ITO, WARD-2, ROHTAK V. JAI SINGH, ROHTAK

ITA 8284/DEL/2018

AI Insights

The case involves an appeal by the Revenue against the order of the CIT(A), which had invalidated the reassessment made under sections 144 and 147 of the Income Tax Act, 1961, due to non-service of notice under section 148. The Tribunal examined the procedures followed for serving the notice and the subsequent reassessment. The key contention was whether the notice under section 148 was properly served, as the CIT(A) found no evidence of service by affixture, which was the method used after initial postal service failed. The Tribunal, referencing decisions from the Supreme Court, concluded that due service of the notice was presumed, as the assessee did not contest the receipt of the assessment order and filed an appeal shortly thereafter.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 46979 (ITAT-DELHI)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-04-2025
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2010-2011
• Other Referred Cases: Mayawati vs CIT, M/s Ajeet Seeds Limited vs Gopal Krishnaiah, Priyanka Kumari vs Shailendra Kumar, RK Upadhyay vs Shanabhai P. Patel
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: OM PRAKASH
• Assessee Lawyers: NAVIN GUPTA
• Keywords: Additional evidence; Reassessment proceedings; Reopening of assessment; Assessment record
• Section: 147; 148; 144; 142(1); 274; 27; 20

Judgement Text

"IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH, ‘B’: NEW DELHI BEFORE MS. MADHUMITA ROY, JUDICIAL MEMBER AND SHRI BRAJESH KUMAR SINGH, ACCOUNTANT MEMBER ITA No.8284/Del/2018 [Assessment Year: 2010-11] Income Tax Officer, Ward-2, Aayakar Bhawan, Rohtak Vs Shri Jai Singh, S/o-Shri Chandgi Ram Saini, H. No.2530/1, Saini Anandpura, Behind Gaur School, Rohtak, PAN-BFPPS1050D Revenue Assessee Assessee by Shri Navin Gupta, Adv. Revenue by Shri Om Prakash, Sr. DR Date of Hearing 13.01.2025 Date of Pronouncement 11.04.2025 ORDER PER BRAJESH KUMAR SINGH, AM, This appeal filed by the Revenue is directed against the order dated 31.10.2018 of the Ld. CIT(A), Rohtak, relating to Assessment 2010-11 arising out of order u/s 144 r.w.s. 147 of the Act dated 21.03.2016 passed by the Income Tax Officer, Ward-2, Rohtak. 2. Brief facts of the case:- In this case information was received from office of the Pr. Chief Commissioner of Income Tax, North West Region, Aaykar Bhawan, Sector-17E, Chandigarh in respect of total cash deposit amounting to Rs.1,99,13,900/-. On the basis of the information, the then DCIT, Rohtak Circle, Rohtak recorded the reasons for re-opening the case u/s 147 of the IT Act, 1961 and issued notice u/s 148 of the IT Act, 1961 dated 31.03.2015. The AO also noted that the assessee had not filed its 2 ITA No.8284/Del/2018 return of income for the year under consideration. According to the AO, as the assessee did not appear during the assessment proceedings, he issued notice u/s 274 r.w.s. 271 of the Act along with show cause letter sent through speed-post on 12.02.2016 fixing the case for 18.02.2016. The AO noted in the assessment order that the assessee neither attended in response to the said notice nor filed any reply and therefore he completed the assessment u/s 144 r.w.s. 147of the Act on 21.03.2016 by treating the cash deposit as undisclosed income of the assessee and an addition of Rs.1,99,13,900/- was made by the AO. During the appellate proceedings the assessee contested that no notice u/s 148 of the Act was served on him and no reasons were given for reopening of assessment proceedings and therefore the proceedings were not as per law and without jurisdiction. On merits also the addition was challenged in view of the cash flow statement and source of deposit explained by the assessee. Additional evidences given by the assessee was under Rule 46A of the I.T. Rules were sent to the AO for his comments. Vide remand report's dated 03.01.2018 and 20.09.2018 the AO stated that proceedings u/s 148 of the Act was in accordance with law and notice u/s 148 of the Act was duly served by affixture upon the assessee. 2.1. The ld. CIT(A) observed on the basis of the records and two remand reports of the AO wherein it was admitted by the AO that the notice dated 31.03.2015 could not be served by post and the AO asked the Inspector to serve the said notice by affixture. The Ld. CIT(A) noted that the AO has not been able to submit any proof of service through affixture and proof of signature of witness on the said notice served by Affixture during the 3 ITA No.8284/Del/2018 appellate/remand proceedings. The Ld. CIT(A) thereafter relied upon various case laws and held that in view of the fact as discussed in her order, as there was no evidence of service of notice u/s 148 of the Act by affixture, as proposed by the AO when the notice issued on 31.03.2015 came back unserved, the re-assessment made u/s 144/147 of the Act was invalid and void. Accordingly, she did not adjudicate the appeal on its merits. 3. Aggrieved with the said order, the Revenue is in appeal before us and has raised the following ground of appeal:- “The Ld. CIT(A) has erred in law and on the facts in treating the reassessment made under section 144/ 147 of the Income Tax Act. 1961 invalid and void when the notice under section148 of the Income Tax Act, 1961 dated 31.03.2015 was sent by post on 31.03.2015, and subsequently served through affixture by the Inspector who put his signature on the affixture.” 4. The Ld. DR submitted that the notice u/s 148 of the Act dated 311.03.2015 was duly served upon the assessee in view of the decision of the Hon’ble Delhi High Court in the case of Mayawati vs CIT [2009] 222 CTR 117(Del.). In this regard, the Ld. DR filed a written submission, which is reproduced as under:- “Facts of the case may kindly be taken from the appeal order itself (on page 6 bottom line): In the instant case, notice u/s 148 of the Act was issued on the address given by the assessee on his letter which was received in the AO's Office on 10.10.2012. The notice came back unserved with postal remarks that \"on enquiry it was gathered that the assessee is not at home and it is not known that when he will be back\". This notice was issued on 31.03.2015. It may also be appreciated that as noted in the assessment order para 2 page I, the assessee had not filed ITR for the year under consideration and therefore no alternate address was available. 4 ITA No.8284/Del/2018 The Ld. CIT A then noted that the AO issued affixture notice and noted in the appeal order certain irregularities with the affixture notice. On this basis the Ld. Ld. CIT A has treated reassessment u/s 144/147 of the Income Tax Act, 196lin this case invalid and void as there was no proof of service of notice u/s 148 of the Act by affixture. (Para 5.2.9 of the Appeal Order, page 12) and Department is in appeal against this. Having held so, the Ld. CIT A didn't decide the assessee's appeal on merits (Para 5.2.11 of the Appeal Order, page 14). The Ld. CIT A relied upon various judgements in support to hold that service of notice u/s 148 was mandatory. It is contended that issue of notice on 31.03.2015 and sending it by registered post on the address given by the assessee on his letter which was received in the AO's Office on 10.10.2012 was proper service and the Ld. AO, apparently in good faith, attempted service of the notice through affixture on 07.04.2015 after the same came back undelivered on 06.04.2015. And therefore any alleged irregularity in the service of notice through affixture is irrelevant. As sending of the notice by registered post on the address given by the assessee was proper service, all the judgements relied upon by the Ld. CIT A are not applicable to the facts of the case. Kind attention is drawn to the following further facts in this case: As per page 2, para 3 of the assessment order, the Id.AO sent a notice u/s 142(1) dated 18.11.2015. and this came back undelivered with the remarks \" bar bar jane per nahi milta wapish jaye\". Then a show cause letter was issued on 18-02- 2016 through speed post and it was noted in bottom para on page 2 that this notice has not been received back undelivered. It can safely be assumed that all the notices were sent at the same address which was used to send the original notice dated 31-03-2015 and the same address was used as mentioned by the Id. AO while passing the assessment order dated 21.03.2016(first page of assessment order). That it was proper address can be seen from the fact that within 20 days of issue of assessment order, the assessee filed appeal on 10.04.2016 before the Id. CIT A as is clear from the form of verification attached with Form 35. As per the requirement of Section 149, the notice u/s 149 has been issued in time by way of sending it by registered post on 31-03-2015 on the proper address of the assessee and as per the requirement of section 148 the same should be presumed to be served despite the fact that the notice had come back unserved as it was the duty of the assessee to ensure proper arrangement at all times to receive dak sent at the address given by the assessee himself to the Income Tax Department. In 5 ITA No.8284/Del/2018 Mayawati vs CIT 321 ITR 349, the Hon'ble Delhi High Court held that section 27 of the General Clauses Act creates a statutory presumption to the effect that if a letter is properly addressed, it must be deemed to have been served. In view of above submissions, it is prayed that the Department's ground of appeal may be allowed.” 4.1. In yet another submission filed by the ld. DR, it was submitted that presumption contained u/s 114 of the Indian Evidence Act would apply in the present case, which enables the Court to presume that in common course of natural events, the communication sent by post would have been delivered at the address of the addressee. The Ld. DR submitted that this view has been affirmed and upheld by the Hon’ble Supreme Court in the case of M/s Ajeet Seeds Limited vs Gopal Krishnaiah [2014] 12 Hon'ble Supreme Court 685(SC). The Ld. DR further submitted that the Hon’ble Supreme Court in the case of Priyanka Kumari vs Shailendra Kumar in Transfer Petition (Civil) Nos.2090/2019 IA No.126261/2019 vide order dated 13.10.2023 has held that ‘refusal’ is synonymous with ‘unclaimed’. The Ld. DR further submitted that the Hon’ble Apex Court further held that when notice is returned as unclaimed it shall be deemed to be served and it is proper service. 5. The Ld. AR supported the order of the Ld. CIT(A) and filed a written submission as under:- • Ld. AO had issued notice under section 148 on 31.03.2015, which was received back unserved on 06.04.2015. • Thereafter, Ld. AO made no efforts to serve the notice again, except for the alleged affixture. Ld. AO on page 2 para 3 of Assessment Order mentioned that 'the above notice was served through affixture only'. • Respondent challenged the service of notice through Affixture before the Ld. CIT(A). The Respondent in his submission dated 6 ITA No.8284/Del/2018 15.02.2018, filed as page 19 of Paper Book, had cited several judgments of Hon'ble Supreme Court and jurisdictional Hon'ble High Court of Punjab and Haryana and other Hon'ble High Courts on affixture. • The Ld. CIT(A) after seeking the remand report two times and after perusal of assessment records herself, gave a clear finding in para 5.2.2 that there is no evidence available on record to prove the affixture. There is even no entry on order sheet to this effect that the notice was served by affixture. • Hence Ld. CIT(A) relies upon the judgment of the Hon'ble Supreme Court in RK Upadhyay 166 ITR 163, and several other judgments, quashed the reassessment proceedings for non- service of notice u/s 148. 6. We have heard both the parties and perused the materials available on record. In this case, the notice u/s 148 of the Act dated 31.03.2015 was issued on the address given by the assessee in his letter which was received in the AO’s office on 10.10.2012. The Ld. CIT(A) noted that the notice came back unserved with postal remarks that ‘on enquiry it was gathered that the assessee is not at home and it is not known that when he will be back’. The ld. CIT(A) has noted in her order that this notice u/s 148 of the Act was issued on 31.03.2015. Further, a notice u/s 142(1) of the Act issued by the AO fixing the case for hearing on 18.11.2015 also came back undelivered with the postal remarks ‘bar bar jane per nahi milta wapis jaye’. In this regard, the Hon’ble Supreme Court in para No.14 of its order dated 16.07.2014 in the case of M/s Ajeet Seeds Limited vs Gopal Krishnaiah (supra) noted that this Court has already held that when a notice is sent by registered post and is returned with a postal endorsement ‘refused’ or ‘not available in the house’ or ‘house locked’ or ‘shop closed’ or ‘addressee not in station’ due service has to be presumed. The said para no.14 of the Hon’ble Apex Court order is reproduced as under:- 7 ITA No.8284/Del/2018 “14. Section 27 gives rise to a presumption that service of notice has been effected when it is sent to the correct address by registered post. In view of the said presumption, when stating that a notice has been sent by registered post to the address of the drawer, it is unnecessary to further aver in the complaint that in spite of the return of the notice unserved, it is deemed to have been served or that the addressee is deemed to have knowledge of the notice. Unless and until the contrary is proved by the addressee, service of notice is deemed to have been effected at the time at which the letter would have been delivered in the ordinary course of business. This Court has already held that when a notice is sent by registered post and is returned with a postal endorsement ‘refused’ or ‘not available in the house’ or ‘house locked’ or ‘shop closed’ or ‘addressee not in station’, due service has to be presumed. [Vide Jagdish Singh Vs. Natthu Singh (1992) 1 SCC 647; State of M.P. Vs. Hiralal & Ors. (1996) 7 SCC 523 and V.Raja Kumari Vs. P.Subbarama Naidu & Anr. (2004) 8 SCC 74] It is, therefore, manifest that in view of the presumption available under Section 27 of the Act, it is not necessary to aver in the complaint under Section 138 of the Act that service of notice was evaded by the accused or that the accused had a role to play in the return of the notice unserved.” 6.1. In this case also as discussed above, the postal remark in respect of the notice u/s 148 dated 31.03.2015 sent by registered post (the fact of sending the notice u/s 148 of the Act dated 31.03.2015 by registered post is mentioned at Sr. No.-5 of the ‘statement of facts filed by the ITO, Ward- 2, Rohtak’) was that ‘on enquiry it was gathered that the assessee is not at home and it is not known that when he will be back’. Thus, this remark of the Postal Department falls in one of the above remarks ‘not available in the house’ in the above cited case where the due service of the notice was held to be presumed. Further, as stated by the Ld. DR that the assessment order u/s 144 r.w.s. 147 of the Act dated 21.03.2016 was sent on the same address on which the original notice u/s 148 of the Act dated 31.03.2015 was issued and sent by registered post and the said address in the notice u/s 148 of the Act dated 31.03.2015 was the correct address for the reason that as stated by the Ld. DR that within 20 days of the issue of 8 ITA No.8284/Del/2018 the assessment order on the same address, the assessee filed an appeal on 10.04.2016 against the said assessment order before the Ld. CIT(A) as evident from the Form No.35 of the Appeal Memo. Therefore, in this case, it is not in dispute that the notice u/s 148 of the Act dated 31.03.2015 was issued and it was issued on the correct address as submitted by the assessee vide his letter received in the office of the AO on 10.10.2012, which is confirmed by the fact that the assessee received the assessment order u/s 144 of the Act dated 21.03.2016 and filed the appeal on 10.04.2016 within 20 days at the receipt of the order as stated by the Ld. Sr. DR. Therefore, in the given facts of the case, relying upon the decision of the Hon’ble Apex Court in the case of M/s Ajeet Seeds Limited vs Gopal Krishnaiah (supra), due service of notice u/s 148 of the Act dated 31.03.2015 has to be presumed upon the assessee. Therefore, respectfully, following the same, it is held that due service of notice u/s 148 of the Act dated 31.03.2015 is presumed in the case of the assessee. 6.2. The assessee has relied upon the decision of the Hon’ble Apex Court in the case of RK Upadhyay vs Shanabhai P. Patel 166 ITR 163(SC) to submit that unless the notice u/s 148 of the Act is served upon the assessee, the AO cannot make re-assessment and therefore the assessment order dated 21.03.2016 u/s 144 r.w.s. 147 of the Act was not a valid assessment because the notice u/s 148 of the Act dated 31.03.2015 was not served upon him. In this regard, we have noted the observation of the Hon’ble Apex Court in the cited case, wherein, the Hon’ble Court observed that ‘The mandate of section 148(1) is that reassessment shall not be made until there has been service’. However, in 9 ITA No.8284/Del/2018 the present case from the remarks of the Postal Department to the notice u/s 148 of the Act dated 31.03.2015 shows that the Postal Department had reached the home of the assessee but the notice was not received on the ground that the assessee was not at home and it was not known when the assessee will be back at home. Similarly, the notice u/s 142(1) of the Act fixing the case for hearing on 18.11.2015 also came back undelivered with the postal remarks ‘bar bar jane per nahi milta wapis jaye’ which shows that despite repeated attempts by the Postal Department, the assessee was not found and the Postal Department was asked to go back. The above conduct of the assessee and the remarks of the Postal Department raises a reasonable presumption that the assessee deliberately avoided to receive the notice u/s 148 of the Act dated 31.03.2015 in this case. The law will protect the rights of a citizen if he was ready to perform his corresponding duty. In this case, the assessee was not ready to receive the said notice and therefore the notice u/s 148 of the Act dated 31.03.2015 could not be served upon him. Therefore, as held in earlier para i.e. 6.1 that due service of notice u/s 148 of the Act dated 31.03.2015 is presumed in this case on the assessee and therefore, the decision of the Hon’ble Apex Court in the case of RK Upadhyay 166 ITR 163(SC) will not be applicable in the case of the assessee. 6.3. For the above reasons, the decision of the Ld. CIT(A) in holding that the assessment order u/s 144 r.w.s. 147 dated 21.03.2013 in this case as invalid because of non-service of the notice u/s 148 of the Act dated 21.3.2015 by affixture as per law is also held to be not a valid finding because we have held that the notice u/s 148 of the Act dated 31.03.2015 10 ITA No.8284/Del/2018 has been presumed to have been served upon the assessee in this case. Therefore, the said finding of the ld. CIT(A) cannot be sustained and the same is set-aside. 6.4. In view of the above facts, it is held that the assessment proceedings initiated in this case vide the notice u/s 148 of the Act dated 31.03.2015 was validly initiated and the assessment order u/s 144 r.w.s. 147 of the Act dated 21.03.2016 was validly completed in this case as per law. 7. In view of the above facts, the ground of the appeal of the Revenue is allowed and the order of the ld. CIT(A) is set-aside and is remitted to the file of the Ld. CIT(A) for deciding the issue on merits. 8. In the result, the appeal of the Revenue is allowed for statistical purpose. Order pronounced in the open court on 11th April, 2025. Sd/- Sd/- [MADHUMITA ROY] [BRAJESH KUMAR SINGH] JUDICIAL MEMBER ACCOUNTANT MEMBER Dated 11.04.2025. f{x f{x f{x f{x~{tÜ ~{tÜ ~{tÜ ~{tÜ Copy forwarded to: 1. Assessee 2. Respondent 3. PCIT 4. CIT(A) 5. DR Asst. Registrar, ITAT, New Delhi, "