M/s. Mico Steels (P) Ltd., New Delhi V. ITO, New Delhi

ITA 1669/DEL/2014

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 7209 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 5 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-08-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: E
• Next Hearing Date: 21-07-2016
• Assessment Year: 2001-2002
• Appeal Filed On: 21-03-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: UMESH CHANDER DUBEY
• Assessee Lawyers: K C SINGHAL
• Keywords: Period of limitation; Question of law; Procedural lapse; Assessment record
• Section: 244A; 144

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH E, NEW DELHI BEFORE SHRI H.S. SIDHU, JUDICIAL MEMBER AND SHRI ANADI N. MISHRA, ACCOUNTANT MEMBER I.T.A. NO. 1669/DEL/2014 A.Y. : 2001-02 M/S MICO STEELS (P) LTD. H.NO. 1465, SECTOR-15, FARIDABAD - 121007 (PAN: AAACM6695G) VS. INCOME TAX OFFICER, WARD-6(4), NEW DELHI (APPELLANT ) (RESPONDENT ) ASSESSEE BY : SH. KC SINGHAL, A.R. DEPARTMENT BY : SH. UMESH CHANDER DUBEY, SR. DR DATE OF HEARING: 25-07-2016 DATE OF ORDER : 30-08-2016 ORDER PER H.S. SIDHU, JM THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST TH E ORDER OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS)-IX, NEW DELHI DATED 24.2.2014 PERTAINING TO ASSESSMENT YEAR 2001-02 ON THE FOLLOW ING GROUNDS:- 1. ANY NOTICE U/S. 143(2) OF THE INCOME TAX ACT, 1 961 WAS NOT SERVED UPON THE ASSESSEE WITHIN THE TIME PERMITTED BY PROV ISO TO SECTION 143(2) OF THE ACT AND WITHOUT PREJUDICE THE SAME WE RE ALSO NOT ADDRESSED TO THE 'THE PRINCIPAL OFFICER' AS REQUIRE D BY SECTION ITA NO. 1669/DEL/2014 2 282(2)(B) OF THE ACT AND THEREFORE, THE SAME AND CO NSEQUENTIAL ASSESSMENT IS NULL AND VOID AB INITIO. 2. SELECTION OF THE CASE FOR SCRUTINY WITH PRIOR APPROVAL OF THE LD. COMMISSIONER OF INCOME TAX IS BAD IN LAW AND THEREF ORE THE ASSESSMENT IS NULL AND VOID AB INITIO. 3. SHRI R.K. MEENA, PURPORTEDLY ACTING AS THE INCOME TAX OFFICER, WARD 6(3) WHO MADE THE ORIGINAL ASSESSMENT HAD NO JURISD ICTION OVER THE CASE OF THE ASSESSEE AND THEREFORE THE ASSESSMENT I S NULL AND VOID AB INITIO. 4. THE LD. INCOME TAX OFFICER, WARD 6(4) WHO MADE THE REMANDED ASSESSMENT HAD NO JURISDICTION OVER THE CASE OF THE ASSESSEE AND THEREFORE THE ASSESSMENT IS NULL AND VOID AB INITIO . 5. THE LD. COMMISSIONER OF INCOME TAX ( APPEALS) -IX NEW DELHI [ HEREAFTER THE CIT(A)] ERRED IN NO ALLOWING ELECTRIC ITY EXPENSES OF RS.5,07,33,033( ON MERCANTILE BASIS OF ACCOUNTING) AGAINST CLAIM/DEBIT TO PROFIT AND LOSS ACCOUNT OF RS.4,91,7 7,188( ON CASH BASIS OF ACCOUNTING). WITHOUT PREJUDICE AND ALTERNA TIVELY, THE LD. CIT(A) ERRED IN UPHOLDING THE ADDITION OF RS.10,72, 022 BEING PRIOR PERIOD, AND WITHOUT PREJUDICE THE SAME IS EXCESSIVE . 6. THE LD. CIT(A) ERRED IN UPHOLDING THE ADDITI ON OFRS.7,35,000 BEING UNSECURED LOANS. , 7. THE LD.CIT(A) ERRED IN UPHOLDING CHARGING OF INTEREST ULS234B. 234D AND 244A OF THE ACT AND WITHOUT PREJUDICE THE SAME ARE EXCESSIVE. THE LD. CIT(A) FAILED TO APPRECIATE THAT SECTION 23 4D WAS INTRODUCED WITH EFFECT FROM 01.06.2003 AND BEING PROSPECTIVE I S APPLICABLE FROM A.Y. 2004-05, AS HAS BEEN HELD IN THE CASE OF (A) I TO VS. EKTA PROMOTERS (P) LTD, 113 ITD 719(DELHI) (SB) AND (B) GLAXO SMITHKLINE ASIA ( P ) LTC! VS. ACIT (2005) 97 TTJ (DEL) 108. ITA NO. 1669/DEL/2014 3 8. THE ID. CIT(A) ERRED IN NOT ADMITTING THE ADDITI ONAL EVIDENCE. 9. THE OBSERVATIONS AS WELL AS THE ORDER PASSED BY THE LD. ASSESSING OFFICER AND THE LD. CIT(A) ARE AGAINST THE FACTS AS WELL AS LAW AND ARE WITHOUT PROVIDING PROPER OPPORTUNITY OF HEARING TO THE APPELLANT. 2. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E COMPANY DURING THE YEAR IS ENGAGED IN THE BUSINESS OF MANUFACTURING OF MS I NGOTS AND RISER/ RUNNER AND THE BUSINESS OF LIAISON ETC. AND HAD DECLARED T URNOVER OF RS. 7.71 CRORE AGAINST WHICH IT CLAIMED MANUFACTURING EXPENSES OF RS. 10.02 CRORES. IN THIS CASE RETURN OF INCOME FOR THE ASSESSMENT YEAR 2001- 02 WAS FILED ON 31.10.2001 DECLARING A LOSS OF RS. 1,84,404/-. THIS ASSESSMEN T WAS EARLIER COMPLETED U/S. 144 OF THE ACT, VIDE ORDER DATED 19.3.2004, AGAINST WHICH ASSESSEE COMPANY FILED AN APPEAL BEFORE THE THEN CIT(A), WHICH WAS D ECIDED ON 2.10.2004. AGAINST THE ORDER DATED 2.10.2004 OF THE CIT(A), DE PARTMENT AS WELL AS THE ASSESSEE COMPANY FURTHER FILED APPEALS BEFORE THE I TAT, WHICH WAS DISPOSED BY THE ITAT WITH THE FOLLOWING DIRECTIONS:- WE THINK IT APPROPRIATE THAT THE MATTER REGARDING VALIDITY OF NOTICES OUGHT TO BE RESTORED TO THE FILE OF THE AO, BEFORE THE ASSESSEE WILL FILE AN AFFIDAVIT CONTAINING AVERMENTS REGARDING ALL FAC TS SO THAT HE MAY TAKE A DECISION AS PER LAW ABOUT THE VALIDITY OF TH E NOTICES AGAINST HEARING THE ASSESSEE. THEREFORE, AFTER IF HE FIND THAT ANY NOTICE HAD BEEN SERVED WITHIN THE STATUTORY PRESCRIBED TIME, H E SHALL MAKE A FRESH ASSESSMENT TAKING ALL THE EVIDENCE FILED BEFO RE THE LD. CIT(A) INTO ACCOUNT. THE AO WILL BE FREE TO BRING ANY FURT HER EVIDENCE ON ITA NO. 1669/DEL/2014 4 RECORD IN THIS BEHALF AND EVEN THE ASSESSE WILL BE FREE TO FILE ANY EVIDENCE IN REGARD TO DETERMINATION OF THE INCOME. 2.1 SUBSEQUENTLY, THE AO COMPLETED THE ASSESSMENT U /S. 143(3)254 OF THE I.T. ACT ON 31.12.2009 AND MADE THE FOLLOWING ADDIT IONS:- A) PRIOR PERIOD EXPENSES ON ACCOUNT OF ELECTRICIT Y : RS. 10,72,022/- B) UNEXPLAINED UNSECURED LOAN : RS. 7,35,000/- 3. AGGRIEVED WITH THE ABOVE, ASSESSEE APPEALED BEFO RE THE LD. CIT(A) WHO VIDE HIS IMPUGNED ORDER DATED 24.2.2016 HAS PARTLY ALLOWED THE APPEAL OF THE ASSESSEE. 4. AGAINST THE ORDER OF THE LD. CIT(A) ASSESSEE IS AGAIN BEFORE THE TRIBUNAL. 5. AT THE TIME OF HEARING, LD. A.R. OF THE ASSESSE E STATED THAT NOTICE U/S. 143(2) OF THE INCOME TAX ACT, 1961 WAS NOT SERVED U PON THE ASSESSEE WITHIN THE TIME PERMITTED BY PROVISO TO SECTION 143(2) OF THE ACT AND WITHOUT PREJUDICE THE SAME WERE ALSO NOT ADDRESSED TO THE 'THE PRINCI PAL OFFICER' AS REQUIRED BY SECTION 282(2)(B) OF THE ACT AND THEREFORE, THE SAM E AND CONSEQUENTIAL ASSESSMENT IS NULL AND VOID AB INITIO. IN THIS REG ARD, HE STATED THAT THE RETURN FOR AY 2001-02 WAS FILED ON 31.10.2001; THE PERIOD OF LIMITATION FOR SERVICE OF NOTICE U/S 143(2) EXPIRED ON 31.10.2002, HENCE, SUC H NOTICE HAD TO BE MANDATORILY SERVED BY 31.10.2002; HOWEVER, ADMITTED LY, THE FIRST NOTICE WAS ISSUED ON 16.09.2002; THE SAID NOTICE WAS SENT BY R EGD. POST AND ADMITTEDLY RETURNED BACK UNSERVED ON 21.9.2002 WITHOUT ANY POS TAL REMARK; ACCORDING TO ITA NO. 1669/DEL/2014 5 A.O., ANOTHER NOTICE WAS ISSUED AND SERVED THROUGH PROCESS SERVER AND INSPECTOR ON 26.9.2002; BUT THERE IS NO ENTRY IN TH E ORDER SHEET TO THIS EFFECT; ACCORDING TO A.O., ANOTHER NOTICE WAS ISSUED AND SE RVED THROUGH PROCESS SERVER AND INSPECTOR ON 28.10.2002; BUT THERE IS NO ENTRY IN THE ORDER SHEET TO THIS EFFECT ALSO; THE NEXT NOTICE IS DATED 7.7.2003 WHIC H IS BEYOND STATUTORY PERIOD AND THEREFORE NOT RELEVANT; THE JURISDICTION OF AO TO ASSESS U/S 143(2) WAS CHALLENGED IN APPEAL BEFORE CIT(A) WITHOUT SUCCESS. ON FURTHER APPEAL, THE TRIBUNAL NOTICED THAT THE ASSESEE HAD NOT FILED ANY AFFIDAVIT BEFORE THE LOWER AUTHORITIES REGARDING NON SERVICE OF NOTICE; HENCE, THE MATTER WAS RESTORED TO THE FILE OF A.O. FOR FRESH ADJUDICATION AFTER TAKIN G ON RECORD THE AFFIDAVIT OF THE ASSESSEE. AS PER THE DIRECTION OF THE TRIBUNAL, THE AFFIDAVIT DATED 29.12.2009 WAS FILED BEFORE AO BUT SERVICE OF NOTICE WAS HELD TO BE VALID BY AO VIDE ORDER DT. 23.12.2009; THE ASSESSMENT WAS COMPLETED VIDE O RDER DATED 31.12.2009. THE SAID ASSESSMENT WAS AGAIN CHALLENGED BEFORE THE CIT(A) ON JURISDICTIONAL GROUND AS WELL AS ON MERITS. THE CIT(A) DISMISSED T HE JURISDICTIONAL GROUND BY OBSERVING THAT THE NOTICE BY REGD. POST MIGHT HAVE BEEN REFUSED BY THE ASSESSEE AND THE SERVICE BY AFFIXTURE WAS VALID. AGGRIEVED B Y THE SAME, THE PRESENT APPEAL IS BEFORE THE TRIBUNAL. LD. COUNSEL FOR THE ASSESSEE FURTHER SUBMITTED THAT ACCORDING TO SECTION 282 OF THE INCOME TAX ACT READ WITH ORDER V RULE 20 OF CPC, IF THE SERVICE OF NOTICE THROUGH PROCESS SE RVER RETURNED BACK WITH THE POSTAL REPORT AND THE SERVICE OF NOTICE IS NOT POS SIBLE THROUGH AN ORDINARY WAY THEN THE AO HAS TO PASS AN ORDER IN WRITING SATISFY ING HIMSELF THAT THE SERVICE OF NOTICE IS NOT POSSIBLE AS THE ASSESSEE IS INTENT IONALLY AVOIDING THE SERVICE ITA NO. 1669/DEL/2014 6 AND THE NOTICE CANNOT BE SERVED IN AN ORDINARY WAY AND AO WILL PASS THE ORDER OF AFFIXTURE. THE PROCESS SERVER HAS TO FIX THE NO TICE ON THE LAST KNOWN ADDRESS OF THE ASSESSEE. HE FURTHER STATED THAT ACCORDING T O ORDER V RULE 17 & 20 OF CPC WHICH IS DEALING WITH THE SERVICE OF NOTICE BY AFFIXTURE AND THE NOTICE SHOULD BE AFFIXED ON THE LAST KNOWN ADDRESS OF THE ASSESSEE IN THE PRESENCE OF TWO INDEPENDENT WITNESSES WHILE WHOM THE HOUSE WAS IDENTIFIED OR BUSINESS PREMISES WAS IDENTIFIED AND IN WHOSE PRESENCE THE C OPY WAS AFFIXED. IN THE PRESENT CASE THE PROCEDURE PRESCRIBED U/S. 282 OF T HE I.T. ACT READ WITH ORDER V RULE 17 & 20 OF CPC HAS NOT BEEN COMPLIED WITH BY THE AO. THEREFORE, THE NOTICE IN QUESTION ISSUED U/S. 143(2) IS NOT VALID AND ASSESSMENT FRAMED THEREFROM IS VOID ABINITO. IN SUPPORT OF THESE AR GUMENTS, LD. COUNSEL FOR THE ASSESSEE HAS FILED THE SMALL PAPER BOOK CONTAINING PAGES 1 TO 11 IN WHICH HE HAS SPECIFICALLY DRAW OUR ATTENTION TOWARDS THE ORD ER SHEET OF THE ASSESSMENT RECORDS AND ESTABLISHED THAT AO HAS NOT ADOPTED THE PRESCRIBED PROCEDURE FOR SERVING THE NOTICE U/S. 143(2) THROUGH AFFIXTURE. HE HAS ALSO CITED THE VARIOUS CASE LAWS OF THE HONBLE SUPREME COURT OF INDIA AND THE HONBLE HIGH COURTS AND ESPECIALLY DRAW THE ATTENTION TOWARDS THE JUDG MENT OF THE HONBLE SUPREME COURT OF INDIA IN THE CASE OF CIT VS. RAME NDRA NATH GHOSH 82 ITR 888 SC AND CIT VS. NAVEEN CHANDER 323 ITR 242 (P &H). IN VIEW OF THE ABOVE, HE REQUESTED THAT ASSESSMENT IN DISPUTE MAY BE CANCELLED BY ACCEPTING THE APPEAL FILED BY THE ASSESSEE. ITA NO. 1669/DEL/2014 7 6. ON THE CONTRARY, LD. DR OPPOSED THE AFORESAID RE QUEST OF THE LD. A.R. OF THE ASSESSEE. HE RELIED UPON THE ORDERS OF THE AUT HORITIES BELOW AND REQUESTED THAT THE SAME MAY BE UPHELD. 7. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE R ELEVANT RECORDS AVAILABLE WITH US. WE FIND THAT LD. CIT(A) HAS ADJ UDICATED THE ISSUE AS UNDER:- 4.6 I HAVE EXAMINED THE AFFIDAVIT FILED BY SH. PRE M CHABBRA, DIRECTOR OF THE APPELLANT COMPANY. THE AFFIDAVIT DO ES NOT SPEAK AS TO WHAT WAS THE ADDRESS OF THE APPELLANT C OMPANY & HOW AND IN WHAT MANNER THE NOTICES SERVED BY AO T HROUGH AFFIXTURE WERE NOT RECEIVED BY ASSESSEE. THE AFFIDA VIT FILED SHOWS THAT THE DIRECTOR ONLY CONTENDED THAT NOTICES DATED 16.9.2002 AND 28.10.2002 WERE NEVER AFFIXED AT THE BUSINESS PREMISES. 4.6.1 IN THE PRESENT CASE APPELLANT COMPANY FILLED RETURN OF INCOME ON 31-10-2001 & THEREFORE, THE STATUTORY NOTICES U/ S 143(2) WAS REQUIRED TO BE SERVED BY AO WITHIN 12 MONTHS FR OM THE END OF THE MONTH IN WHICH THE RETURN WAS FILLED. TH EREFORE, THE AO WAS REQUIRED TO SERVE THE NOTICE U/S 143(2) ON OR -BEFORE 31-10-2002. THE FIRST NOTICE SENT BY AO DATED 16-09 -2002 WAS RECEIVED BACK UNSERVED. THEREFORE, THE AO SERVE D ANOTHER NOTICE U/S 143(2) THROUGH AFFIXTURE ON 26-0 9-2002 AND ALSO ON 28-10-2002 TO WHICH NO COMPLIANCE WAS M ADE BY THE ASSESSEE COMPANY. IT HAS NO WHERE BEEN DENIED B Y THE ASSESSEE COMPANY THAT THE ADDRESS ON WHICH THE NOTI CE SERVED THROUGH AFFIXTURE BY AO WAS NOT THE ADDRESS OF THE ASSESSEE COMPANY WHICH PROVES THAT NOTICES WERE DUL Y SERVED ON ASSESSEE COMPANY AND ASSESSEE COMPANY INTENTIONALLY DID NOT COMPLY TO THE NOTICES ISSUED BY THE THEN AO WHICH WERE SERVE THROUGH AFFIXTURE, AND AS SUCH THE AO ITA NO. 1669/DEL/2014 8 WAS COMPELLED TO PASS AN EX-PARTE ORDER ULS. 144 OF THE INCOME TAX ACT. THE APPELLANT NEVER STATED THAT THE ADDRESS TO WHICH ORIGINAL NOTICE WAS SENT BY REGISTERED POS T IS A WRONG ADDRESS. IT MIGHT HAVE COME BACK UNSERVED FOR SEVER AL REASONS. IT MAY BE DUE TO ASSESSEE OR DUE TO FAULT OF THE POSTAL DEPARTMENT. THUS, NOTICE SENT BY REGISTERED 'POST TO THE LAST KNOWN ADDRESS IS VALID EVEN IF IT HAS COME BAC K UNSERVED. THE APPELLANT MIGHT HAVE REFUSED TO RECEI VE IT. 4.6.2 I HAVE ALSO EXAMINED THE ORDER SHEET OF AO DA TED 24-12-2009 WHICH CLEARLY STIPULATES THAT THE NOTICES U/S 143(2 )(II) HAVE BEEN VALIDLY SERVED TO THE ASSESSEE WITHIN THE STIP ULATED TIME LIMIT FOR THE PREVIOUS YEAR UNDER CONSIDERATION. I HAVE ALSO EXAMINED THE SERVICES MADE THROUGH AFFIXTURE FOR NO TICES U/S 143(2)(II) FOR SERVICE OF NOTICE DATED 16-09-2002 S ERVED THROUGH AFFIXTURE ON 26-09-2002 & NOTICE DATED 28-1 0-2002 SERVED THROUGH AFFIXTURE ON 28-10-2002. THESE NOTIC ES HAVE BEEN SERVED THROUGH AFFIXTURE AT ADDRESS G-4A, GUPT A APARTMENTS, 138, KALKAJI NEW DELHI-19, AND THESE. H AVE DULY BEEN SERVED THROUGH PROCESS SERVER. SERVICE OF THES E NOTICES HAVE DULY BEEN CONFIRMED BY THE INSPECTOR OF THE WA RD AND THE SERVICE THROUGH AFFIXTURE IF HAS ALSO BEEN DULY VALIDATED BY THE THEN AO. THEREFORE, I DO NOT FIND THAT THERE WAS ANY DEFAULT IN SERVICE OF NOTICE U/S 143(2)(II) BY THE AO WHICH WAS VALIDLY SERVED ON THE ASSESSEE. 4.6.3 IT IS ALSO OBSERVED THAT SIMILAR GROUND WAS R AISED BY THE APPELLANT IN APPEAL FILLED BEFORE MY PREDECESSOR WH ICH WAS DISPOSED BY HIM VIDE ORDER DATED 21-10-2004 OBSERVI NG AS UNDER: ITA NO. 1669/DEL/2014 9 '5.4 I HAVE CONSIDERED THE SUBMISSION OF THE APPELL ANT AND HAVE PERUSED THE ASSESSMENT RECORD. I FIND THE SUBMISSIONS OF THE APPELLANT ARE DEVOID OF MERITS. THE INCOME TAX OFFICER SENT THE NOTICE BY REGISTERED PO ST, WHICH IS A PERMISSIBLE MODE OF SERVICE. THE APPELLA NT HAS NOT DENIED THE FACT OF DISPATCH OF NOTICE BY REGISTERED POST; RATHER THE APPELLANT HAS ACCEPTED THIS FACT. THE INCOME TAX OFFICER, THROUGH NOT REQUIRED, SERVED THE NOTICE BY AFFIXTURE NON ONLY ONCE BUT TW ICE. I, THEREFORE, REJECT THIS GROUND OF APPEAL. ' 4.6.4 AFTER CONSIDERING THE AVERMENTS MADE BY THE A O IN THE ASSESSMENT ORDER, SUBMISSION MADE BY THE APPELLANT, REMAND REPORT OF THE AO & REJOINDER FILED BY THE A PPELLANT AND AFTER EXAMINING THE NOTICES SERVED THROUGH AFFI XTURE, I DO NOT FIND ANY SUBSTANCE IN THE SUBMISSIONS MADE BY T HE APPELLANT, AS THESE NOTICES HAVE BEEN FOUND DULY S ERVED THROUGH AFFIXTURE WHICH WERE WITHIN THE STATUTORY P ERIOD OF LIMITATION AND THEREFORE, THE ASSESSMENT WAS RIGHTL Y COMPLETED BY THE AO, WHICH ARE FOUND IN ACCORDANCE WITH LAW. THE ISSUE OF NOTICE AND THE JURISDICTION ARE ONLY PROCEDURAL LAPSES THAT SHOULD NOT HAMPER THE APPLICABILITY OF OTHER SECTIONS OF THE ACT LEADING TO ACTUAL TAXABILITY. T HE HONBLE ITAT IN THE CASE OF CITY GARDEN VS. ITO (2012) 21 TAXMAN.COM 373 (JODH) HELD THAT, ANY GRIEVANCE IN RELATION TO THE JURISDICTION OF THE AO PROCEEDING TO ASSESS ANY PERSON, IS NOT APPELLABLE AND, IN FACT NOT JUSTICIABLE, BEING ONLY A DEFECT OF PROCEDURE N OT INVALIDATING THE END ACTION; THE ACT NOT TREATING T HE ALLOCATION ITA NO. 1669/DEL/2014 10 OF FUNCTIONS TO VARIOUS AUTHORITIES AS ONE OF THE S UBSTANCE BUT AS ONE OF PROCEDURE. EVEN IF THE APPELLANT DID NOT RECEIVED THE FIRST NO TICE, THE APPELLANT GOT AMPLE OPPORTUNITIES TO EXPLAIN THE DISALLOWANCE S. IN VIEW OF THESE OBSERVATIONS, THIS GROUND OF APPE AL IS DISMISSED. 7.1 FOR THE SAKE OF CLARITY, WE ARE REPRODUCING H EREUNDER THE SECTION 282 OF THE I.T. ACT, 1961:- [ SERVICE OF NOTICE GENERALLY. 282. (1) THE SERVICE OF A NOTICE OR SUMMON OR REQUISITI ON OR ORDER OR ANY OTHER COMMUNICATION UNDER THIS ACT (HEREAFTER I N THIS SECTION REFERRED TO AS 'COMMUNICATION' ) MAY BE MADE BY DEL IVERING OR TRANSMITTING A COPY THEREOF, TO THE PERSON THEREIN NAMED, (A) BY POST OR BY SUCH COURIER SERVICES AS MAY BE A PPROVED BY THE BOARD; OR (B) IN SUCH MANNER AS PROVIDED UNDER THE CODE OF CI VIL PROCEDURE, 1908 (5 OF 1908) FOR THE PURPOSES OF SERVICE OF SUM MONS; OR (C) IN THE FORM OF ANY ELECTRONIC RECORD AS PROVIDE D IN CHAPTER IV OF THE INFORMATION TECHNOLOGY ACT, 2000 (21 OF 2000); OR (D) BY ANY OTHER MEANS OF TRANSMISSION OF DOCUMENTS AS PROVIDED BY RULES MADE BY THE BOARD IN THIS BEHALF. (2) THE BOARD MAY MAKE RULES PROVIDING FOR THE ADDR ESSES (INCLUDING THE ADDRESS FOR ELECTRONIC MAIL OR ELECTRONIC MAIL MESSAGE) TO WHICH THE COMMUNICATION REFERRED TO IN SUB-SECTION (1) MA Y BE DELIVERED OR TRANSMITTED TO THE PERSON THEREIN NAMED. ITA NO. 1669/DEL/2014 11 7.2 WE FURTHER REPRODUCE HEREBELOW THE ORDER V RUL E 17 OF THE CPC: 17. PROCEDURE WHEN DEFENDANT REFUSES TO ACCEPT SERV ICE, OR CANNOT BE FOUND.- WHERE THE DEFENDANT OR HIS AGENT OR SUCH OTHER PERSON AS AFORESAID REFUSES TO SIGN THE ACKNOWLEDGMENT, OR WHERE THE SE RVING OFFICER, AFTER USING ALL DUE AND REASONABLE DILIGENCE, CANNOT FIND THE D EFENDANT, WHO IS ABSENT FROM HIS RESIDENCE AT THE TIME WHEN SERVICE IS SOUG HT TO BE EFFECTED ON HIM A T HIS RESIDENCE AND THERE IS NO LIKELIHOOD OF HIS BEI NG FOUND AT THE RESIDENCE WITHIN A REASONABLE TIME AND THERE IS NO AGENT EMPO WERED TO ACCEPT SERVICE OF THE SUMMONS ON HIS BEHALF, NOR ANY OTHER PERSON ON WHOM SERVICE CAN BE MADE, THE SERVING OFFICER SH ALL AFFIX A COPY OF THE SUMMONS ON THE OUTER DOOR OR SOME OTHER CONSPICUOUS PART OF THE HOUSE IN WHIC H 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 I SSUED, WITH A REPORT ENDORSED THEREON OR ANNEXED THERETO STATING THAT HE HAS SO A FFIXED THE COPY, THE CIRCUMSTANCES UNDER WHICH HE DID SO, AND THE NAME A ND ADDRESS OF THE PERSON (IF ANY) BY WHOM THE HOUSE WAS IDENTIFIED AN D WHOSE PRESENCE THE COPY WAS AFFIXED. 7.3 WE FURTHER REPRODUCE HEREBELOW THE ORDER V RUL E 20 OF THE CPC: 20. SUBSTITUTED SERVICE.- (1) WHERE THE COURT IS SATISFIED THAT THERE IS REA SON TO BELIEVE THAT THE DEFENDANT IS KEEPING OUT OF THE WA Y FOR THE PURPOSE OF AVOIDING SERVICE, OR THAT FOR ANY OTHER REASON THE SUMMONS C ANNOT BE SERVED IN THE ORDINARY WAY, THE COURT SHALL ORDER THE SUMMONS TO BE SERVED BY AFFIXING A COPY THEREOF IN SOME CONSPICUOUS PLACE IN THE COURT HOUS E, AND ALSO UPON SOME CONSPICUOUS PART OF THE HOUSE (IF ANY) IN WHICH THE DEFENDANT IS KNOWN TO HAVE LAST RESIDED OR CARRIED ON BUSINESS OR PERSONALLY W ORKED FOR GAIN, OR IN SUCH OTHER MANNER AS THE COURT THINKS FIT. ITA NO. 1669/DEL/2014 12 (1A) WHERE THE COURT ACTING UNDER SUB-RULE (1) ORDE RS SERVICE BY AN ADVERTISEMENT IN A NEWSPAPER, THE NEWSPAPER SHALL B E A DAILY NEWSPAPER CIRCULATING IN THE LOCALITY IN WHICH THE DEFENDANT IS LAST KNOWN TO HAVE ACTUALLY AND VOLUNTARILY RESIDED, CARRIED ON BUSINESS OR PER SONALLY WORKED FOR GAIN. (2) EFFECT OF SUBSTITUTED SERVICESERVICE SUBSTITUT ED BY ORDER OF THE COURT SHALL BE AS EFFECTUAL AS IF IT HAD BEEN MADE ON THE DEFEN DANT PERSONALLY. (3) WHERE SERVICE SUBSTITUTED, TIME FOR APPEARANCE TO BE FIXEDWHERE SERVICE IS SUBSTITUTED BY ORDER OF THE COURT, THE COURT SHALL FIX SUCH TIME FOR THE APPEARANCE OF THE DEFENDANT AS THE CASE MAY REQUIRE. 7.4 AFTER CAREFULLY PERUSING THE ASSESSMENT ORDER, FINDING OF THE LD. CIT(A) AS AFORESAID, GROUNDS OF APPEAL RAISED BY THE ASSES SEE, SECTION 282 OF THE I.T. ACT, 1961, ORDER V RULE 17 CPC AND ORDER V RULE 20 CPC, WE FIND THAT IN THIS CASE NO NOTICE U/S. 143(2) OF THE INCOME TAX ACT, 1 961 WAS SERVED UPON THE ASSESSEE WITHIN THE TIME PERMITTED BY PROVISO TO SE CTION 143(2) OF THE ACT AND SECONDLY THE NOTICE U/S. 143(2) OF THE I.T. ACT IS NOT ADDRESSED TO THE 'THE PRINCIPAL OFFICER' AS REQUIRED BY SECTION 282 OF TH E ACT. IN THIS CASE THE RETURN FOR AY 2001-02 WAS FILED ON 31.10.2001 AND THE PERI OD OF LIMITATION FOR SERVICE OF NOTICE U/S 143(2) EXPIRED ON 31.10.2002, HENCE, SUCH NOTICE HAD TO BE MANDATORILY SERVED BY 31.10.2002; HOWEVER, ADMITTED LY, THE FIRST NOTICE WAS ISSUED ON 16.09.2002; THE SAID NOTICE WAS SENT BY R EGD. POST AND ADMITTEDLY THE SAME RETURNED BACK UNSERVED ON 21.9.2002 WITHOU T ANY POSTAL REMARK. ACCORDING TO A.O., ANOTHER NOTICE WAS ISSUED AND SE RVED THROUGH PROCESS SERVER AND INSPECTOR ON 26.9.2002; BUT THERE IS NO ENTRY IN THE ORDER SHEET TO ITA NO. 1669/DEL/2014 13 THIS EFFECT. ACCORDING TO A.O., ANOTHER NOTICE WAS ISSUED AND SERVED THROUGH PROCESS SERVER AND INSPECTOR ON 28.10.2002; BUT THE RE IS NO ENTRY IN THE ORDER SHEET TO THIS EFFECT ALSO; THE NEXT NOTICE WAS DATE D 7.7.2003 WHICH IS BEYOND STATUTORY PERIOD. IN VIEW OF THE ABOVE DISCUSSION S, WE ARE OF THE CONSIDERED VIEW THAT REVENUE HAS FAILED TO ESTABLISH THAT IT H AS FOLLOWED THE PROCEDURE AS LAID DOWN UNDER SECTION 282 OF THE INCOME TAX ACT, 1961; UNDER ORDER V RULE 17 & 20 OF THE CPC, HENCE, THE SERVICE OF NOTICE IS ILLEGAL AND VOID AB INITO. OUR VIEW IS FULLY SUPPORTED BY THE FOLLOWING JUDGME NTS:- A) CIT VS. RAMENDRA NATH GHOSH 82 ITR 888 SC - TH E HONBLE SUPREME COURT HELD AS UNDER:- THE CONTENTION OF THE ASSESSES WAS THAT AT THE REL EVANT TIME THEY HAD NO PLACE OF BUSINESS. THE REPORT OF THE S ERVING OFFICE DID NOT MENTION THE NAMES AND ADDRESSES OF THE PERSON WHO IDENTIFIED THE PLACE OF BUSINESS OF THE ASSESSES. THAT OFFICER DID NOT MENTION IN HIS REPORT NOR IN T HE AFFIDAVIT FILED BY HIM THAT HE PERSONALLY KNEW THE PLACE OF BUSINESS OF THE ASSESSEE. HENCE, THE SERVICE OF NOTICE MUST BE HELD TO BE NOT IN ACCORDANCE WITH THE LAW. THE POSSIBILITY OF HIS HAVING GONE TO A WRONG PLACE COULD NOT BE RULED OU T. HENCE, IT WAS NOT POSSIBLE TO HOLD THAT THE ASSESSES HAD B EEN GIVEN A PROPER OPPORTUNITY TO PUT FORWARD THEIR CASE AS R EQUIRED BY SECTION 33 B. THE QUESTION WHETHER THE ASSESSEE HAD BEEN SERVED I N ACCORDANCE WITH LAW OR NOT WAS ESSENTIALLY A QUESTI ON OF FACT. THE ACT PROVIDES FOR AN APPEAL AGAINST THE ORDER UN DER SECTION 33B. NORMALLY, THE ASSESSEE SHOULD HAVE G ONE UP IN ITA NO. 1669/DEL/2014 14 APPEAL AGAINST THE ORDER UNDER SECTION 33B. THEY SHOULD NOT HAVE BEEN ALLOWED TO INVOKE THE EXTRAORDINARY JURISDICTION OF THE HIGH COURT. IT COULD NOT BE SAI D THAT THE HIGH COURT HAD NO JURISDICTION TO ENTERTAIN THE WRI T PETITIONS THOUGH IT SHOULD NOT HAVE EXERCISED ITS DISCRETION IN FAVOUR OF THE ASSESSEE IN VIEW OF THE ADEQUATE ALTERNATIVE REMEDY THEY HAD. - (NOTE: THE CASE WAS DECIDED IN FAVOUR OF ASSESSEE) B) HONBLE PUNJAB AND HARYANA HIGH COURT IN THE CA SE OF CIT VS. NAVEEN CHANDER REPORTED IN [2010] 323 ITR 4 9 (P&H) HAS DEALT WITH SIMILAR AND IDENTICAL ISSUE AND HENCE, BY REFERRING THE ORDER V, RULE 20 OF THE CODE OF CI VIL PROCEDURE DECIDED THE APPEAL IN FAVOUR OF THE ASSES SEE. THE RELEVANT PORTION OF THE JUDGMENT IS AS UNDER:- 2. THE BASIC CONTROVERSY RAISED IS AS TO WHETHER T HE ASSESSEE-RESPONDENT WAS SERVED UNDER SECTION 158BD OF THE ACT AT HIS LAST KNOWN ADDRESS ON JULY 23, 2001, BY WAY OF AFFIXTURE. THE TRIBUNAL CONSIDERED THE AFORESAID IS SUE AS A 'FUNDAMENTAL' CONTROVERSY BECAUSE IT WAS NECESSARY TO ESTABLISH THAT SUCH A NOTICE WAS SERVED TO CONFER J URISDICTION. THE TRIBUNAL PLACED RELIANCE ON THE PROVISIONS OF O RDER V, RULE 17 OF THE CODE OF CIVIL. PROCEDURE, 1908 (FOR BREVI TY 'THE CODE') AND HAS CONCLUDED ON PRINCIPLE THAT WHERE NOTICE OF SERVICE IS CLAIMED TO HAVE BEEN SERVED BY AFFIXATION UNDER ORD ER V, RULES 17, 18 AND 19 OF THE CODE THEN IT BECOMES NEC ESSARY TO EXAMINE WHETHER SUCH SERVICE HAS BEEN MADE IN ACCOR DANCE WITH THE PROCEDURE, AS IT IS MANDATORY. THE FIRST R EQUIREMENT IS TO ENSURE THAT THE PLACE IS PROPERLY IDENTIFIED AND, SECONDLY, THE REPORT IS AUTHENTICATED BY INDEPENDENT PERSONS TO AVOID ANY ATTEMPT BY THE PROCESS SERVER TO PREPARE THE RE PORT SITTING ITA NO. 1669/DEL/2014 15 IN HIS OFFICE. THE TRIBUNAL HAS REFERRED TO THE REP ORT DATED JULY 23, 2001, ISSUED BY THE PROCESS SERVER. ACCORDING T O THE REPORT OF THE INSPECTOR/NOTICE SERVER DATED JULY 23, 2001, THE NOTICE WAS AFFIXED ON THE MAIN DOOR OF SHOP NO. 33, ANAJMA NDI, MULLANPUR. THERE WAS NO EVIDENCE OF ANY LOCAL PERSO N HAVING BEEN ASSOCIATED WITH IN IDENTIFYING THE PLACE OF BU SINESS OF THE ASSESSEE-RESPONDENT AND THE REPORT IS NOT WITNE SSED BY ANY PERSON AT ALL. IT HAS BEEN FOUND TO BE FLAGRANT VIOLATION OF RULE 17 OF ORDER V OF THE CODE WHICH LAYS DOWN A PR OCEDURE TO SERVE NOTICE BY AFFIXTURE. THE CONCLUSION IS RECORD ED IN PARAGRAPHS 13 AND 14 OF THE ORDER WHICH READS THUS: '13. SO, HOWEVER, IN THE REPORT OF THE INSPECTOR/NO TICE SERVER, WHO CLAIMED TO HAVE AFFIXED THE NOTICE, THERE IS NO EVIDENCE OF ANY INDEPENDENT LOCAL PERSON HAVING BEEN ASSOCIATED WITH THE IDENTIFICATION OF THE PLACE OF BUSINESS OF THE ASSE SSEE. IN FACT SUCH REPORT IS NOT WITNESSED BY ANY PERSON AT ALL. EVIDENTLY, IT IS IN CLEAR VIOLATION OF THE MANDATE OF RULE 17 OF ORDER V OF THE CIVIL PROCEDURE CODE, WHICH LAYS DOWN THE PROCEDURE TO SERVE NOTICE BY AFFIXTURE. IT MANDATES THAT THE SERVING O FFICER SHALL AFFIX THE NOTICE ON THE OUTER DOOR OR SOME OTHER CO NSPICUOUS PART OF THE HOUSE IN WHICH THE PERSON ORDINARILY RE SIDES OR CARRIES ON BUSINESS OR PERSONALLY WORKS FOR GAIN AN D SHALL THEREAFTER REPORT THAT HE HAS SO AFFIXED THE COPY, THE CIRCUMSTANCES UNDER WHICH HE DID SO AND, THE NAME A ND ADDRESS OF THE PERSON BY WHOM THE HOUSE WAS IDENTIF IED AND IN WHOSE PRESENCE THE COPY WAS AFFIXED. THE IMPUGNE D REPORT OF THE INSPECTOR/NOTICE SERVER IS BEREFT OF ANY SUC H LAWFUL REQUIREMENTS ENSHRINED IN THE CODE OF CIVIL PROCEDU RE. IN FACT IT WOULD NOT BE OUT OF PLACE TO OBSERVE THAT THERE IS NO ASSERTION EVEN BY THE INSPECTOR/NOTICE SERVER THAT THEY HAD ITA NO. 1669/DEL/2014 16 PERSONALLY CHECKED THE BUSINESS PLACE OF THE ASSESS EE AND WERE IN A POSITION TO IDENTIFY THE SAME. FOR ALL TH E ABOVE REASONS, AN INFERENCE WHICH CANNOT ESCAPE, IS THAT THERE HAS BEEN NO VALID SERVICE OF NOTICE ISSUED UNDER SECTIO N 158BD UPON THE ASSESSEE. 14. BEFORE CONCLUDING, WE OBSERVE THAT HAVING REGAR D TO THE REPORT OF THE INSPECTOR/NOTICE SERVER DATED MARCH 2 7, 2001, THE REQUIREMENTS OF THE CODE OF CIVIL PROCEDURE HAV E NOT BEEN FULFILLED AND, THEREFORE, IN VIEW OF THE AFORESAID DISCUSSION AND THE CASE LAW REFERRED TO, WE ARE OF THE VIEW TH AT THERE HAS BEEN NO VALID SERVICE OF NOTICE ISSUED UNDER SECTIO N 158BO ON THE ASSESSEE. SINCE THERE HAS BEEN NO PROPER SERVIC E OF NOTICE ON THE ASSESSEE, IT HAS TO BE HELD THAT THE IMPUGNE D ASSESSMENT PROCEEDINGS RESULTING IN THE ORDER DATED JUNE 27, 2003, ARE BAD IN LAW. THE SAME IS HEREBY SET ASIDE. THE ASSESSING OFFICER CAN ISSUE AFRESH NOTICE, IF SO AU THORIZED UNDER THE LAW.' 3. IT IS THUS OBVIOUS THAT FINDING WITH REGARD TO S ERVICE OF NOTICE TO CONFER JURISDICTION IS ABSENT. 4. THE ONLY ARGUMENT RAISED BY MR. YIVEK SETHI, LEA RNED COUNSEL FOR THE REVENUE-APPELLANT IS THAT THERE ARE SIGNATURES OF THE ASSESSEE IN THE ORDER SHEET ENTRY DATED MAY 19, 2003, WHICH ACKNOWLEDGES THE FACT THAT HE HAD DULY NOTED THE NOTICE UNDER SECTION 158BO OF THE ACT. HOWEVER, ON CLOSE SCRUTINY, WE FIND THAT THE CLAIM MADE BY THE REVENU E IN THE GROUNDS OF APPEAL AND IN THE QUESTIONS OF LAW THAT THERE IS ORDER SHEET ENTRY DATED MAY 19, 2003, SHOWING THAT THE ASSESSEE HAD NOTED THE FACTUM OF NOTICE UNDER SECT ION 158BD ITA NO. 1669/DEL/2014 17 OF THE ACT IS WITHOUT ANY SUBSTANCE. THE TRIBUNAL H AD TAKEN THE VIEW THAT REGISTERED AD LETTER WAS RECEIVED BAC K UNSERVED AND THEREAFTER SERVICE WAS SOUGHT TO BE EFFECTED AF FIXATION WHICH WAS REQUIRED TO BE DONE IN ACCORDANCE WITH TH E PROCEDURE LAID DOWN BY ORDER V, RULE 20 OF THE CODE . THESE ARE NECESSARILY FINDINGS OF FACT COUPLED WITH THE F INDING ON LAW THAT REQUIREMENT OF ORDER V, RULE 20 OF THE COD E WERE NOT COMPLIED WITH. THEREFORE, WE FIND THAT NO QUESTION OF LAW MUCH LESS A SUBSTANTIVE QUESTION OF LAW WOULD ARISE FOR DETERMINATION OF THIS COURT. ACCORDINGLY, THE APPEA L FAILS AND THE SAME IS DISMISSED. 7.5 IN THE BACKGROUND OF THE AFORESAID DISCUSSIONS AND RESPECTFULLY FOLLOWING THE PRECEDENTS, AS AFORESAID, WE CANCEL T HE ORDERS OF THE AUTHORITIES BELOW AND ALLOW THE APPEAL OF THE ASSESSEE. 8. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE STANDS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 30/08/2016. SD/- SD/- [ANADI N. MISHRA] [H.S. SIDHU] ACCOUNTANT MEMBER JUDICIAL MEMBER DATE: 30-08-016 SRBHATNAGAR COPY FORWARDED TO: - 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT (A) 5. DR, ITAT TRUE COPY BY ORDER, ASSISTANT REGISTRAR