vs. Union of India (1994) 117 CTR (SC) 314 : (1994) 205 ITR 508 (SC).
25. In the result, the appeal filed by the assessee on this issue is allowed."
Sanjay Badani and Another Vs DCIT(Supra ) the coordinate bench held as under:
"15. In view of the above, it is clear that there was no valid service of notice u/s. 143(2) by way of affixation. Since in the instant case, the department has not been able to demonstrate that notice u/s. 143(2) was served within the statutory time limit, the assessment made on the basis of such invalid notice could not be treated 17 ITA No.6807/M/2016 ITA No.7536/M/2016 M/s. Dnyaneshwar Trading and Investment Pvt. Ltd.
to be valid assessment and, hence, such assessment order deserves to be treated as null and void and liable to be quashed and annulled. Accordingly, we allow assessee's appeal on legal issue regarding non-service of notice u/s. 143 (2). As we have already allowed assessee's appeal on legal issue, we are not going to discuss the merits of the addition made on account of deemed dividend u/s. 2(22)(e) of the Act."
In the case of Ketan V. Shah Vs ACIT(supra) has held that without exhausting the ordinary mode of services, the service through affixture is proper service.
In the case of Parshotam Singh Vs ITO (Supra) the coordinate bench held that service through affixture is illegal and void ab- initio and the assessment order was quashed when the notice was issued on 31.3.1978 and served on the same day by affixture.
In the Hon'ble Delhi High Court in the case of CIT Vs Hotline International (P) Ltd (supra) held has that where the serving officer does not make any efforts to locate the assessee, the service by affixture in invalid and re-assessment proceedings are bad in law. The background facts in this case are that the serving officer visited the office of the assessee to serve the notice and security guard informed that the office is closed for holi festival. The serving officer made the affixture which was held to be invalid.
The case of the assessee is squarely covered by the ratio laid down by the Co-ordinate benches of the Tribunal and the Hon'ble High Court and therefore respectfully following the above decisions we hold that the service of notice issued u/s 148 dated 31.3.2015 through affixture on 31.3.2015 is not a 18 ITA No.6807/M/2016 ITA No.7536/M/2016 M/s. Dnyaneshwar Trading and Investment Pvt. Ltd.
valid service and accordingly the re-assessment proceedings and consequent order are quashed.
10. In result, the appeal of the assessee is allowed.
ITA No.7536/Mum/2016 (Revenue's Appeal)11. Since we have quashed the re-assessment proceedings in the assessee's appeal, the appeal of the revenue on merits becomes infructuous and need not be adjudicated and is accordingly dismissed.
12. The appeal of the assessee is allowed and appeal of the Revenue is dismissed.
Order pronounced in the open court on 14.03.2019.
Sd/- Sd/-
(Ram Lal Negi) (Rajesh Kumar)
JUDICIAL MEMBER ACCOUNTANT MEMBER
Mumbai, Dated: 14.03.2019.
* Kishore, Sr. P.S.
Copy to: The Appellant
The Respondent
The CIT, Concerned, Mumbai
The CIT (A) Concerned, Mumbai
The DR Concerned Bench
//True Copy// [
By Order
Dy/Asstt. Registrar, ITAT, Mumbai.