SHRI HARSH VARDHAN , JALANDHAR V. ASSISTANT COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE-1, JALANDHAR

ITA 308/ASR/2018

• Counselvise Citation: [2022] 105 COUNSELVISE.COM (IT) 8518 (ITAT-AMRITSAR)
• Duration Of Justice: 3 year(s) 9 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-02-2022
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2008-2009
• Appeal Filed On: 15-05-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Unexplained investment; Invalid notice; Search and seizure; Source of fund; Assessment record
• Section: 147; 148; 10; 2; 143(3); 143(2); 153; 22

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH, AMRITSAR. BEFORE SH. RAVISH SOOD, JUDICIAL MEMBER AND DR. M. L. MEENA, ACCOUNTANT MEMBER I.T.A. No. 308/(Asr)/2018 Assessment Year: 2008-09 Sh. Harsh Vardhan 36, Govind Niwas, Citi Bank, G.T. Road, Jalandhar PAN: AECPV 0683C Vs. Commissioner of Income Tax, Central Circle-1, Jalandhar (Appellant) (Respondent) Appellant by : Sh. Nirmal Mahajan, CA Respondent by : Sh. Trilochan Singh PS Khalsa, DR Date of Hearing: 22.12.2021 Date of Pronouncement: 21.02.2022 ORDER PER RAVISH SOOD, JM The present appeal filed by the assessee is directed against the order passed by the Commissioner of Income-Tax(Appeals)-5, Ludhiana, dated 26.03.2018, which in turn arises from the order passed by the A.O u/s 148 r.w.s 143(3) of the Income Tax Act, 1961 (for short ‘Act’), Harsh Vardhan Vs. DCIT – ITA No. 308/Asr/2018 2 dated 30.03.2016 for Assessment Year 2008-09. The assessee has assailed the impugned order on the following grounds before us : “1. Regarding Service of notice u/s 148: 1.1 The learned CIT(A) has erred in holding that the notice u/s 148 has been issued at the right address and is a valid notice. 1.2 The learned CIT(A) has erred in holding that theaddress given in Affidavit filed before the ADIT is right even though the affidavit was filed in 2011 and new address was available with the AO when notice was issued. 1.3 The learned CIT (A) has erred in holding that the service of notice u/s 148 at wrong address by affixture inspite of Notice Server’s report that the assessee does not stay at the given address is a valid service. 2 The learned CIT(A) has erred in holding that the disposal of objections raised by the assessee to the reasons recorded at the time of reopening is not must and it does not hold the assessment bad. 3 That the learned CIT(A) has erred in holding that the AO acquired valid jurisdiction even if he does not issue notice u/s 143(2) after the assessee files return in response to notice u/s 148. 4 The learned CIT(A) is not justified in conforming the addition of Rs. 22,00,000/- made by the AO. 5. Any other ground which may be raised at the time of hearing.” 2. Succinctly stated, on the basis of information available with the A.O that the assessee had purchased 22,000 shares of Lakhanpal Designs Pvt. Ltd, Ghaziabad for a consideration of Rs. 22 lac, the case of the assessee Harsh Vardhan Vs. DCIT – ITA No. 308/Asr/2018 3 was reopened u/s 147 of the Act. Notice u/s 148, dated 11.03.2015 was issued and served by affixture. 3. On a request by the assessee, copy of the reasons to believe on the basis of which his case was reopened were made available to him. Return of income for the year under consideration, i.e, A.Y 2008-09 was filed by the assessee on 25.02.2016, disclosing an income of Rs. 7,19,250/-. On being queried as regards the source of the investment of Rs. 22 lac that was made in the aforesaid 22,000 shares of M/s Lakhanpal Designs Pvt. Ltd, Ghaziabad, the assessee vide his reply dated 30.03.2016, submitted, that the same was sourced from the joint bank a/c with ICICI Bank, G.T Road, Jalandhar, that was jointly held by him a/w his mother Smt. Ram Dulari. Elaborating on the source of funds in the aforesaid bank account, it was submitted by the assessee that the same comprised of, viz. (i). loan proceeds of Rs. 4 lac that was raised from Axis Bank (after deduction of processing charges of Rs. 8,989/-) : Rs. 3,91,011/-; (ii). loan proceeds of Rs. 4 lac that was raised from Citi Bank Ltd : Rs. 4,00,000/-; and (iii). the balance amount of credits belonged to the other joint account holder,i.e, Smt. Ram Dulari (assessee’s mother) : Rs. 15 lac. Observing, that there Harsh Vardhan Vs. DCIT – ITA No. 308/Asr/2018 4 were only petty withdrawals in the aforementioned Joint Saving bank A/c No. 008201009323 with ICICI Bank Ltd., and also that the assessee had failed to establish any nexus inter se the withdrawals and the investment in question, the A.O was not inclined to accept the assessee’s claim that the investment in question was sourced from the aforesaid bank account. Also, it was noticed by the A.O that neither the assessee had furnished the purpose for which the loans were raised and repaid by him, nor he had placed on record any evidence that the balance credits of Rs. 15 lac (supra) in the bank account belonged to the other joint account holder, viz. Smt. Ram Dulari, i.e, his mother. Backed by his aforesaid observations, the A.O rejected the aforesaid claim of the assessee that the investment in 22,000 shares of Lakhanpal Designs Pvt. Ltd, Ghaziabad was sourced from his duly explained funds and held the same as his unexplained investment. Accordingly, the A.O vide his order passed u/s 148 r.w.s 143(3), dated 30.03.2016 assessed the income of the assessee at Rs. 29,19,250/-. 4. Aggrieved, the assessee assailed the order passed by the A.O u/s 148 r.w.s 143(3), dated 30.03.2016 before the CIT(A). Before the CIT(A), the assessee assailed the validity of the jurisdiction that was assumed by the Harsh Vardhan Vs. DCIT – ITA No. 308/Asr/2018 5 A.O for reopening his case u/s 147 of the Act, inter alia, on the ground that Notice u/s 148 was not validly served upon him. It was claimed by the assessee, that it was only when the counsel of the company, viz. M/s Lakhanpal Designs Pvt. Ltd, Ghaziabad of which he was a shareholder, was informed by the A.O about the reassessment proceedings that were initiated in the case of the assessee, it was only then, that the said counsel had after getting the necessary instructions from the assessee participated in the assessment proceedings, and had after obtaining the copy of the ‘reasons to believe’ on the basis of which the assessee’s case was reopened filed his objections as regards the validity of the reassessment proceedings. Apropos the objections filed by the assessee in the course of the assessment proceedings, it was submitted by him that the A.O had failed to dispose off the same by way of a speaking order. Also, it was the claim of the assessee that the impugned assessment order, i.e, u/s 148 r.w.s 143(3), dated 30.03.2016 was passed by the A.O de hors issuance of any Notice u/s 143(2) of the Act. 5. Elaborating on his contention as regards the absence of a valid service of Notice u/s 148, dated 11.03.2015, it was submitted by the Harsh Vardhan Vs. DCIT – ITA No. 308/Asr/2018 6 assessee that in the ‘reasons to believe’ that were recorded by the A.O for reopening of his case a wrong address was therein found mentioned, viz. 1-B, New Guru Teg Bahadur Nagar, Jalandhar. Also, it was submitted by the assessee, that even in the Notice u/s 148, dated 11.03.2015 the aforesaid wrong address was mentioned. It was submitted by the assessee that his address as mentioned in his return of income for the year consideration was, viz. Citi Bank NA, 36 Gobind Niwas, G.T Road, Jalandhar, while for that as per Form No 26AS was 22/3, Ajit Road, Jalandhar Cantt. It was submitted by the assessee that as the Notice u/s 148 was issued at a wrong address, therefore, the notice server had returned the same with the remarks, viz. “Shrimaan Ji, is kothi mein is naam ka kohi nahin hai” (that no one by the said name is available at this address). It was submitted by the assessee, that despite the fact that the notice server had returned the Notice u/s 148, dated 11.03.2015 to the A.O, with the remarks that nobody by the name of the assessee was residing in the said property, the A.O, instead of exercising his diligence and locating the whereabouts of the assessee which were clearly borne from his records, i.e, the return of income itself, however, most arbitrarily Harsh Vardhan Vs. DCIT – ITA No. 308/Asr/2018 7 directed his Inspector to effect service of the said notice by way of affixture at the said wrong address. Apart from that, the assessee assailed the validity of the service of the Notice u/s 148, on other multiple grounds, viz. that the service by affixture was carried out at a wrong address; that service by affixture was not witnessed by any independent witness; that the alleged service of notice had not been carried out within reasonable time period of its issuance; and that no entry qua the alleged service of the Notice u/s 148 had been made by the A.O in the order sheet. Also, the assessee assailed the failure on the part of the A.O to dispose off by way of a speaking order the objections that were filed as regards the validity of the jurisdiction that was assumed by him for reopening of his case u/s 147 of the Act. Alternatively, the assessee, without prejudice to his claim that the A.O had wrongly assumed jurisdiction u/s 147 of the Act, therein, assailed the sustainability of the assessment order passed by him u/s 148 r.w.s 143(3), dated 30.03.2016, i.e, in the absence of issuance of a Notice u/s 143(2) of the Act. Apart from that, the assessee assailed the merits of the addition of Rs. 22 lac made by the A.O. Harsh Vardhan Vs. DCIT – ITA No. 308/Asr/2018 8 6. Backed by the aforesaid claim of the assessee, the CIT(A) called for a ‘remand report’ from the A.O. In reply, the A.O rebutting the assessee’s claim that the Notice u/s 148, dated 11.03.2015 was sent at a wrong address, viz. 1-B, Guru Teg Bahadur Nagar, Jalandhar, therein stated, that as the assessee on an earlier occasion had in compliance to summons that were issued to him at the aforesaid address by the ADIT(Inv.), Jalandhar, had attended the proceedings before the said officer, therefore, it was incorrect on his part to now claim that the very same address to which the Notice u/s 148, dated 11.03.2015 was addressed was an incorrect address. It was further stated by the A.O, that the assessee in his reply dated 26.11.2011 that was filed in the course of the proceedings before the ADIT(Inv.), Jalandhar, had stated that the aforesaid address, viz. 1-B, Guru Teg Bahadur Nagar, Jalandhar, where the summons were sent was his present residential address. In order to drive home his aforesaid claim the A.O also enclosed a copy of the letter dated 26.11.2011 (supra) that was filed by the assessee in the course of the inquiries conducted by the ADIT(Inv.), Jalandhar., wherein at Sr. No.(i) of the reply he had stated that his present address was the same at which the letter was addressed. On Harsh Vardhan Vs. DCIT – ITA No. 308/Asr/2018 9 being supplied with a copy of the ‘remand report’, the assessee vide his rejoinder submitted that the address referred to by the A.O, viz. 1-B, Guru Teg Bahadur Nagar, Jalandhar, a rented accommodation, was his address way back as on 26.11.2011, while for the Notice u/s 148, dated 11.03.2015 had been issued 3½ years thereafter. It was stated by the assessee that he had long back shifted from the aforesaid old address (i.e rented property), and his new address could safely be gathered from his returns of income and the PAN database which formed part of the record of the department. It was further stated by the assessee, that now when the notice server had returned the Notice u/s 148, dated 11.03.2015 to the A.O, with a report that none by the name of the assessee was residing at the property to which the said notice was addressed, then, it was incumbent on the part of the A.O to have exercised his diligence to locate the whereabouts of the assessee. It was further stated by the assessee, that the bare minimum that was required on the part of the A.O, i.e, verifying/consulting the assessee’s assessment records that were lying with him had also not been done. However, the CIT(A) did neither found favor with the contentions of the assessee qua the validity of the jurisdiction that Harsh Vardhan Vs. DCIT – ITA No. 308/Asr/2018 10 was assumed by the A.O for reopening of his case u/s 147 of the Act, i.e, without effecting a valid service of Notice u/s 148; as well as that as regards the validity of the assessment that was framed by him without issuing a Notice u/s 143(2) of the Act, nor with those that were advanced by him as regards the merits of the addition made by the A.O and, dismissed the appeal. 7. Being aggrieved with the order of the CIT(A) the assessee has carried the matter in appeal before us. We have heard the ld. Authorized representatives for both the parties, perused the orders of the lower authorities and the material available on record, as well as considered the judicial pronouncements that have been pressed into service by them in their attempt to drive home their respective contentions. Controversy involved in the case before us lies in a narrow compass, i.e, whether or not the Notice u/s 148, dated 11.03.2015 had validly been served upon the assessee? Admittedly, the answer to the aforesaid issue would have a strong bearing on the sustainability of the assessment in hand. As noticed by us hereinabove, it is the claim of the assessee that as the A.O without exercising his diligence as regards verifying the whereabouts of the Harsh Vardhan Vs. DCIT – ITA No. 308/Asr/2018 11 assessee, had despite having been informed by the notice server vide his report that no person by the name as that of the assessee was residing at the property to which the aforesaid Notice u/s 148, dated 11.03.2015 was addressed, without putting up any efforts to locate the whereabouts of the assessee, which he could have easily gathered by going no further but referring/consulting the assessment records of the assessee, had however, most arbitrarily by way of an idle formality, or, in fact, an eye wash, got the Notice u/s 148, dated 11.03.2015 served by way of affixture at the said wrong address. Although, the assessee had also assailed the validity of the service by way of affixture, for the reason, that the same is not in conformity with the manner contemplated in Sec. 282 of the Act r.w Order V-Rule 17 & Rule 19 of the Code of Civil Procedure, 1908 (V of 1908), as the same is not witnessed by an independent witness, but we shall deal with the said contention of the assessee, if required, after dealing with his primary objection, i.e, validity of the service by affixture at a wrong addresss. 8. Before adverting to the sustainability of the contentions advanced by the ld. A.R, we shall first cull out the relevant provisions of the Act which Harsh Vardhan Vs. DCIT – ITA No. 308/Asr/2018 12 shall have a material bearing on the adjudication of the controversy in hand. As per the mandate of Section 148 of the Act, the A.O before making an assessment, reassessment or re-computation under Sec.147, shall serve on the assessee a notice requiring him to furnish within the stipulated time period as may be specified in the notice, a return of his income for the previous year corresponding to the relevant assessment year, in the prescribed form and verified in the prescribed manner and setting forth such other particulars as may be prescribed. Admittedly, the assumption of jurisdiction for framing of an assessment or reassessment under Sec.147 of the Act presupposes a valid service on the assessee of a notice issued under Sec.148 of the Act. For the sake of clarity Sec. 148 (relevant extract) is culled out as under : “148 (1)] Before making the assessment, reassessment or recomputation under section 147, the Assessing Officer shall serve on the assessee a notice requiring him to furnish within such period, [***], as may be specified in the notice, a return of his income or the income of any other person in respect of which he is assessable under this Act during the previous year corresponding to the relevant assessment year, in the prescribed form and verified in the prescribed manner and setting forth such other particulars as may be prescribed; and the provisions of this Act shall, so far as may be, apply accordingly as if such return were a return required to be furnished under section 139.” (emphasis supplied by us) Further, the time limit within which a notice u/s 148 shall be issued by the A.O is prescribed in Sec. 149 of the Act. For the sake of clarity Sec. 149 (relevant extract) is culled out as under : Harsh Vardhan Vs. DCIT – ITA No. 308/Asr/2018 13 “149(1) No notice under section 148 shall be issued for the relevant assessment year,— [(a) if four years have elapsed from the end of the relevant assessment year, unless the case falls under clause (b) [or clause (c)]; (b) if four years, but not more than six years, have elapsed from the end of the relevant assessment year unless the income chargeable to tax which has escaped assessment amounts to or is likely to amount to one lakh rupees or more for that year;] [(c) if four years, but not more than sixteen years, have elapsed from the end of the relevant assessment year unless the income in relation to any asset (including financial interest in any entity) located outside India, chargeable to tax, has escaped assessment.] Explanation.—In determining income chargeable to tax which has escaped assessment for the purposes of this sub-section, the provisions of Explanation 2 of section 147 shall apply as they apply for the purposes of that section.].” Insofar the mode and manner of service of a notice issued under Sec. 148 of the Act is concerned, the same can be traced in Sec. 282 of the Act and Rule 127 of the Income-tax Rules, 1962, which reads as under : “282 (1) The service of a notice or summon or requisition or order or any other communication under this Act (hereafter in this section referred to as communication”) may be made by delivering or transmitting a copy thereof, to the person therein named: (a) by post or by such courier services as may be approved by the Board; or (b) in such manner as provided under the Code of Civil Procedure, 1908 (5 of 1908) for the purposes of service of summons; or (c) in the form of any electronic record as provided 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 addresses (including the address for electronic mail or electronic mail message) to which the communication referred to in sub- section (1) may be delivered or transmitted to the person therein named. 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).” Harsh Vardhan Vs. DCIT – ITA No. 308/Asr/2018 14 Further, Rule 127 of the Income Tax Rules, 1962 contemplates the address (including the address for electronic mail or electronic mail message) to which a notice or summons or requisition or order or any further communication under the Act may be delivered for the purpose of sub- section (1) of Sec. 282, which reads as under: “Service of notice, summons, requisition, order and other communication.” 127, (1) For the purposes of sub-section (1) of section 282, the addresses (including the address for electronic mail or electronic mail message) to which a notice or summons or requisition or order or any other communication under the Act (hereafter in this rule referred to as “communication”) may be delivered or transmitted shall be as per sub-rule (2). (2) The addresses referred to in sub-rule (1) shall be (a) for communications delivered or transmitted in the manner provided in clause (a) or clause (5) of sub-section (1) of section 282— (i) the address available in the PAN database of the addressee; or (ii) the address available in the income-tax return to which the communication relates; or (iii) the address available in the last income-tax return furnished by the addressee; or (iv) in the case of addressee being a company, address of registered office as available on the website of Ministry of Corporate Affairs: Provided that the communication shall not be delivered or transmitted to the address mentioned in items (i) to (iv) where the addressee furnishes in writing any other address for the purposes of communication to the income-tax authority or any person authorised by such authority issuing the communication: [Provided further that where the communication cannot be delivered or transmitted to the address mentioned in items (i) to (iv) or any other address furnished by the addressee as referred to in first proviso, the communication shall be delivered or transmitted to the following address: (i) the address of the assessee as available with a banking company or a co-operative bank to which the Banking Regulation Act, 1949 (10 of 1949) applies (including any bank or banking institution referred to in section 51 of the said Act); or (ii) the address of the assessee as available with the Post Master General as referred to in clause (j) of section 2 of the Indian Post Office Act, 1898 (6 of 1898); or (iii) the address of the assessee as available with the insurer as defined in clause (9) of section 2 of the Insurance Act, 1938 (4 of 1938); or Harsh Vardhan Vs. DCIT – ITA No. 308/Asr/2018 15 (iv) the address of the assessee as furnished in Form No. 61 to the Director of Income-tax (Intelligence and Criminal Investigation) or to the Joint Director of Income-tax (intelligence and Criminal Investigation) under sub-rule (1) of rule 114D; or (v) the address of the assessee as furnished in Form No. 61A under sub-rule(1) of rule 114E to the Director of Income-tax (Intelligence and Criminal Investigation) or to the Joint Director of Income-tax (Intelligence and Criminal Investigation); or (vi) the address of the assessee as available in the records of the Government; or (vii) the address of the assessee as available in the records of a local authority as referred to in the Explanation below clause (20) of section 10 of the Act;] , (b) for communications delivered or transmitted electronically:- (i) email address available in the income-tax return furnished by the addressee to which the communication relates; or (ii) the email address available in the last income-tax return furnished by the addressee; or (iii) in the case of addressee being a company, email address of the company as available on the website of Ministry of Corporate Affairs: or (iv) any email address made available by the addressee to the income tax authority or any person authorised by such income-tax authority. (3) The Principal Director General of Income-tax (Systems) or the Director, Gene of Income-tax (Systems) shall specify the procedure, formats and Standard, for ensuring secure transmission of electronic communication and shall also responsible for formulating and implementing appropriate security, and retrieval policies in relation to such communication.]” 9. We shall in the backdrop of the aforesaid mandate of law deliberate on the validity of the service by affixture of the Notice u/s 148 at the aforesaid address, viz. 1-B, New Guru Teg Bahadur Nagar, Jalandhar. Admittedly, as observed by the A.O in his ‘remand report’ [filed before the CIT(A)], the assessee in the course of the proceedings before the ADIT(Inv.), Jalandhar, had acknowledged the letter that was issued to him, and had vide his reply dated 26.11.2011 (at Sr. No. (i) of the reply), stated, that he was residing at the said address. But then, we cannot Harsh Vardhan Vs. DCIT – ITA No. 308/Asr/2018 16 remain oblivious of the fact that as the Notice u/s 148, dated 11.03.2015 was issued 3½ years subsequent to the date of the aforesaid reply dated 26.11.2011, therefore, the same could not have been blindly acted upon by the A.O. Our aforesaid conviction is all the more fortified by the fact that the notice server having failed to effect the service of the Notice u/s 148, dated 11.03.2015, had returned the same with a report, viz. viz. “Shrimaan Ji, is kothi mein is naam ka kohi nahin hai” (that no one by the said name is available at this address), which thus clearly did cast an obligation upon the A.O to have made necessary verifications as regards the whereabouts of the assessee, which we are afraid he had most arbitrarily dispensed with, and instead, by way of an idle formality got the same served by way of affixture at the aforesaid wrong address. At this stage, we may herein observe, that if the A.O would have done the bare minimum that was expected of him, i.e, consulted/referred to the assessment record of the assessee, i.e, his returns of income, PAN data, Form No. 26AS etc., then, the correct present address of the assessee could have easily been gathered by him. In fact, as per Rule 127(2)(c)(i) & (iii) of the Income-ta Rules, 1962, the address of an assessee, viz. (i) available in the PAN Harsh Vardhan Vs. DCIT – ITA No. 308/Asr/2018 17 database; and (ii). the address available in the last income-tax return furnished by the assessee, respectively, are, inter alia, two of the addresses to which a notice or summons or requisition or order or any other communication under the I.T Act may be delivered as per the mandate of sub-section (1) of Sec. 282 of the Act. In our considered view, as the A.O had failed to exercise his diligence as regards verifying the address of the assesseee, and had in fact most arbitrarily dispensing with the said statutory obligation got the Notice u/s 148, dated 11.03.2015 affixed at an address, i.e, 1-B, New Guru Teg Bahadur Nagar, Jalandhar, at which the assessee well to his knowledge (as intimated by the notice server vide his report) was not residing, therefore, the validity of such a service cannot be subscribed on our part. At this stage, we may observe, that the manner in which the A.O had ordered for the service of the Notice u/s 148, dated 11.03.2015 by way of affixture at the aforesaid address, i.e, without using all due and reasonable diligence for verifying the whereabouts of the asssessee is absolutely not in conformity with the mode and manner of service of notice as contemplated in Sec. 282(1)(b) r.w Order V – Rule 17 of the Code of Civil Procedure, 1908 (V of 1908). Harsh Vardhan Vs. DCIT – ITA No. 308/Asr/2018 18 We, thus, in terms of our aforesaid observations are of the considered view that the service of the Notice u/s 148, dated 11.03.2015 cannot be held to have been carried out as per the mandate of law. 10. Backed by the fact, that the assessee’s counsel on being intimated by the A.O about the initiation of the reassessment proceedings, had after bringing the said fact to the knowledge of the assessee and seeking necessary instructions from him had obtained the Notice u/s 148, dated 11.03.2015 and participated in the assessment proceedings, we shall now deal with the bearing of the same on the validity of the assessment framed by the A.O. In sum and substance, the issue before us boils down to the aspect that as to whether or not the receipt of the Notice u/s 148, dated 11.03.2015 by the assessee’s counsel, i.e, after substantial lapse of time would suffice the requirement on the part of the A.O to effect a valid service of Notice u/s 148 of the Act. Qua the said aspect, we shall draw support from the judgment of the Hon’ble High court of Bombay in the case of Harjeet Surajprakash Girotra Vs. Union of India (2019) 108 taxman.com 491(Bom), wherein the Hon’ble High Court had after relying on a host of judicial pronouncements, concluded, that in the absence of Harsh Vardhan Vs. DCIT – ITA No. 308/Asr/2018 19 service of notice before the last date envisaged u/s 149 of the Act, the reopening of the assessment would be invalid in the eyes of law. The Hon’ble High Court while concluding as hereinabove had after drawing support from the various judicial pronouncements observed as under : “7. As is well known, section 147 of the Act pertains to income escaping assessment. In terms of subsection (1) of section 147, if the Assessing Officer has reason to believe that any income chargeable to tax has escaped assessment, he may, subject to the provisions of sections 148 to 153, assess or reassess such income and any other income chargeable to tax which has escaped assessment. Section 148 of the Act pertains to the issue of notice where income has escaped assessment. Sub-section (1) of section 148 provides that before making assessment or recomputation under section 147, the Assessing Officer shall serve on the assessee a notice requiring him to furnish the return of income in prescribed form. Section 149 of the Act pertains to time limit for such notice to be issued under section 148 of the Act. 8. In terms of section 148(1) of the Act, thus, before making reassessment under section 147, the Assessing Officer had to serve on the assessee the notice requiring him to furnish a return. Service of notice is necessary and not its mere issuance. In terms of provisions contained in section 149 of the Act, such notice could have been issued latest by 31.3.2018. As we have noted, the Department did issue such a notice on 15.3.2018 and despatched it through post for its service to the petitioner at the address given by her in the PAN card. This postal despatch, however, was returned by the postal department with a remark "left". The Assessing Officer proceeded on the basis of such notice and its return and completed the assessment after issuing notices under section 143(2) of the Act. The question is could he have done so? 9. It is consistent view of the Courts that not mere issuance of notice of reopening of assessment but its service on the assessee, that too, within the time frame envisaged under section 149 of the Act is necessary for a valid reopening of assessment. In case of Y. Narayan Chetty & Anr. vs. Income Tax officer, Nellore & Ors. reported in (1959) 35 ITR 388, the Supreme Court in the context of Income Tax Act, 1922 had observed as under: 5. The first point raised by Mr. Sastri is that the proceedings taken by respondent 1 under s.34 of the Act are invalid because the notice required to be issued under the said section has not been issued against the Harsh Vardhan Vs. DCIT – ITA No. 308/Asr/2018 20 assessees contemplated therein. In the present case the Income Tax Officer has purported to act under s.34(1)(a) against the three firms. The said sub-section provides inter alia that "if the Income Tax Officer has reason to believe that by reason of the omission or failure on the part of the assessee to make a return of his income under Section 22 for any year or to disclose fully and truly all material facts necessary for his assessment for that year, income, profits or gains chargeable to income- tax has been underassessed", he may, within the time prescribed, "serve on the assessee a notice containing all or any of the requirements which may be included in the notice under sub-section (2) of Section 22 and may proceed to reassess such income, profits or gains". The argument is that the service of the requisite notice on the assessee is a condition precedent to the validity of any reassessment made under Section 34; and if a valid notice is not issued as required, proceedings taken by the Income Tax Officer in pursuance of an invalid notice and consequent orders of reassessment passed by him would be void and inoperative. In our opinion, this contention is well-founded. The notice prescribed by Section 34 cannot be regarded as a more procedural requirement; it is only if the said notice is served on the assessee as required that the Income Tax Officer would be justified in taking proceedings against him. If no notice is issued or if the notice issued is shown to be invalid then the validity of the proceedings taken by the Income Tax Officer without a notice or in pursuance of an invalid notice would be illegal and void. That is the view taken by the Bombay and Calcutta High Courts in the CT v. Ramsukh Motilal and R.K. Das & Co. v. CT and we think that that view is right." 10. In the case of Shanabhai B. Patel vs. R.K. Upadhyaya, Income Tax Officer, Ahmedabad reported in (1974) 96 ITR 141, the Division Bench of Gujarat High Court had examined similar issue and opined as under: 9. In our opinion, therefore, the assumption of jurisdiction by the Income- tax Officer of reassessing an assessee is subject to the provisions contained in section 148 to 153 of the Act. Section 148 and 149, which we have reproduced above, clearly show that such jurisdiction cannot be assumed without issuance of notice within the prescribed period and service thereof on the assessee concerned. Mr. Kaji, however, attempted to persuade us that the very fact that the legislature has divided these different provisions contained in the old section 34 of the 1922 Act by suitably enacting sections 147, 148 and 149, where the Income-tax Officer has been given power to reassess after service of notice on the assessee issued within the prescribed period, clearly indicates that the legislature intended to depart from the positions as it emerged from the provisions contained in section 34 of the old Act of 1922. We do not think that this submissions of Mr. Kaji is justified. The scheme for the power of Harsh Vardhan Vs. DCIT – ITA No. 308/Asr/2018 21 reassessment has been now suitably divided in section 147 onwards of the 1961 Act. This scheme of power was originally comprehended within the provisions contained in section 34 of the 1922 Act. This division of the provisions contained in the old section 34 into section 147 onwards, do not in any way materially alter the positions which could justify the court in accepting the interpretation canvassed by Mr. Kaji that the different stages have been prescribed before the assumption of jurisdiction. These stages, according to Mr. Kaji, are the issuance of notice within the prescribed period and service of the notice on the assessee. On the plain reading of sections 147,148 and 149, we do not think that this contention of Mr. Kaji can be sustained. Though the marginal notes of the sections are not decisive, they give us an idea about the intention of the legislature, that it did not contemplate two stages as contended by Mr. Kaji. Section 148 provides for the service of notice before the jurisdiction for reassessment can be assumed. The marginal note of this section reads, "Issue of notice where income has escaped assessment". Section 149 provides for issuance of notice before the expiry of the prescribed period and the marginal note of this section reads: "Time limit for notice". In our opinion, therefore, these words, "service of notice" or "issuance of notice", have no fixed connotation but are interchangeable, as held by the Supreme Court in Banarsi Debi's case. The Division Bench of this court in Induprasad Devshanker Bhatt v. J. P. Jani, Income-tax Officer, Circle IV, Ward-O, Ahmedabad, was dealing with a similar contention that the words "issue" and "service" as used in section 34 cannot be equated with each other and that the stage of issue of notice is a distinct and different stage from the stage of service of notice. Mr. Justice Bhagwati (as he then was) observed as under: "Now, it is undoubtedly true that, according to the decision of Desai C.J., as he then was, and Miabhoy J. in Madanlal Mathurdas v. Chunilal, Income-tax Officer, the words 'issue' and 'serve' as used in section 34 cannot be equated with each other and that the stage of issue of notice is a distinct and different stage from the stage of service of notice and ordinarily this decision being a decision of a Division Bench of this court would be binding upon us, but having regard to the subsequent decision of the Supreme Court in Banarasi Debi v. Income- tax Officer, this decision can no longer be regarded as good law and its authority must be held to have been impliedly overruled, though we may point out that even if the view taken by the Bombay High Court in this decision were correct, we should still have found considerable difficulty in accepting the contention that the proceedings under section 34 commence on the issue of the notice. The Supreme Court in the decision to which we have just referred pointed out that the words 'issued' and 'served' are used as interchangeable terms in the context of notice issued Harsh Vardhan Vs. DCIT – ITA No. 308/Asr/2018 22 under section 34 and that where the legislature has used the word 'issued' in the context of such notices, that word is used in the same sense as the word 'served'. This decision of the Supreme Court made it clear that, so far as notices under section 34 are concerned, there are no two distinct and separate stages such as the stage of issue of notice and the stage of service of notice; the notice is issued to the assessee when it is served upon him. If that be the position, the entire foundation on which the superstructure of the argument urged on behalf of the petitioner is based must disappear. There being only one stage, whether it be described as issue of notice or as service of notice, proceedings under section 34 would commence when the step envisaged in that stage is taken and that would be when the notice is served on the assessee." 11. The decision of the Gujarat High Court was noticed by the Punjab & Haryana High Court in the case of Major Tikka Khushwant Singh vs. The Commissioner of Income Tax, Patiala & Anr. reported in (1975) 101 ITR 106. The Court observed as under: "Thus, it will be assumed that while enacting the 1961 Act, the legislature knew that the words "serve" and "issue" were being used interchangeably according to the judicial interpretation. In spite of the knowledge it preferred to use the words in the aforesaid Act. Mr. Awasthy, the learned counsel for the revenue, has argued that in the 1961 Act, the two words have been used in two different sections. According to him before making the assessment, reassessment or recomputation under section 147, it is the duty of the Income-tax Officer to serve a notice on the assessee as required by section 148, whereas he can assume jurisdiction after issuance of the notice within the prescribed period under section 149 even though the same may not be served upon the assessee. He also submits that by dividing the provisions of section 34 of the 1922 Act in the 1961 Act, the intention of the legislature has become clear. We express our inability to accept the contention of the learned counsel for the Revenue. A reading of sections 148 and 149 clearly shows that the Income-tax Officer cannot assume jurisdiction to make assessment, reassessment of recomputation unless the notice has been issued and served within the time limit prescribed under the aforesaid sections. The same question came up before a Division Bench of the Gujarat High Court in Shanabhai P. Patel v. R.P. Upadhyaya, income-tax Officer, B. K. Mehta J., while speaking for the court, observed as follows: "Sections 147, 148 and 149 of the Income-tax Act of 1961 confer the power of reassessment on the Income-tax Officer. This scheme of power was originally comprehended in the provisions of section Harsh Vardhan Vs. DCIT – ITA No. 308/Asr/2018 23 34 of the Act of 1922. The division of the provisions contained in section 34 of the 1922 Act into sections 147, 148 and 149 in the Act of 1961 does not in any way indicate that the legislature intended to depart from or materially alter the position as it emerged from the provisions of section 34 of the old Act regarding notice of reassessment. The Supreme Court held in Banarsi Debi vs. Income-tax Officer (1), that the words, 'service of notice' or 'issuance of notice' in section 34 have no fixed connotation but are interchangeable. The same meaning should be given to the words 'issue of notice' in section 148 and 'service of notice' in section 149. "Under the Act of 1961 also there are no two distinct and separate stages of issue of notice and service of notice. Notice of reassessment is issued to the assessee when it is served on him. A notice of reassessment issued against the assessee before limitation but served on the assessee after limitation would be without jurisdiction, void and ineffective." (4) We are respectfully in agreement with the above observations. Similar view was taken by a learned single judge of the Calcutta High Court in Lilooah Steel & Wire Co. Ltd. v. Income-tax Officer, (4). Mr. Awasthy has placed reliance on a Full Bench judgment of this court in Seth Balkishan Das v. Commissioner of Income-tax, Patiala (5). In that case the question referred to this court was : whether on the facts and in the circumstances of the case, the service of the notice under section 34 on the assessee was invalid at law as copy of the notice was not affixed at any conspicuous place in the court-house or at any conspicuous place in the income-tax office. The matter for decision before the Full Bench was absolutely different. The learned counsel cannot derive any benefit from that case. In view of the aforesaid discussion, we are of the opinion that the words "issue" and "serve" are interchangeable and that the word "issue" has been used in section 1489 of the 1961 Act in the same sense in which the word "serve" has been used." 12. As per these decisions, thus, the notice of reassessment under section 148 of the Act had to be served on the assessee. In this context, we may examine the stand of the Department. We may recall, the notice dated 15.3.2018 was despatched to the petitioner's address as contained in her PAN card. This notice was returned by the postal department on or around 22.3.2018 with the remark 'left'. It is also an admitted position that the petitioner had not intimated to the Department about her change of address. After receiving the envelope containing the notice from the postal department, till 31.3.2018 which was the last date for service of such notice, the department took no further steps. In this background, the question is can the Department contend that there was due service of the notice. Harsh Vardhan Vs. DCIT – ITA No. 308/Asr/2018 24 13. Section 282 of the Act pertains to service of notice generally and reads as under: "Service of notice generally. 282. (1) The service of a notice or summon or requisition or order or any other communication under this Act (hereafter in this section referred to as "communication") may be made by delivering or transmitting a copy thereof, to the person therein named, - (a) by post or by such courier services as may be approved by the Board; or (b) in such manner as provided under the Code of Civil Procedure, 1908 (5 of 1908) for the purposes of service of summons; or (c) in the form of any electronic record as provided 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 addresses (including the address for electronic mail or electronic mail message) to which the communication referred to in sub-section (1) may be delivered or transmitted to the person therein named. 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)." 14. As per the sub-section (1) of section 282 thus, the service of notice or summons, etc. may be made by delivering or transmitting a copy to the person named, inter alia as per clause (a) by post or by such courier service as may be approved by the Board or in such manner as provided under the Code of Civil Procedure for the purposes of service of summons. The Department has followed the procedure envisaged in clause (a) of sub-section (1) of section 282 of attempting to deliver the notice by post. 15. Rule 127 of the Rules pertains to service of notice, summon, requisition, order and other communications, the relevant portion of which reads as under: "Service of notice, summons, requisition, order and other communication. Harsh Vardhan Vs. DCIT – ITA No. 308/Asr/2018 25 127.(1) For the purposes of sub-section (1) of section 282, the addresses (including the address for electronic mail or electronic mail message) to which a notice or summons or requisition or order or any other communication under the Act (hereafter in this rule referred to as "communication") may be delivered or transmitted shall be as per sub-rule (2) The addresses referred to in sub-rule (1) shall be— (a) for communications delivered or transmitted in the manner provided in clause (a) or clause (b) of sub-section (1) of section 282— (i) the address available in the PAN database of the addressee; or (ii) the address available in the income-tax return to which the communication relates; or (iii) the address available in the last income-tax return furnished by the addressee; or (iv) in the case of addressee being a company, address of registered office as available on the website of Ministry of Corporate Affairs: Provided that the communication shall not be delivered or transmitted to the address mentioned in item (i) to (iv) where the addressee furnishes in writing any other address for the purposes of communication to the income-tax authority or any person authorised by such authority issuing the communication: Provided further that where the communication cannot be delivered or transmitted to the address mentioned in item (i) to (iv) or any other address furnished by the addressee as referred to in first proviso, the communication shall be delivered or transmitted to the following address:- (i) the address of the assessee as available with a banking company or a co-operative bank to which the Banking Regulation Act, 1949 (10 of 1949) applies (including any bank or banking institution referred to in section 51 of the said Act); or...." 16. As per sub-rule (1) of Rule 127 for the purposes of sub-section (1) of section 282, the addresses to which a notice or a summons, etc. may be delivered or transmitted, shall be as per the sub-rule (2). Clause (a) of sub-rule (2) of Rule 127 includes four sources of address for such transmission. First one being the address available in PAN database of the addressee. It was at this address that Harsh Vardhan Vs. DCIT – ITA No. 308/Asr/2018 26 the notice in question was despatched. The first proviso to sub-rule (2) provides that the said communication shall not be delivered at any of the above mentioned addresses where the assessee has furnished any other address for such purpose, which is not in the present case. The further proviso to sub-rule (2) which is of considerable importance to us provides that where communication cannot be delivered or transmitted to the addresses mentioned in item Nos.(i) to (iv) or the address furnished by the assessee as per the first proviso, the communication shall be delivered or transmitted to the addresses given below the said further proviso. At item No.(i) is the address of the assessee as available with the Banking company or a cooperative bank to which Banking Regulations Act, 1949 applies. 17. Since the delivery of the notice could not be made at the address of the assessee available in PAN database, by virtue of the further proviso to sub-rule (2) of Rule 127, the communication had to be delivered at the address as available with the banking company. 18. It is undisputed that the Department had access to the petitioner's bank account. It is precisely from the activities in such bank account that the department had gathered the material prima facie believing that the income chargeable to tax had escaped assessment. In terms of Rule 127 and in particular, sub-rule (2) therefore, having regard to the further proviso therein, the Department had to deliver the notice of reassessment at the petitioner's address given by her to the bank where her account was maintained. No such steps were taken. Service of notice, therefore, was not complete. In absence of service of notice before the last date envisaged under section 149 of the Act for such purpose, the Assessing Officer could not have proceeded further with the reassessment proceedings. His consequential steps of attempting to serve the notices of scrutiny assessment were of no consequence. Reopening of assessment was invalid. No valid assessment thereon could have been framed. 19. In the result, the impugned notice dated 15.3.2018 and the consequential order of reassessment passed by the Assessing Officer are set aside. All subsequent steps for coercive recovery of the tax dues arising out of such order of assessment are also set aside. The attachment of the petitioner's bank accounts would, therefore, stand nullified. The petition is allowed and disposed off accordingly.” As in the case before us the Notice u/s 148, dated 11.03.2015 had been served on the assessee’s counsel for the first time in the month of February, 2016, i.e, much beyond the prescribed period of 6 years from Harsh Vardhan Vs. DCIT – ITA No. 308/Asr/2018 27 the end of the relevant assessment year which had expired on 31.03.2015, therefore, respectfully following the aforesaid judgment of the Hon’ble High Court of Bombay in the case of Harjeet Surajprakash Girotra (supra), we are of the considered view, that the A.O had invalidly assumed jurisdiction for reopening the concluded assessment of the assessee company and passed the reassessment order u/s 148 r.w.s 143(3), dated 30.03.2016. At the same time, we may herein observe, that our aforesaid view is subject to our observations recorded herein below. 11. In the backdrop of our aforesaid deliberations, we are of the considered view that as the A.O had failed to validly serve the Notice u/s 148, dated 11.03.2015 on the assessee, therefore, he had invalidly assumed jurisdiction and framed the assessment u/s 148 r.w.s 143(3), dated 30.03.2016. But then, we may herein observe, that as per Sec. 292BB of the Act as had been made available on the statute w.e.f 01.04.2008, and is applicable to the case of the assessee before us, if an assessee had not raised any objection in the course of the assessment proceedings as regards the service of a notice, viz. that the notice had not been served; or that the notice was served beyond the stipulated time Harsh Vardhan Vs. DCIT – ITA No. 308/Asr/2018 28 period; or that the notice was served in an improper manner; then he is precluded from raising any such objection in any proceeding or inquiry under the Act. Backed by the aforesaid position of law, the ld. A.R on being queried as to whether or not any such objection as regards the non-service of the Notice u/s 148, dated 11.03.2015 was raised by the assessee in the course of the assessment proceedings, answered in the affirmative. In order to buttress his aforesaid claim the ld. A.R had drawn our attention to Page No. 14 & 15 of the order of the CIT(A) wherein letters dated 25.02.2016 & 08.03.2016 of the assessee addressed to the A.O were reproduced. It was submitted by the ld. A.R, that the assessee objecting to the validity of the service of Notice u/s 148, dated 11.03.2015 had specifically raised the said issue before the A.O in the course of the assessment proceedings. On a specific direction by the bench to produce copies of the aforesaid letters dated 25.02.2016 (supra) and 08.03.206 (supra) a/w the proof that the same were filed with the A.O in the course of the assessment proceedings, it was submitted by the ld. A.R that the fact as regards having filed the aforesaid letters dated 25.02.2016 (supra) and 08.03.2016 (supra) in the course of the assessment proceedings could Harsh Vardhan Vs. DCIT – ITA No. 308/Asr/2018 29 safely be gathered from the “Order sheet” entries to the said effect at Page 16 of the order of the CIT(A). Our attention was drawn by the ld. A.R to Page 16 of the order of the CIT(A) wherein the “Order sheet” of the A.O was reproduced. 12. We have perused Page No. 14 & 15 of the order of the CIT(A), wherein the letters dated 25.02.2016 & 08.03.2016 of the assessee addressed to the A.O are reproduced. Also, we have perused Page 16 of the order of the CIT(A) wherein the “Order sheet” of the A.O had been reproduced. Admittedly, the assessee vide his aforesaid letters dated 25.02.2016 (supra) and 08.03.2016 (supra) had specifically objected to the improper service of Notice u/s 148, dated 11.03.2015, on the ground, that the same was not as per the mandate of law. For the sake of clarity, the relevant extract of the said respective letters as are discernible from the order of the CIT(A), are culled out as under : Letter dated 25.02.2016 : “ From the notice itself it is crystal clear that the notice has been issued at an address at which I was not residing at t hat time and even your notice server has reported that there is no such person at the given address. It appears that the notice has been issued without going through my return of income. Had it been taken into consideration, the notice would have been issued at the proper address. It is a trite law that notice served Harsh Vardhan Vs. DCIT – ITA No. 308/Asr/2018 30 at a wrong address is nothing but nullity and needs to be filed. The same being the case here it is prayed that the notice may please be filed.” Letter dated 08.03.2016 : “Had the record of the assessee been followed by the A.O, the notice under s. 148 would not have been served on wrong address and that too by affixture. Even after report of Notice Server that no one resides at the given address, the affixture was made at the same address. No effort was made to see the address of the assessee from the return and issue the notice at proper address.” In so far the respective ‘order sheet’ entries dated 25.02.2016 and 08.03.2016 are concerned, we find that the same as reproduced at Page 16 of the order of the CIT(A) though refers to the attendance of the assessee’s counsel; supply of copy of the reasons to believe on the basis of which the case of the assessee was reopened and; seeking of adjournment by the assessee’s counsel, but on there is no reference of filing of the aforesaid letters dated 25.02.2016 (supra) and 08.03.2016(supra) by the assessee, objecting to the service of Notice u/s 148, dated 11.03.2015 before him, and the same reads as under : Order sheet entry dated 25.02.2016 : “25.02.2016: Present Sh. Nirmal Mahajan, CA & AR. Supplied copy of reasons recorded for reopening of case. Case adj. for 08/03/2016. Sd/- Sd/- (assessee’s counsel) (A.O) 25/02 25/02” Order sheet entry dated 08.03.2016 : “08.03.2016: Present Sh. Nirmal Mahajan, CA & AR. Asked for adjournment., granted for 30/03. Harsh Vardhan Vs. DCIT – ITA No. 308/Asr/2018 31 Sd/- Sd/- (assessee’s counsel) (A.O) 25/02 25/02” Backed by the aforesaid facts, we are of the considered view, that in all fairness the matter requires to be revisited by the A.O for a limited purpose, i.e, to verify the factual position that as to whether or not the aforesaid letters dated 25.02.2016 (supra) and 08.03.2016 (supra) were filed by the assessee in the course of the assessment proceedings. In case the aforesaid letters, or either of them, are found to have been filed by the assessee before the A.O in the course of the assessment proceedings, then, in the backdrop of our aforesaid deliberations the assessment framed by the A.O vide his order passed u/s 148 r.w.s 143(3), dated 30.03.2016 shall stand vacated for want of valid assumption of jurisdiction by him for passing the impugned order. We, thus, in terms of our aforesaid observations restore the matter to the file of the A.O, for the aforesaid limited purpose of making necessary verifications. 13. Resultantly, the appeal filed by the assessee is allowed for statistical purposes in terms of our aforesaid observations. Harsh Vardhan Vs. DCIT – ITA No. 308/Asr/2018 32 Order pronounced under rule 34(4) of the Income Tax (Appellate Tribunal) Rules, 1962, by placing the details on the notice board. Sd/- Sd/- (Dr. M.L. Meena) (Ravish Sood) Accountant Member Judicial Member Date: 21.02.2022 *GP/Sr./PS* Copy of the order forwarded to: (1) The Appellant: (2) The Respondent: (3) The CIT(Appeals) (4) The CIT concerned (5) The Sr. DR, I.T.A.T True copy By Order