DCIT CEN. 7(1), MUMBAI V. M/s NATIONAL REFINERY PVT. LTD., MUMBAI

ITSSA 347/MUM/2003

• Counselvise Citation: [2010] 124 COUNSELVISE.COM (IT) 9424 (ITAT-MUMBAI)
• Duration Of Justice: 6 year(s) 10 month(s) 4 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 05-03-2010
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 16-12-2009
• Assessment Year: misc
• Appeal Filed On: 01-05-2003
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: L K AGRAWAL; S S RANA PITAMBAR DAS
• Assessee Lawyers: J D MISTRY; VINOD VASA
• Keywords: Invalid notice; Period of limitation; Assessment record; Block assessment; Time period of passing order; Reassessment proceedings
• Section: 143(3); 145; 27; 263; 144

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES B, MUMBAI BEFORE SHRI R.S.SYAL, AM AND SHRI R.S.PADVEKAR, JM IT(SS)A NO.347/MUM/2003 : BLOCK PERIOD 1.4.1989 TO 29.11.1999 THE DY.COMMISSIONER OF INCOME-TAX CIRCLE 7(1) MUMBAI. VS. M/S.NATIONAL REFINERY PRIVATE LIMITED 87, MILAN BUILDING, TARDEO ROAD MUMBAI 400 034. PA NO.AAACN2799J. (APPELLANT) (RESPONDENT) CO NO.185/MUM/2004 : BLOCK PERIOD 1.4.1989 TO 29.11 .1999 M/S.NATIONAL REFINERY PRIVATE LIMITED 87, MILAN BUILDING, TARDEO ROAD MUMBAI 400 034. VS. THE DY.COMMISSIONER OF INCOME-TAX CIRCLE 7(1) MUMBAI. (CROSS OBJECTOR) (RESPONDENT) REVENUE BY : S/SHRI S.S.RANA, PITAMBAR DAS & L.K.AG RAWAL ASSESSEE BY : S/SHRI J.D.MISTRY & VINOD VASA O R D E R PER : R.S.SYAL, AM : THIS APPEAL BY THE REVENUE AND CROSS OBJECTION BY T HE ASSESSEE EMANATE FROM THE ORDER PASSED BY THE COMMISSIONER OF INCOME -TAX (APPEALS) ON 25.2.2003 IN RELATION TO THE BLOCK PERIOD 1.4.1989 TO 29.11.1 999. 2. THE FACTUAL MATRIX OF THE CASE IS AS FOLLOWS : AN ACTION U/S.132 WAS TAKEN AT SEVERAL PREMISES OF THE ASSESSEE AND ITS DIRECTORS ON 29.11.1999. NOTICE U/S.158BC DATED 24.4.2000 WAS ISSUED AND SERVED ON THE ASSESS EE ON THE SAME DAY. IN RESPONSE TO THAT A RETURN DECLARING UNDISCLOSED INC OME OF RS. NIL WAS FILED ON 15.5.2000. THE ASSESSMENT WAS COMPLETED ON 31.1.200 2 DETERMINING THE TOTAL UNDISCLOSED INCOME AT RS.8,12,72,916. THE LEARNED C IT(A) DELETED MOST OF THE ADDITIONS ON MERITS, AGAINST WHICH THE REVENUE HAS COME UP IN APPEAL BEFORE US. IT(SS)A NO.347/M/03 & CO. 185/M/04 M/S.NATIONAL REFINERY PVT. LTD. 2 3. THE ASSESSEE, INTER ALIA , RAISED OBJECTION BEFORE THE LEARNED CIT(A) THAT THE FIRST NOTICE U/S.143(2) WAS RECEIVED BY IT ON 24.12 .2001. RELYING ON THE PROVISO TO SECTION 143(2) IT WAS URGED THAT SINCE THE NOTICE U /S.143(2) WAS ISSUED AFTER EXPIRY OF ONE YEAR FROM THE END OF THE MONTH IN WHICH THE RETURN WAS FILED, THE WHOLE ASSESSMENT BE HELD AS NULL AND VOID. THE LEARNED CI T(A) WROTE ONE LETTER DT. 10.2.2003 TO THE ASSESSING OFFICER SEEKING CLARIFIC ATION IN THE MATTER. THE A.O. ATTENDED THE OFFICE OF THE LEARNED CIT(A) ALONG WIT H CASE RECORD AND STATED THAT THE CONTENTION RAISED BY THE ASSESSEE THAT NO NOTICE WA S ISSUED U/S 143(2) TILL 24.12.2001, WAS INCORRECT. IT WAS PUT FORTH THAT A NOTICE DATED 16.5.2000 WAS ISSUED BY RPAD TO THE ASSESSEE WHICH WAS DULY SERV ED. WHEN THIS POSITION WAS CONFRONTED TO THE ASSESSEE, IT WAS CLAIMED THAT NO NOTICE DATED 16.5.2000 WAS SERVED ON IT INASMUCH AS IT WAS HIGHLY IMPROBABLE T HAT A NOTICE COULD BE ISSUED BY THE A.O. ON THE VERY NEXT DAY OF ITS FILING THE RET URN. THE ASSESSEE SOUGHT STRICT PROOF OF THE SERVICE OF NOTICE. A PROOF FROM THE POSTAL AUTHORITIES ACKNOWLEDGING SEVERAL LETTERS FROM THE OFFICE OF JOINT COMMISSION ER OF INCOME-TAX, SPECIAL RANGE-17, MUMBAI ADDRESSED TO A NUMBER OF DIFFEREN T ASSESSES, INCLUDING THE NAME OF THE ASSESSEE, WAS PRODUCED BY THE A.O. THE ASSESSEE OBJECTED TO IT BY POINTING OUT THAT THE SAME DID NOT INDICATE OF HAV ING ANY NOTICE U/S.143(2). THE LEARNED CIT(A) FOUND IT DIFFICULT TO ACCEPT THAT NO TICE U/S.143(2) WOULD BE ISSUED ON THE DAY FOLLOWING THE DATE OF FILING THE RETURN. BUT CONSIDERING THE FACT THAT THERE WAS A PROOF IN THE FORM OF ACKNOWLEDGEMENT FROM TH E POSTAL AUTHORITIES THAT SOME COMMUNICATION HAD GONE FROM THE TAX DEPARTMENT TO T HE ASSESSEE ON 2.6.2000 THOUGH NOT STRICTLY VERIFIABLE TO BE NOTICE U/S.143 (2), HE GAVE BENEFIT OF DOUBT TO THE A.O. BY HOLDING THAT NOTICE U/S.143(2) WAS ISS UED TO THE ASSESSEE ON 2.6.2000. THUS THE GROUND RAISED BY THE ASSESSEE IN THIS REGA RD CAME TO BE REJECTED. IN ITS CROSS OBJECTION THE ASSESSEE IS AGGRIEVED AGAINST T HIS FINDING RETURNED BY THE LEARNED FIRST APPELLATE AUTHORITY, APART FROM CHALL ENGING THE UPHOLDING OF ONE ADDITION OF RS.8,404 ON ACCOUNT OF UNEXPLAINED STOC K OF SILVER AT JOGESHWARI FACTORY. IT(SS)A NO.347/M/03 & CO. 185/M/04 M/S.NATIONAL REFINERY PVT. LTD. 3 4. WE HAVE HEARD THE PARTIES AT LENGTH IN THE LIGHT OF MATERIAL PLACED BEFORE US AND PRECEDENTS RELIED UPON. THE LEGAL ISSUE RAISED THROUGH THE ASSESSEES CROSS OBJECTION IS AGAINST THE VIEW POINT OF THE LEARNED CIT(A) THAT THE NOTICE U/S.143(2) WAS PROPERLY SERVED ON THE ASSESSEE IN TIME. THE C HRONOLOGY OF EVENTS FROM THE DEPARTMENTAL PAPER BOOK SHOWS THAT THE SEARCH WAS CONCLUDED ON 31.1.2000. BLOCK RETURN WAS FILED ON 15.5.2000. FIRST NOTICE D ATED 16.5.2000 WAS ISSUED WHICH WAS SERVED ON THE ASSESSEE BY REGISTERED POST AND S ECOND NOTICE U/S.143(2) WAS ISSUED ON 24.12.2001. THE ASSESSMENT ORDER WAS FIN ALLY PASSED ON 31.1.2002 DETERMINING THE TOTAL UNDISCLOSED INCOME AT RS.8.12 CRORE. 5. SECTION 158BC(B) PROVIDES THAT W HERE ANY SEARCH HAS BEEN CONDUCTED U/S.132 OR BOOKS OF ACCOUNT, OTHER DOCUMENTS OR ASS ETS ARE REQUISITIONED UNDER SECTION 132A, IN THE CASE OF ANY PERSON, THEN THE A SSESSING OFFICER SHALL PROCEED TO DETERMINE THE UNDISCLOSED INCOME OF THE BLOCK PERIO D IN THE MANNER LAID DOWN IN SECTION 158BB AND THE PROVISIONS OF SECTION 142, SU B-SECTIONS (2) AND (3) OF SECTION 143, SECTION 144 AND SECTION 145 SHALL, SO FAR AS MAY BE, APPLY. ONE OF THE IMPORTANT QUESTIONS RAISED IN THIS APPEAL IS WHETHE R THE PROVISO TO SECTION 143(2) APPLIES TO THE BLOCK ASSESSMENT ALSO. IN OTHER WORD S IS IT INCUMBENT UPON THE AO TO ISSUE NOTICE U/S 143(2) WITHIN THE PRESCRIBED PERIO D OF TWELVE MONTHS FROM THE END OF THE MONTH IN WHICH THE BLOCK RETURN IS FILED? 6. AT THIS JUNCTURE IT WILL BE USEFUL TO R EFER TO THE PROVISO TO SECTION 143(2) WHICH AT THE MATERIAL TIME PROVIDED THAT `NO NOTICE UNDER CLAUSE (II) SHALL BE SERVED ON THE ASSESSEE AFTER THE EXPIRY OF TWELVE MONTHS FROM THE END OF THE MONTH IN WHICH THE RETURN IS FURNISHED. THE EFFECT OF THI S PROVISO IS THAT FOR THE PURPOSES OF MAKING ASSESSMENT, NOTICE U/S.143(2) CAN BE SERVED ON THE ASSESSEE ONLY WITHIN A PERIOD OF TWELVE MONTHS FROM THE END OF THE MONTH I N WHICH THE RETURN IS FURNISHED. WHERE NO NOTICE IS ISSUED WITHIN THE ST IPULATED TIME, THEN NO ASSESSMENT IT(SS)A NO.347/M/03 & CO. 185/M/04 M/S.NATIONAL REFINERY PVT. LTD. 4 IS POSSIBLE AND RESULTANTLY THE DECLARED INCOME AUT OMATICALLY BECOMES THE ASSESSED INCOME. IF THE ASSESSING OFFICER INTENDS TO MAKE AS SESSMENT, IT IS INCUMBENT UPON HIM TO ISSUE NOTICE U/S 143(2) WITHIN THE PRESCRIBE D PERIOD. IF ASSESSMENT IS TAKEN UP IN VIOLATION OF THE PROVISIONS OF THE PROVISO TO SECTION 143(2), THAT IS, NOTICE IS ISSUED AFTER THE PRESCRIBED PERIOD, THEN THE ASSESS MENT SO MADE SHALL BE NULL AND VOID. THE HONBLE GUJARAT HIGH COURT IN DCIT VS. MAHI VALLEY HOTELS AND RESORTS [(2006) 287 ITR 360 (GUJ.)] CONSIDERED A CASE IN WHICH NOTICE U/S.143(2) WAS ISSUED BEYOND THE STATUTORY PERIOD OF LIMITATIO N PRESCRIBED UNDER PROVISO TO SECTION 143(2) I.E. ONE YEAR FROM THE FILING OF THE RETURN. IT WAS HELD THAT THE ASSESSMENT SO MADE ON THE BASIS OF SUCH NOTICE BEYO ND THE LIMITATION PERIOD WAS VOID AB INITIO . THE DEPARTMENTAL CONTENTION THAT THERE WAS ACQUIE SCENCE OR WAIVER ON THE PART OF THE ASSESSEE BY PARTICIPATING IN T HE PROCEEDINGS, WAS FOUND TO BE WITHOUT ANY SUBSTANCE. 7. NOW WE COME BACK TO THE MAIN QUESTION WH ETHER THE PROVISIONS OF SECTION 143(2) APPLY IN THE CASE OF BLOCK ASSESSMENT. IN T HE CASE OF SMT.BANDANA GOGOI VS. CIT & ANR. [(2007) 289 ITR 28 (GAU.)] THE A.O. ISSUED NOTICE U/S.158BC ON 20.8.1998, IN RESPONSE TO WHICH THE ASSESSEE FILED THE RETURN OF INCOME FOR THE BLOCK PERIOD ON 31.3.1999. THE A.O. ISSUED NOTICE U /S.142(1) AND COMPLETED THE ASSESSMENT U/S.158BC R.W.S. 143(3) OF THE ACT. NO N OTICE WAS ISSUED U/S.143(2). THE ASSESSEE CHALLENGED THE NON-ISSUANCE OF SUCH N OTICE BEFORE THE APPELLATE AUTHORITIES. THE CIT(A) AND THE TRIBUNAL HELD THAT THE OMISSION ON THE PART OF THE A.O. TO ISSUE NOTICE U/S.143(2) WAS A PROCEDURAL MI STAKE AND COULD NOT INVALIDATE THE ASSESSMENT. WHEN THE MATTER CAME UP BEFORE THE HONBLE HIGH COURT IT HELD THAT THE PROVISIONS OF SECTION 142(2) AND 143(2) A ND (3) WILL HAVE MANDATORY APPLICATION IN A CASE WHERE THE A.O., IN REPUDIAT ION OF THE RETURN FILED, PROCEEDS TO MAKE AN INQUIRY. THE ASSESSMENT ORDER WAS HELD TO BE SUFFERING FROM BOTH THE PROCEDURAL AND JUDICIAL ERROR. IT WAS, THEREFORE, CONCLUDED THAT THE ONLY OPTION LEFT IT(SS)A NO.347/M/03 & CO. 185/M/04 M/S.NATIONAL REFINERY PVT. LTD. 5 WITH THE A.O. IN SUCH CIRCUMSTANCES WAS TO COMPUTE THE INCOME AND LEVY TAX ON THE RETURN FILED BY THE ASSESSEE. STILL IN A MORE RECENT JUDGMENT RENDERED BY THE HONBLE DELHI HIGH COURT IN CIT VS. PAWAN GUPTA & ORS. [(2009) 223 CTR (DEL.) 487] , IT HAS BEEN HELD THAT WHERE THE A.O. WAS NOT INC LINED TO ACCEPT THE RETURN OF UNDISCLOSED INCOME FILED BY THE ASSESSEE, THE PROCE DURE PRESCRIBED U/S.143(2) WAS TO BE NECESSARILY FOLLOWED. THE ASSESSMENT COMPLET ED WITHOUT ISSUING NOTICE U/S.143(2), WAS HELD TO BE INVALID AND NOT A MERE IRREGULARITY. 8. AS AGAINST THE ABOVE VIEW IN FAVOUR O F THE ASSESSEE THAT THE ISSUANCE OF NOTICE WITHIN THE TIME PRESCRIBED UNDER PROVISO TO SECTION 143(2) IS A MANDATORY REQUIREMENT FOR FRAMING OF BLOCK ASSESSMENT, A CONT RARY VIEW ALSO CAME TO BE EXPRESSED BY SOME JUDICIAL FORUMS. THE STAND OF TH E REVENUE REMAINED THAT THE PROVISO TO SECTION 143(2) DID NOT APPLY TO THE BLOC K ASSESSMENT PROCEEDINGS INASMUCH AS CLAUSE (B) OF SECTION 158BC INCLUDED TH E WORDS SO FAR AS MAY BE IN THE CONTEXT OF APPLICABILITY OF SECTION 143(2) AND HENCE EVEN IF NO NOTICE WAS ISSUED WITHIN TWELVE MONTHS FROM THE END OF THE MON TH IN WHICH THE RETURN WAS FURNISHED, THE ASSESSMENT PROCEEDINGS COULD VALIDLY GO ON. EVENTUALLY THIS ISSUE HAS BEEN RECENTLY SET TO REST BY THE HONBLE APEX COURT IN THE CASE OF ACIT VS. HOTEL BLUEMOON [2010-TIOL-08-SC-IT] . THE FACTS OF THE CASE ARE THAT SEARCH ACTION WAS TAKEN AGAINST THAT ASSESSEE U/S.132 OF T HE ACT. WHEREAS THE ASSESSEE ARGUED THAT ISSUANCE OF NOTICE U/S.143(2) OF THE AC T WITHIN THE PRESCRIBED TIME FOR THE PURPOSE OF BLOCK ASSESSMENT WAS MANDATORY FOR T HE ASSESSING AUTHORITY, THE DEPARTMENT TOOK A VIEW THAT THE NOTICE U/S.143(2) W AS NOT AN ESSENTIAL REQUIREMENT IN THE BLOCK ASSESSMENT. THE TRIBUNAL AFFIRMED THE DECISION OF THE CIT(A) THAT NON-ISSUANCE OF NOTICE U/S.143(2) WAS ONLY A PROCED URAL IRREGULARITY AND THE SAME WAS CURABLE. THE HONBLE GAUHATI HIGH COURT DID NOT CONCUR WITH THE VIEW EXPRESSED BY THE TRIBUNAL THAT THE ISSUANCE OF NOT ICE U/S.143(2) WITHIN THE PRESCRIBED TIME LIMIT WAS NOT AN ESSENTIAL REQUIREM ENT FOR THE PURPOSES OF MAKING IT(SS)A NO.347/M/03 & CO. 185/M/04 M/S.NATIONAL REFINERY PVT. LTD. 6 BLOCK ASSESSMENT. THE REVENUE TOOK UP THE MATTER BE FORE THE HONBLE SUPREME COURT. VIDE JUDGMENT DATED 2.2.2010, THE HONBLE APEX COURT HAS HELD THAT IF AN ASSESSMENT IS TO BE COMPLETED U/S.143(3) R.W.S. 158 BC, NOTICE U/S.143(2) SHOULD BE ISSUED WITHIN ONE YEAR FROM THE END OF THE MONTH IN WHICH BLOCK RETURN IS FILED. IT HAS FURTHER BEEN HELD THAT THE OMISSION ON THE PART OF THE ASSESSING AUTHORITY TO ISSUE NOTICE U/S.143(2) CANNOT BE A PROCEDURAL IRRE GULARITY AND THE SAME IS NOT CURABLE. WITH THE ADVENT OF THIS JUDGMENT FROM TH E HONBLE SUMMIT COURT, NOW IT BECOMES UNAMBIGUOUS THAT THE PROVISIONS OF SECTI ON 143(2) ARE APPLICABLE TO THE BLOCK ASSESSMENT. SINCE ISSUANCE OF NOTICE U/S 14 3(2) IS AN ESSENTIAL REQUIREMENT FOR MAKING BLOCK ASSESSMENT, SUCH NOTICE HAS NECESS ARILY TO BE ISSUED WITH THE TIME PRESCRIBED UNDER PROVISO TO SECTION 143(2). THUS T HE SERVICE OF NOTICE WITHIN A PERIOD OF TWELVE MONTHS FROM THE END OF MONTH IN W HICH RETURN IS FILED IS SINE QUA NON FOR PROCEEDING WITH THE BLOCK ASSESSMENT. IF NO NO TICE IS ISSUED U/S.143(2) WITHIN THE PRESCRIBED PERIOD, THE ASSESSING OFFICE R WILL HAVE TO ACCEPT THE RETURNED INCOME AND HE CANNOT BE ALLOWED TO GO AHE AD WITH THE ASSESSMENT. IF AN ASSESSMENT, IN CONTRAVENTION OF THE PROVISIONS OF PROVISO TO SECTION 143(2), IS MADE, THE SAME WILL BE A NULLITY AND NOT AN IRREGUL AR ASSESSMENT. 9. ADVERTING TO THE FACTS OF THE INSTANT CASE IT IS FOUND AS AN UNDISPUTED FACT THAT THE ASSESSEE FILED ITS RETURN FOR THE BLOCK PERIOD ON 15.5.2000. GOING BY THE MANDATE OF PROVISO TO SECTION 143(2), NOTICE U/S.14 3(2) COULD HAVE BEEN VALIDLY ISSUED ON OR BEFORE 31.5.2001. IF THE REVENUES CON TENTION IS ACCEPTED THAT NOTICE U/S.143(2) ISSUED ON 16.5.2000 WAS SERVED UPON THE ASSESSEE THROUGH REGISTERED POST, THEN OF COURSE SUCH NOTICE WILL BE IN TIME AN D NO INFIRMITY CAN BE FOUND IN THE BLOCK ASSESSMENT ORDER ON THIS COUNT. IF HOWEVER T HE VIEW POINT OF THE ASSESSEE IS ACCEPTED THAT THE NOTICE U/S.143(2) WAS ISSUED FOR THE FIRST TIME ON 24.12.2001, THEN SUCH A NOTICE WOULD BE TIME BARRED. NOW WE NEED T O EXAMINE IF ANY NOTICE U/S.143(2) DATED 16.5.2000 WAS ISSUED AND SERVED ON THE ASSESSEE. THE REVENUES IT(SS)A NO.347/M/03 & CO. 185/M/04 M/S.NATIONAL REFINERY PVT. LTD. 7 VIEW POINT IS THAT NOTICE U/S.143(2) DATED 16.5.200 0 WAS ISSUED AND SERVED ON THE ASSESSEE BY REGISTERED POST ACKNOWLEDGEMENT DUE. IN SUPPORT OF THIS CLAIM THE REVENUE HAS PLACED ON RECORD A COPY OF POSTAL DEPAR TMENT ACKNOWLEDGEMENT AT PAGES 6 AND 7 OF THE PAPER BOOK. ON THE PERUSAL OF THESE TWO PAGES IT IS FOUND THAT THE NAME OF THE ASSESSEE IS MENTIONED AGAINST SL.NO .A-715. ON THE RIGHT SIDE OF THIS PAGE THERE IS STAMP IMPRESSION OF THE DEPARTMENT OF POSTS WHICH BEARS THE DATE OF 22.5.2000. THE LEARNED DEPARTMENTAL REPRESENTATIVE CANVASSED THE VIEW THAT SINCE THE NOTICE U/S.143(2) DATED 16.5.2000 WAS SENT THRO UGH REGISTERED POST, IT MAY BE DEEMED TO BE PROPER SERVICE. HE RELIED ON THE FOLLO WING CASES TO BOLSTER HIS SUBMISSION THAT SERVICE OF NOTICE THROUGH REGISTERE D POST A.D. WHICH WAS NOT RECEIVED BACK UNSERVED, RAISED THE PRESUMPTION OF THE SERVICE OF NOTICE ON THE ASSESSEE :- (I) CIT VS. VINS OVERSEAS INDIA LTD. [(2008) 305 ITR 32 0 (DEL.)] (II) CIT VS. YAMU INDUSTRIES LTD. [(2008) 306 ITR 309 (D EL.)] (III) CIT VS. MADHSY FILMS P.LTD. [(2008) 301 ITR 69 (DEL .)] (IV) CIT VS. SHANKER LAL VED PRAKASH [(2008) 300 ITR 243 (DEL.)] 10. WE HAVE GONE THROUGH THESE CASES AND FIND THAT THE HONBLE COURT HAS HELD THAT IF NOTICE U/S.143(2) IS DISPATCHED BY REG ISTERED POST DULY ADDRESSED AND STAMPED, IT IS TO BE PRESUMED TO HAVE REACHED THE H ANDS OF THE ASSESSEE WITHIN A REASONABLE TIME IN THE ABSENCE OF ANY CONTRARY PROO F. IT HAS FURTHER BEEN HELD THAT WHERE NOTICE IS SO SENT AND NOT RECEIVED BACK THEN, IN THE ABSENCE OF ANY REBUTTAL FROM THE SIDE OF THE ASSESSEE, IT IS DEEMED TO HA VE BEEN SERVED ON THE ASSESSEE IN THE ORDINARY COURSE OF POST WITHIN 2 / 3 DAYS BY VI RTUE OF PRESUMPTION U/S.27 OF THE GENERAL CLAUSES ACT, 1897. FROM THESE JUDGMENTS TH ERE REMAINS NO DOUBT WHATSOEVER THAT IF A NOTICE IS ISSUED BY REGISTERED POST AND THE SAME IS NOT RECEIVED IT(SS)A NO.347/M/03 & CO. 185/M/04 M/S.NATIONAL REFINERY PVT. LTD. 8 BACK IT HAS TO BE PRESUMED THAT IT WAS SERVED ON TH E ASSESSEE WITHIN THE REASONABLE TIME, UNLESS CONTRARY IS PROVED BY THE ASSESSEE. 11. SECTION 282 OF THE ACT DEALS WITH THE SERVIC E OF NOTICE GENERALLY. SUB-SECTION (1) OF SECTION 282, AT THE RELEVANT TIME, PROVID ED THAT `A NOTICE OR REQUISITION UNDER THIS ACT MAY BE SERVED ON THE PERSON THEREIN NAMED EITHER BY POST OR AS IF IT WERE SUMMONS ISSUED BY A COURT IN THE CODE OF CIVIL PROCEDURE, 1908(5 OF 1908). FROM THIS PROVISION IT IS MANIFEST THAT A NOTICE CA N BE SERVED EITHER BY POST OR AS IF IT WERE A SUMMONS ISSUED BY A COURT. IN THE INSTANT CASE WE ARE CONCERNED WITH THE SERVICE OF NOTICE BY POST. AT THIS STAGE IT WILL BE RELEVANT TO TAKE NOTE OF THE PROVISIONS OF SECTION 27 OF THE GENERAL CLAUSES ACT , 1897 WHICH READS AS UNDER:- 27. MEANING OF SERVICE BY POST. WHERE ANY (CENTR AL ACT) OR REGULATION MADE AFTER THE COMMENCEMENT OF THIS ACT AUTHORIZES OR REQUIRES ANY DOCUMENT TO BE SERVED BY POST, WHERE T HE EXPRESSION SERVE OR EITHER OF THE EXPRESSIONS GIVE OR SEN D OR ANY OTHER EXPRESSION IS USED, THEN, UNLESS A DIFFERENT INTENT ION APPEARS, THE SERVICE SHALL BE DEEMED TO BE EFFECTED BY PROPERLY ADDRESSING PREPAYING AND POSTING BY REGISTERED POST, A LETTER CONTAINING THE DOCUMENT, AND UNLESS THE CONTRARY IS PROVED, TO HAVE BEEN EFFECTED AT THE TIME AT WHICH THE LETTER WOULD BE DELIVERED IN THE ORDINARY COURSE OF POST. (EMPHASIS SUPPLIED BY US) 12. WHEN SECTION 27 OF THE GENERAL CLAUSES ACT IS R EAD IN JUXTAPOSITION TO SECTION 282 OF THE INCOME-TAX ACT, IT FOLLOWS THAT A NOTICE CAN BE VALIDLY SERVED BY POST. WHEN A LETTER IS PROPERLY ADDRESSED, PREPAID AND POSTED BY A REGISTERED POST, SUCH LETTER CONTAINING DOCUMENT IS PRESUMED TO HAVE BEEN DELIVERED IN THE ORDINARY COURSE OF POST UNLESS THE CONTRARY IS PROVED. IT, T HEREFORE, FOLLOWS THAT THERE IS A PRESUMPTION OF DELIVERY OF THE DOCUMENT CONTAINED I N THE LETTER WHEN THE LETTER IS SENT THROUGH REGISTERED POST PROPERLY ADDRESSED AND PREPAID. THE PRESUMPTION IS IT(SS)A NO.347/M/03 & CO. 185/M/04 M/S.NATIONAL REFINERY PVT. LTD. 9 FOR THE DELIVERY OF DOCUMENT WHICH IS CONTAINED IN THE LETTER SENT THROUGH REGISTERED POST. WHEN IT IS CLAIMED THAT A PARTICULAR NOTICE O R ORDER OR OTHER DOCUMENT WAS NOT CONTAINED IN THE LETTER, CLAIMED TO HAVE BEEN S ENT THROUGH REGISTERED POST, IT IS FOR THE SENDER TO LEAD EVIDENCE TO DEMONSTRATE THAT SUCH NOTICE, ORDER OR OTHER DOCUMENTS ETC. WAS IN THE LETTER SO SENT. IT CAN B E PROVED WITH THE HELP OF SOME INTERNAL RECORD OR DISPATCH REGISTER ETC. MAINTAINE D BY THE SENDER. THE ONUS IS ALWAYS UPON THE CLAIMANT TO LEAD EVIDENCE IN SUPPOR T OF ITS CLAIM. WHEN IT IS SHOWN THAT SOME LETTER WAS DISPATCHED BY REGISTERED POST TO THE ASSESSEE, THE REVENUE, IF CHALLENGED, NEEDS TO PROVE THAT THE PA RTICULAR NOTICE OR ORDER OR DOCUMENT AS CLAIMED BY IT, WAS CONTAINED IN THE S AID LETTER. THERE MAY BE SEVERAL TYPES OF COMMUNICATIONS BETWEEN THE REVENUE AND THE ASSESSEE. THERE MAY BE VARIETY OF PROCEEDINGS FOR DIFFERENT YEARS GOING ON AT PARTICULAR POINT OF TIME, SUCH AS THE ASSESSMENT PROCEEDINGS, PROCEEDINGS GIVING E FFECT TO THE APPELLATE ORDER, REASSESSMENT PROCEEDINGS, PROCEEDINGS GIVING EFFE CT TO SECTION 263 ORDER, PENALTY PROCEEDINGS FOR THE CURRENT OR EARLIER YEAR DEPENDI NG UPON THE NATURE OF PENALTY ETC. THE DISPATCH OF A LETTER BY REGISTERED POST PR OPERLY ADDRESSED AND PREPAID MAY INDICATE THAT SOME DOCUMENT WAS CONTAINED IN THE LE TTER BUT THAT WOULD NOT PER SE PROVE THE NATURE OF DOCUMENT ACTUALLY SENT. REVER TING TO THE FACTS OF THE INSTANT CASE WE FIND THAT NO DOUBT PAGE NO.6 OF THE DEPARTM ENTS PAPER BOOK INDICATES THAT SOME LETTER WAS SENT BY REGISTERED POST TO THE ASSE SSEE ON 22.5.2000 BUT NO OTHER EVIDENCE HAS BEEN BROUGHT TO OUR NOTICE IN THE SHAP E OF DISPATCH REGISTER OR SOME INTERNAL OFFICIAL RECORD TO INDICATE THAT IT WAS T HE ALLEGED NOTICE WHICH WAS CONTAINED IN THE SAID LETTER. 13. IT IS PERTINENT TO NOTE THAT THE MANDATE CONTA INED IN SECTION 27 OF THE GENERAL CLAUSES ACT, BEING THE SERVICE THROUGH REGISTERED POST AS EVIDENCE OF DELIVERY IN THE ORDINARY COURSE OF POST, IS NOT CONCLUSIVE. FROM THE VERY LANGUAGE OF SECTION CONTAINING THE HIGHLIGHTED EXPRESSION UNLESS THE CONTRARY IS PROVED IT IS PATENT IT(SS)A NO.347/M/03 & CO. 185/M/04 M/S.NATIONAL REFINERY PVT. LTD. 10 THAT THERE IS A REBUTTABLE PRESUMPTION OF DELIVERY IN THE ORDINARY COURSE OF POST. IF THE OPPOSITE PARTY PROVES IT WITH THE OVERWHELMING EVIDENCE THAT THE DOCUMENT CONTAINED IN THE SAID LETTER SENT THROUGH REGISTERE D POST WAS NOT RECEIVED BY IT, THE PRESUMPTION CONTAINED IN THE EARLIER PART OF SECTIO N SHALL FAIL. ALL THE CASES RELIED ON BY THE LEARNED DEPARTMENTAL REPRESENTATIVE HOLDI NG THAT THE NOTICE SENT THROUGH REGISTERED POST PROPERLY ADDRESSED AND PRE-PAID WA S TO BE PRESUMED AS SERVED ON THE ASSESSEE CONTAIN A RIDER SUCH AS IN THE ABSEN CE OF ANY REBUTTAL FROM THE SIDE OF THE ASSESSEE. IT, THEREFORE, TRANSPIRES THAT IF TH E ASSESSEE SUCCEEDS IN PROVING THAT THE LETTER CONTAINING THE NOTICE WAS NOT SERVED ON IT OR THE LETTER DID NOT CONTAIN THE NOTICE AT ALL, THE PRESUMPTION CONTAINED IN SECTION 27 OF THE GENERAL CLAUSES ACT SHALL NOT APPLY. 14. CERTAIN SALIENT FEATURES OF THIS CASE NEED TO B E TAKEN NOTE OF (I). BLOCK RETURN WAS FILED ON 15.5.2000. ACCORDIN G TO SECTION 143(2) AT THE RELEVANT TIME : `WHERE A RETURN HAS BEEN MADE UNDER SECTION 139, OR IN RESPONSE TO A NOTICE UNDER SUB-SECTION (1) OF SECTION 142, THE ASSESSING OFFICER SHALL, IF HE CONSIDERS IT NECESSARY OR EXPEDIENT TO ENSURE THAT THE ASSESSEE HAS NOT UNDERSTATED THE INCOME OR HAS NOT COMPUTED EXCESSIVE LOSS OR HA S NOT UNDER-PAID THE TAX IN ANY MANNER, SERVE ON THE ASSESSEE A NOTICE REQUIRING HI M, ON A DATE TO BE SPECIFIED THEREIN, EITHER TO ATTEND HIS OFFICE OR TO PRODUCE , OR CAUSE TO BE PRODUCED THERE, ANY EVIDENCE ON WHICH THE ASSESSEE MAY RELY IN SUPPOR T OF THE RETURN. ORDINARILY IT IS ONLY ON THE PERUSAL OF THE RETURN OF INCOME FILED B Y THE ASSESSEE THAT THE ASSESSING OFFICER REQUIRES THE ATTENDANCE OR PRODUCTION OF SO ME EVIDENCE IN SUPPORT OF THE ASSESSEES CLAIM. THE FILING OF RETURN ON A RECEIP T COUNTER ON ONE DAY AND THE ISSUANCE OF NOTICE U/S.143(2) ON THE VERY NEXT DAY WOULD MEAN THAT ALL THE STEPS FROM THE RECEIPT OF RETURN ON THE RECEIPT COUNTER T ILL THE ISSUANCE OF NOTICE GOT COMPLETED WITHIN ONE DAYS TIME. SUCH STEPS WOULD I NCLUDE THE RECEIPT OF RETURN ON THE RECEIPT COUNTER OF THE DEPARTMENT; THE RECEI PT CLERK, AFTER ENTERING THE IT(SS)A NO.347/M/03 & CO. 185/M/04 M/S.NATIONAL REFINERY PVT. LTD. 11 NECESSARY PARTICULARS IN THE RELEVANT REGISTER, HA NDING OVER THE SAME TO THE OFFICE OF THE CONCERNED ASSESSING OFFICER; THE OFFICE OF THE AO RECEIVING IT FROM THE RECEIPT CLERK; PLACING OF SUCH RETURN BEFORE THE AO; THE AO PURSUING THE RETURN AND ALL THE ACCOMPANYING DOCUMENTS; JOTTING DOWN TH E POINTS ON WHICH THE EXPLANATION OF THE ASSESSEE IS REQUIRED ; FINALIZIN G SUCH POINTS AND ACCORDINGLY SENDING THE NOTICE. IT IS VITAL TO NOTE THAT IT IS A CASE OF BLOCK ASSESSMENT AND THE RETURN WAS FILED PURSUANT TO THE SEARCH ACTION. IT IS BUT NATURAL THAT BEFORE ISSUANCE OF NOTICE U/S.143(2) THE ASSESSING OFFICER WILL TAK E NOTE OF APPRAISAL REPORT OF SEARCH AND OTHER RELEVANT DOCUMENTS VIS--VIS THE P ARTICULARS DISCLOSED IN THE RETURN. IT IS DIFFICULT, IF NOT IMPOSSIBLE, TO IS SUE NOTICE U/S.143(2) ON THE VERY NEXT DAY OF THE FILING OF THE BLOCK RETURN. (II). THE REVENUE HAS MADE OUT A CASE THAT THE NOTICE DATED 16.5.2000 WAS ISSUED U/S.143(2). THE COPY OF SAID NOTICE IS AVAILABLE AT PAGE 4 OF THE PAPER BOOK. NO DOUBT SUCH NOTICE IS SHOWN AS DATED 16.5.2000, BUT AGAINST COLUMN NO.1 GIVING THE DATE ON WHICH THE RETURN FOR THE BLOCK PERIOD W AS FILED, IT HAS BEEN MENTIONED AS 15.11.2000. IT IS AXIOMATIC THAT NOTICE U/S.143( 2) CAN BE ISSUED ONLY WHEN THE RETURN HAS ALREADY BEEN FILED. IT IS AN ADMITTED PO SITION THAT THE ASSESSEE FILED THE BLOCK RETURN ON 15.5.2000. AS AGAINST THAT THE SAI D NOTICE DATED 16.5.2000 MENTIONS THE DATE OF RETURN AS 15.11.2000. MOREOVER THE NOTICE CONTAINING REFERENCE TO RETURN FILED ON 15.11.2000 CAN BE ISSU ED ONLY AFTER SUCH DATE AND NOT PRIOR TO THAT. HENCE IT IS IMPOSSIBLE FOR THE SAI D NOTICE DATED 16.5.2000 TO HAVE REFERENCE TO THE RETURN FILED ON 15.11.2000, WHICH IS A LATER DATE. (III). EVEN IF WE GO AHEAD WITH THE PRESUMPTION THAT THE NOTICE, AS CONTENDED BY THE REVENUE, WAS ACTUALLY ISSUED ON 16.5.2000 THEN IT WOULD HAVE CONTAINED SOME REQUIREMENTS OF THE ASSESSING OFFICER SUPPOSED TO BE FURNISHED IN SUPPORT OF CERTAIN CLAIMS MADE BY THE ASSESSEE. ALONG WITH TH E SAID NOTICE U/S.143(2) DATED IT(SS)A NO.347/M/03 & CO. 185/M/04 M/S.NATIONAL REFINERY PVT. LTD. 12 16.5.2000, COPY OF WHICH IS AVAILABLE IN THE DEPART MENTAL PAPER BOOK, THERE IS NO REFERENCE FOR THE PRODUCTION OF ANY ACCOUNTS / DOCU MENT OR ANY PARTICULAR INFORMATION. EXCEPT FOR MENTIONING THE DATE ON WHIC H THE ATTENDANCE IS REQUIRED ON 6.6.2000, IT IS SILENT ON THE DOCUMENTS OR EVIDENCE REQUIRED FROM THE ASSESSEE IN SUPPORT OF THE CLAIMS MADE IN THE BLOCK RETURN. ON THE CONTRARY WE FIND THAT THE NOTICES DATED 20.12.2001 ISSUED ON 24.12.2001, COPY PLACED AT PAGES 1 TO 3 OF THE PAPER BOOK, HAS A QUESTIONNAIRE REQUIRING THE ASSE SSEE TO TENDER EXPLANATION ON VARIOUS DOCUMENTS FOUND AT THE TIME OF SEARCH. THIS QUESTIONNAIRE IS RUNNING INTO TWO PAGES. (IV). ACCORDING TO THE DEPARTMENT IT ISSUED SECOND NOTICE U/S.143(2) ON 24.12.2001 WHEREAS ACCORDING TO THE ASSESSEE THAT WAS ONLY THE FIRST AND THE ONLY NOTICE. IT IS NOT UNDERSTANDABLE AS TO HOW THE SW IFTNESS SHOWN BY THE ASSESSING OFFICER IN ISSUING NOTICE U/S.143(2) ON THE VERY NE XT DAY FROM THE FILING OF THE RETURN ON 16.5.2000 CAME TO HALT ALL OF A SUDDEN AND IT WAS ONLY AFTER A TIME GAP OF MORE THAN ONE AND HALF YEARS THAT THE SO CALLED SECOND NOTICE WAS ISSUED ON 24.12.2001, AGAINST WHICH THE ASSESSMENT WAS COMPLE TED ON 31.1.2002. IF THE ASSESSING OFFICER HAD BEEN GENUINELY SO FAST IN EXA MINING THE RETURN OF THE ASSESSEE AND ISSUING NOTICE U/S.143(2) ON THE NEXT DAY, THEN HE WOULD HAVE TAKEN SOME ACTION AGAINST THE ASSESSEE FOR NON-COMPLIANCE AND NOT KEPT QUIET FOR SUCH A LONG PERIOD IN ISSUING THE SECOND NOTICE REQUIRING COMPLIANCE BY THE ASSESSEE JUST A WEEK AHEAD OF THE LIMITATION PERIOD FOR THE COMPLET ION OF BLOCK ASSESSMENT. (V). THERE IS NO REFERENCE, IN THE ASSES SMENT ORDER, TO THE SAID ALLEGED NOTICE DATED 16.5.2000 ISSUED U/S.143(2). FURTHER WHEN TH E ASSESSEE WAS CALLED UPON TO BE PRESENT ON 6.6.2000, THERE SHOULD HAVE BEEN SOME REFERENCE, AT LEAST TO THE NON- ATTENDANCE OF THE ASSESSEE, IN THE ASSESSMENT ORDE R. IT(SS)A NO.347/M/03 & CO. 185/M/04 M/S.NATIONAL REFINERY PVT. LTD. 13 (VI). ORDER SHEET IS A RECORD OF PROCEEDI NGS, WHICH IS PLACED IN THE BEGINNING OF THE FILE RECORDING VARIOUS DATES ON WHICH THE PR OCEEDINGS FOR ASSESSMENT CONTINUED ALONG WITH THE REQUIREMENTS CALLED FOR BY THE ASSESSING OFFICER FROM TIME TO TIME DURING THE COURSE OF ASSESSMENT. IT IS OBLIGATORY ON THE PART OF THE ASSESSING OFFICER TO MENTION THE GIST OF PROCEEDING S IN THE ORDER SHEET STARTING WITH THE DATE OF FILING OF THE RETURN UP TO THE FIN ALIZATION OF THE ASSESSMENT. WHEREVER SOME DETAILS ARE CALLED FOR OR CASE IS ADJ OURNED TO NEXT DATE, THE SIGNATURE OF THE ASSESSEE OR ITS REPRESENTATIVE IS TAKEN. THIS ORDER SHEET ALSO CONTAINS REFERENCE OF ALL THE NOTICES ISSUED FROM T IME TO TIME BY THE A.O. IN ORDER TO CONCLUSIVELY RESOLVE THE CONTROVERSY ABOUT THE I SSUANCE OF THE SAID NOTICE U/S 143(2) ON 16.5.2000, THE BENCH DIRECTED THE LEARN ED DEPARTMENTAL REPRESENTATIVE TO PRODUCE THE ASSESSMENT RECORD. SUCH RECORD WAS P RODUCED BEFORE THE BENCH. ALBEIT THE ORDER SHEET IS THERE BUT THE LEARNED DEP ARTMENTAL REPRESENTATIVE COULD NOT POINT OUT ANY ENTRY IN THE ORDER SHEET OF THE A.O. FOR THE ISSUANCE OF THE ALLEGED NOTICE ON 16.5.2000. 15. THE ABOVE DISCUSSED POINTS IN THE FOREGOING PA RA DO GO TO SHOW THAT NO NOTICE U/S.143(2) , AS CLAIMED BY THE REVENUE AUTHO RITIES, WAS ISSUED ON 16.5.2000. ONLY THE NOTICE DATED 20.12.2001 WAS SE RVED ON THE ASSESSEE ON 24.12.2001. AS THE BLOCK RETURN WAS FILED ON 15.5. 2000 AND ACCORDING TO THE HONBLE SUPREME COURT IN HOTEL BLUEMOON (SUPRA) THE PROVISIONS OF SECTION 143(2) ARE ATTRACTED IN THE BLOCK ASSESSMENT, IT W AS MANDATORY FOR THE AO TO SERVE NOTICE ON THE ASSESSEE ON OR BEFORE 31.05.2001. SI NCE THE ONLY NOTICE DATED 20.12.2001 ISSUED BY THE A.O. U/S.143(2) WAS SERVE D UPON THE ASSESSEE ON 24.12.2001, THE SAME BECAME TIME BARRED. IT IS SIM PLE AND PLAIN THAT THE EDIFICE OF THE ASSESSMENT CANNOT BE CREATED ON THE FOUNDATION OF A TIME BARRED NOTICE ISSUED U/S.143(2). THE RESULTANT PROCEEDINGS FLOWING OUT OF SUCH INVALID NOTICE CANNOT HAVE LEGAL LEGS TO STAND ON. WE, THEREFORE, HOLD T HAT THE CONSEQUENTIAL BLOCK IT(SS)A NO.347/M/03 & CO. 185/M/04 M/S.NATIONAL REFINERY PVT. LTD. 14 ASSESSMENT ORDER PASSED IN THIS CASE DESERVES TO B E AND IS HEREBY QUASHED. IN VIEW OF OUR DECISION ON THIS LEGAL GROUND RAISED BY THE ASSESSEE IN ITS CROSS OBJECTION, THERE IS NO NEED TO DISPOSE OFF THE DEPARTMENTAL AP PEAL ON MERITS. 16. IN THE RESULT, THE APPEAL OF THE REVENUE IS DIS MISSED AND THE C.O. OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED ON THIS 5 TH DAY OF MARCH, 2010. SD/- SD/- ( R.S.PADVEKAR ) ( R.S.SYAL ) JUDICIAL MEMBER ACCOUNTANT ME MBER MUMBAI : 5 TH MARCH, 2010. DEVDAS* COPY TO : 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE CIT CONCERNED 4. THE CIT(A) XXIV, MUMBAI. 5. THE DR/ITAT, MUMBAI. 6. GUARD FILE. TRUE COPY. BY ORDER ASSISTANT REGISTRAR, ITAT, MUMBAI. FIT FOR PUBLICATION (J.M.) (A.M.)