Sri S.Bhasgeran, CHENNAI V. DCIT, CHENNAI

ITSSA 90/CHNY/2008

• Counselvise Citation: [2022] 103 COUNSELVISE.COM (IT) 9591 (ITAT-CHENNAI)
• Duration Of Justice: 13 year(s) 9 month(s) 28 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 27-10-2022
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 13-09-2022
• Assessment Year: misc
• Appeal Filed On: 29-12-2008
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: KARTHIK RANGANATHAN
• Keywords: Unexplained investment; Search and seizure; Principle of natural justice; Block assessment; Reason to believe; Reassessment proceedings; Set aside; CHAPTER IV
• Section: 148; 144; 142(1); 158BC; 13; 158BD; 22

Judgement Text

आयकर अपीलȣय अͬधकरण, ‘ए’ Ûयायपीठ,चेÛनई IN THE INCOME TAX APPELLATE TRIBUNAL ‘A’ BENCH, CHENNAI ᮰ीमहावीर ᳲसह, उपा᭟यᭃ एवं᮰ी मनोज कुमार अᮕवाल, लेखा सद᭭यके समᭃ BEFORE SHRI MAHAVIR SINGH, VICE PRESIDENTAND SHRI MANOJ KUMAR AGGARWAL, ACCOUNTANT MEMBER आयकर अपील सं./I.T.(SS).A No.:90/CHNY/2008 [Block Assessment Years : 01.04.1986 to 18.10.1996] Late Shri. S.R. Bhasgeran, [L/H Smt. B. Sreedala Devi - Wife Ms. R.B. Abarajitha – Daughter Mr. R.B. Skandha Raja Vanithan – Minor Son] No.2, Radhakrishnan Salai, 9 th Cross St., Mylapore, Chennai – 600 004. PAN : ABRPB 2060P Vs. The DCIT, Central Circle – II(2), Chennai – 600 034. (अपीलाथᱮ/Appellant) (ᮧ᭜यथᱮ/Respondent) अपीलाथᱮ कᳱओर से/Appellant by : Mr. G. Baskar & Mr. I. Dinesh, Advocates ᮧ᭜यथᱮकᳱ ओर से/Respondent by : Mr. Karthik Ranganathan, Senior Standing Counsel स ु नवाई कȧ तारȣख/Date of Hearing : 14.09.2022 घोषणा कȧ तारȣख/Date of Pronouncement : 28.10.2022 आदेश /O R D E R PER MAHAVIR SINGH, VP: This appeal by the assessee is arising out of the block assessment order framed by the Deputy Commissioner of Income Tax, Central Circle – II (2), Chennai for the block period 01.04.1986 to 18.10.1996 u/s.158BD r.w.s.144 r.w.s.254 of the Income Tax Act, 1961 (hereinafter “the Act”) vide his order dated 28.11.2008. - 2 - IT(SS)A No.90/CHNY/2008 2. The first issue in this appeal of the Assessee is as regards to the assumption of the jurisdiction by the Assessing Officer while framing this block assessment u/s.158BD of the Act on the ground that the notice issued u/s.158BD through affixture at the address at No.124, Peters Lane, Royapettah, Chennai is bad in law and consequently the block assessment framed u/s.158BD of the Act is bad and is liable to be quashed. For this, the Assessee has raised the first ground, [Ground No.1], which reads as under: “1) Assessment vitiated on the ground of jurisdiction: The notice u/s.158 BD has not been served on the Appellant. As per the order of the assessment which sets out the address of the Appellant as No.2, Radhakrishna Salai, Mylapore, Chennai – 4, the address of the searched premises at 124A, Peters Lane, Royapettah, Chennai. The notice u/s.158 BD has allegedly been fixed at 124, Peters Lane, Royapettah, Chennai which is not connected to the Appellant in any way at all. The non-service of the notice u/s.158 BD vitiates the entire assessment.” 3. The brief history of this case is that the Assessee, Shri. S.R. Bhasgeran was working in the Reserve Bank of India as Coin Note Examiner. A search u/s.132 of the Act was conducted in the case of the Assessee’s wife, Smt. Sreedala Devi on 24.09.1996 by the Income Tax Department, i.e. Assistant Director of Income Tax (Investigation), Unit III (4). During the course of search conducted in the case of the Assessee’s wife, Shri Sreedala Devi, certain documents relating to the Assessee was seized during the premises - 3 - IT(SS)A No.90/CHNY/2008 at No.124A, Peters Lane, Royapettah, Chennai. The said seized materials point out to various unaccounted investment in the name of the Assessee and therefore on the basis of the same, the original assessment was completed u/s.158BD of the Act on 30.10.1998. 4. Aggrieved against the block assessment order, the Assessee preferred an appeal before the Income Tax Appellate Tribunal [ITAT] and ITAT vide its order dated 05.10.2007 in I.T.(SS).A. No.180/Mad/2005 set aside the block assessment with a direction to provide an adequate opportunity to the Assessee of being heard and for this the Tribunal in its order has observed in paragraph Nos.5 & 6, as under: “5. Principles of natural justice requires that before charging a person with financial liability he should be informed of the materials on which the charge was going to be imposed and given an opportunity to rebut the effect of the materials, if he can. It is to be emphasized that this is so even when the material used is within the knowledge of the person proceeded against. The Assessee must be told that it would be used against him. Unless he is so informed, he would have no opportunity of offering his explanation for meeting the inference that the authority seeks to draw from it. The opportunity contemplated under the law which is required to be provided to the Assessee must be a reasonable opportunity and not an idle formality. 6. Taking into consideration the entire conspectus of the case, we are of the opinion that proper opportunity was not provided to the Assessee to represent his case. We, therefore, in the interest of justice set aside the impugned order and restore it to the file of the Assessing Officer with a direction to decide the issue afresh in accordance with law and after providing an adequate opportunity to the Assessee of being heard.” - 4 - IT(SS)A No.90/CHNY/2008 5. We noted that the first issue before the Tribunal during the original appellate proceedings was this very issue which was raised by the Assessee and the Tribunal noted the same as observed in paragraph No.4, as under: “4. The learned Counsel for the Assessee alleged that no notice was served on the Assessee. No attempt was made to serve the notice in a regular manner. The very first notice was served by affixation. The Assessee did not have absolutely any idea as to the initiation of the proceedings. As such the case could not be represented in a proper manner. When the facts of initiation of proceedings under section 158 BD came to the knowledge of the Assessee, all attempts were made to represent the matter properly. But, since the case was taken up at the fag end of the limitation, details could not be furnished. Ex-consequenti, the assessment was completed under section 144 of the Income Tax Act, 1961. The Assessment so made cannot be construed to be best judgement assessment. Firstly, no proper notice was issued and secondly the Assessee was not given proper opportunity to represent his case. In the case of the Commissioner of Income Tax Vs. P.V. Kumar, 279 ITR 9 (Delhi), the notice fixing the date of hearing sent by post was received back with the postal remark “left”. The Hon’ble High Court has held that the matter can be decided in the absence of a part, provided the party has been served and thereafter the party does not remain present before the Court of the Tribunal. But, when the notice notifying the date of hearing has not been served on the Assessee, there is no question of deciding the matter ex-parte.” In consequence to these directions of the Tribunal to allow an opportunity of being heard, the Assessing Officer, i.e. Deputy Commissioner of Income Tax, Central Circle – II (2), Chennai framed the block assessment and considered the validity of service of notice and for this, he has observed in paragraph Nos.3 to 3.3, as under: - 5 - IT(SS)A No.90/CHNY/2008 “3. Validity of service of notice: The Assessee has challenged the validity of service of notice and the arguments as well as the various case laws have been carefully considered. It is to be stated here that “Service of Notice by Affixture” is one of the modes of service as provided in Civil Procedure Code. Where the person could not be found at the address furnished, the matter needs to be pursued by resort to service by affixture. The legal requirement for the valid service of notice by affixture is that such service should be declared valid by the authority issuing the notice. 3.1 In the case of the Assessee, as seen from the Report furnished by the ITI, the Assessee was not available at the last known address as furnished by him, viz.124,Peters Lane, Chennai – 600 086. Therefore, service of notice was done by affixture and such service was declared valid by the Assessing Officer. Thus, all the requirements are enjoined under the law have been scrupulously followed by the Officer and hence the Assessee’s arguments cannot be accepted. 3.2. In this context, it is relevant to note that the Assessee was searched by the CBI authorities and from the Bank Locker belonging to the Assessee 80 Gold Biscuits with foreign markings each weighing 116 grams valued at Rs.50.00 lakhs were seized. Further, the State Crime Branch, CID have also filed a Charge-sheet before the Special Court and it was stated that the Assessee was absconding. This clearly establishes the fact that the Assessee was not found at the address given, thereby making it expedient to serve the notice by affixture. 3.3 In the light of the above facts, consequent to the search u/s.132 of the Act, notice u/s.159 BD was issued. The said notice was served on the Assessee by affixture Service of notice by affixture as already discussed is one of the modes prescribed under the Income Tax Act, 1961. Therefore, the Assessee’s objections to the validity of service of notice of affixture are devoid of any basis and the submissions made are rejected.” 6. The Assessing Officer rejected the objection of the Assessee, qua validity of service of the notice by affixture. - 6 - IT(SS)A No.90/CHNY/2008 Aggrieved against this, the Assessee came in appeal before the Tribunal in the second round of appeal. 7. Before us, the learned Counsel for the Assessee narrated the fact that the Assessee was a regular Income Tax Assessee on the files of Income Tax Department and that the Assessee has been regularly assessed to tax and has been filing his return of income regularly. According to the learned Counsel for the Assessee, the Assessee has furnished his returns of income and also his address in all the departmental records as residential premises at No.2, Radhakrishna Salai, 9 th Cross Street, Mylapore, Chennai – 600 004 and he is unaware as to how the department had proceeded to serve the notice at some other address where he does not reside. The learned Counsel for the Assessee stated that pursuant to the search on the basis of the warrant issued in the name of the Assessee’s wife, Smt. B. Sreedala Devi and his brother-in-law, Shri R.N. Sundagaran residing at No.124A, Peters Lane, Royapettah, Chennai, the assessment order was framed u/s.158BD r.w.s.144 of the Act dated 30.10.1998. The learned Counsel for the Assessee contended that after the search action, the Assessee has not received any notice calling upon him to file the returns of income for the block period. As per the original order on the block assessment, it - 7 - IT(SS)A No.90/CHNY/2008 transpires from the notice that certain documents relating to the Assessee and his wife were seized from the searched premises and accordingly a notice u/s.158BD of the Act was issued to the Assessee at the address at No.124A, Peters Lane, Royapettah, Chennai, as per the report of the Inspector, this being the last known address of the Assessee herein, according to Revenue. The learned Counsel for the Assessee contested about this report of the Inspector and stated that the same is patently incorrect in so far as the Assessee was never residing at the above address and the permanent residential address was taken due to the search and seizure action in the case of the Assessee’s wife as No.124A, Peters Lane, Royapettah, Chennai. He argued that as per the notice u/s.158BD of the Act indicates that the notice was issued to the Assessee, C/o. R. Seetharaman & Company who never represented the Assessee in the tax matters and the alternative address set out in the notice was No.124, Peters Lane, Royapettah, Chennai – 600 086 which is again patently incorrect. According to the learned Counsel for the Assessee, once there is no valid service of notice on the Assessee and not even issued, which is under severe challenge, notwithstanding the fact that there was a notice u/s.158BD of the Act, not even ever served to the Assessee, the consequent block assessment framed is void and bad in law. The learned Counsel for the Assessee drew our attention to the various - 8 - IT(SS)A No.90/CHNY/2008 notices, copy of the report of the Inspector, returns filed by the Assessee in regular course and for this he filed a paper-book consisting of pages 1 to 127 which is referred and which we will discuss in our findings. 8. On the other hand, the learned Senior Standing Counsel, Shri. Karthik Ranganathan argued that the search was conducted on the Assessee’s wife, Smt. B. Sreedala Devi and the Assessee’s brother- in-law who were residing at No.124A, Peters Lane, Royapettah, Chennai – 600 086 and the Assessee was also a resident of this address. He argued that the address of assessee at No.124A, Peters Lane, Royapettah, Chennai was the last known address as can be seen from the report furnished by ITI as assessee was not available at the last known address furnished by him i.e., 124, Peters Lane, Royapettah, Chennai and hence, service of notice was done through affixture and such service was declared valid by the AO. He argued that all the requirements as envisaged in the Civil Procedure Code as well as the provisions of Income-tax Act were scrupulously followed by the AO while issuing notice and service done through affixture. The ld. Senior Standing Counsel referred to the notice issued for initiation of proceedings u/s.158BD of the Act in the case of assessee and the findings recorded in the case of Smt. Sreedala Devi and Shri - 9 - IT(SS)A No.90/CHNY/2008 S.R. Bhaskaran and the relevant finding in para 10.7, he referred reads as under:- “10.7 Smt. Sreedhaladevi is the sister of Sri V.N. Sudhagaran. She is residing at No.124A, Peters Lane, Madras -6. Her husband, Sri S.R. Bhaskaran, is a salaried employee of Reserve Bank of India, Madras. Both Sri S.R. Bhaskaran and Sreedaladevi were not present during the course of search at their premises. They were reported to be out of station. However, during the course of search at her residence, certain papers were seized. Analysis of the seized material revealed that she and her husband own the following movable and immovable properties:” According to him, this clearly shows that both husband and wife i.e., Smt. Sreedhaladevi and her husband Shri S.R. Bhaskaran were resident of No.124A, Peters Lane, Royapettah, Chennai and this was the last known address on which affixture was done by the Department. 9. In counter, the ld.counsel for the assessee reiterated the earlier submissions and stated that the Revenue could not prove that the assessee was resident of No.124A, Peters Lane, Royapettah, Chennai because there are inherent contradictions in the findings about address of the assessee, as noted in departmental records, as noted in search proceedings in the case of assessee’s wife and further in ITI report, the address is altogether different. Hence, he asked the Bench to allow the appeal on this soul jurisdictional issue because there was no service of notice at all for assumption of jurisdiction - 10 - IT(SS)A No.90/CHNY/2008 u/s.158BD of the Act and for initiation of block assessment proceedings consequent to search conducted u/s.132 of the Act, in the case of assessee’s wife Smt. Sreedhaladevi on 124A, Peters Lane, Royapettah, Chennai – 6. 10. The objection also raised by ld. Senior Standing Counsel that this issue cannot be raised in second round of litigation. We noted that this objection raised by ld. Senior Standing Counsel that this issue cannot be raised in second round of litigation, this issue was very much available during the original assessment proceedings and even in the set aside assessments and dealt by the AO as noted above and hence, we will adjudicate the issue and the objection is rejected. 11. We have heard rival contentions and gone through facts and circumstances of the case. We noted that the assessee was working as employee of Reserve Bank of India as Coin Note Examiner. He always filed his returns of income and even up to assessment year 1989-90 at the address as No.2, 9 th Cross Street, Dr. Radhakrishnan Salai, Mylapore, Chennai – 4. We also noted from the records that even for latter years, i.e., assessment year 1993-94 to 1997-98, the assessee filed his returns of income at the same address and there is - 11 - IT(SS)A No.90/CHNY/2008 no change of address in the residential address of the assessee as per the income-tax records. As pointed out by the ld.counsel, assessee’s address with his employer RBI was also the same of Mylapore address. A search was conducted at the assessee’s premises at No.2, Dr. Radhakrishnan Salai, 9 th Cross Street, Mylapore, Chennai on 18.10.1996, from where certain documents were found and seized as well as search was also conducted at 124A, Peters Lane, Royapettah, Chennai -14 on 18.10.1996, from where also certain documents were found and seized. These details are available at page 3 of assessee’s paper-book. Consequent to the same, the Department issued notice u/s.158BC r.w.s. 158BD of the Act on 28.10.1997 and served the same by affixture at 124A, Peters Lane, Chennai -14 on the same day. It is to be clarified that a notice dated 21.09.1998 u/s.142(1) of the Act, was also issued by the AO calling for various details to the assessee at the address, No.2, Dr.Radhakrishnan Salai, 9 th Cross Street, Mylapore, Chennai-4. The copy of this notice is enclosed at assessee’s paper-book at page 36. In response to this notice, the assessee filed letter dated 28.09.1998 stating that no notice u/s.158BC r.w.s. 158BD of the Act was ever served or issued to assessee. As referred by ld.counsel for the assessee as well as ld. Senior Standing Counsel, the report of ITI, - 12 - IT(SS)A No.90/CHNY/2008 copy of which is given at page 18 of assessee’s paper-book reads as under:- REPORT As directed by the ACIT, I visited the Assessee's premises at 124, Peter's lane, Chennai -86, being the last known address of the Assessee. As there was no one to receive the notice, the service was done by affixture and the signature of the witnesses was obtained in the O.C of the notice u/s. 158BC r.w.158BD. The service may be declared as valid. As also directed by the ACIT, one copy of the notice was served to Sri. Sitaraman of A.N. Jambunathan & Co. Service by Affixture Declared valid ACIT 28.10.1997 -Sd- 28.10.1997 11.1 From the above, we noticed that the notice has been served on the last known address as 124, Peters Lane, Royapettah, Chennai but assessee contested this claim that no documents submitted by assessee with the Department carrying this address or at no point of time, the assessee gave this address to the Department. As referred by ld.counsel, the panchanama address mentioned is 124A, Peters Lane and not simply 124 because he stated that these are two different addresses and the assessee has stated that even in municipal records these are two different addresses. It means that the Department in its report has simply mentioned notice and even notice u/s.158BC r.w.s. 158BD of the Act is issued at 124, Peters - 13 - IT(SS)A No.90/CHNY/2008 Lane, Royapettah and not 124A. We also noted from the arguments of ld.counsel and the documents before us that during the interim period the Department had sought for and obtained the details of the assessee’s passport from the Central Bureau of Investigation, wherein the address given is that of Mylapore and not of Royapettah. We also noticed from the block assessment order wherein the AO has made addition of rent in para 14, which states that the assessee was occupying the Royapettah property i.e., 124A, Peters Lane, Royapettah only between 01.02.1995 to 30.11.1996, which makes it very clear that the Department is aware that subsequent to November, 1996, not even assessee’s spouse is in occupation of said property. We also noted that in this case, the ld. Senior Standing Counsel for the Revenue could not prove that what steps Revenue has taken to find out the correct address before affixture of this notice. We are of the view that service of notice by affixture is only a last resort when addressee could not be found or not traceable even after due diligent efforts. We noticed from notice issued u/s.158BC r.w.s. 158BD of the Act dated 28.10.1997 that the same was issued and served through affixture on the same day and moreover, as per ITI’s report there is no mention of the address of the witnesses and this clearly administers that the Department has not carried out any exercise or due diligence before restoring to - 14 - IT(SS)A No.90/CHNY/2008 service by affixture which is the last resort. In fact, subsequently the Department itself issued a notice u/s.142 of the Act calling for details dated 21.09.1998 at Mylapore address only. 11.2 In view of the above facts and case law relied on by the ld.counsel for the assessee in the case of Brijinderpal Singh Bhullar vs. ITO of Amritsar Bench of the Tribunal in ITA No.671 & 672/ASR/2019, order dated 21.02.2022, wherein the issue of framing of assessment without effecting a valid service of notice u/s.148 of the Act, upon assessee prior to framing of assessment would not be sustained and was held to be invalid. In this case law, the Co-ordinate Bench has discussed provisions of mode of service u/s.282(1) of the Act and Rule 127 of the Income Tax Rules, 1962 as well as the provisions of Code of Civil Procedure 1908 and considered the same as under:- “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 - 15 - IT(SS)A No.90/CHNY/2008 (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).” 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 subsection (1) of Sec. 282, and the same 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: - 16 - IT(SS)A No.90/CHNY/2008 [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 cooperative 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 (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 subrule(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.]” - 17 - IT(SS)A No.90/CHNY/2008 As provided in Sec. 282 of the Act, the service of a summon or requisition or order or any other communication under the Act, inter alia, may also be Brijinder Pal Singh Bhullar Vs. ITO, Ward 1(3), Bathinda ITA Nos. 671 & 672/Asr/2019 – A.Y 2008-09 12 carried out in such manner as provided under the Code of Civil Procedure, 1908 (5 of 1908) for the purposes of service of summons.” and finally, held the assessment to be invalid by observing in para 11 & 12 as under:- 11. Backed by the aforesaid facts, we are of the considered view, that the A.O despite being in knowledge of the fact that the assessee had shifted and was residing abroad, i.e, in Canada, had however grossly erred in taking recourse to substituted service of the Notice u/s 148, i.e, by getting the same affixed at his old residential house in India, which residential house he had himself observed in the assessment order was sold by the assessee prior to his shifting abroad, i.e, to Canada. The observations of the A.O, as recorded in the assessment order, therein revealing beyond doubt his knowledge that the assessee had sold his old residential house at Village Bhaika Dayalpura, Tehsil Rampura Phul, District : Bathinda, are culled out as under : “Since no compliance of notice u/s 148 was made by the assessee by filing his return of income within the time allowed, a notice u/s 142(1) of the Act was issued on 23.07.2013; but the same could not be served upon the assessee because as per the report of the Notice Server of this office, the assessee had left India after selling out his residential house & agriculture land.” (emphasis supplied by us) In the backdrop of the aforesaid factual position, we are unable to comprehend that as to what purpose the service of Notice u/s 148 by affixture on the main gate of the assessee’s residential house (which as observed by the A.O was no more owned by the assessee and had been sold by him prior to shifting abroad) would have served. As observed by us hereinabove, the service of Notice u/s 148 by ordering a substituted service, as contemplated in Order V-Rule 20 of the Code of Civil Procedure, 1908 (5 of 1908), in the absence of using of all reasonable and due diligence for locating the whereabouts of the assessee, not being as per the mandate of law cannot be subscribed on our part. Our aforesaid view that service of - 18 - IT(SS)A No.90/CHNY/2008 notice in case of an assessee residing abroad, by affixing the same on the main door of his local residence in India is not a valid service, is supported by the judgment of the Hon’ble High Court of Allahabad in the case of CIT Vs. Habibullah (1985) 21 Taxman 392 (All). In the said case, it was observed by the Hon’ble High Court that as the assessee had shifted and was residing in London for the past two years, and there was no possibility of his coming back in the near future, the service of a notice on him by the Income-tax department by affixation at the main door of his local residence in India was not a valid service. Also, a similar view had been arrived at by the Hon’ble High Court of Madras in the case of Myitkyiha Trading Depot Vs. Dy. Tahsildar ( 1957) 32 ITR 393 (Mad). In the said case, the proceedings u/s 34 were initiated for reassessment of the assessee which was an unregistered firm that had its business mainly in Rangoon, and only a branch office at Madras. The Madras branch was thereafter closed and the partners left for Burma. Notice was thereafter served by the department by affixing it on the house in which the respective wives of the partners resided, and the reassessment was framed vide an ex-parte order. On appeal, the Hon’ble High Court held that the service by affixture did not constitute due service of the notice issued u/s 34 of the Act. At this stage, we may herein observe, that the assessment in the case of the assessee before us had been framed by the A.O vide his order passed u/s 144/147 of the Act, dated 18.03.2014, but despite having sufficient time of over 1½ years from the date of issuance of Notice u/s 148, dated 03.09.2012, he had, however, failed to use all reasonable and due diligence for locating the whereabouts of the assessee. 12. It would also be relevant and pertinent to point out, that the fact, that the assessee was not validly served with the Notice(s) u/s 148/142(1) during his absence from India, and had learnt about the impugned proceedings only when the department had attached his bank account for recovery of demand arising from the impugned assessment, had been accepted by the CIT(A), Bhatinda, vide his order passed in Appeal No. 493/IT/CIT/BTI/2018-19; dated 14.05.2019, i.e, while quashing the penalty u/s 271(1)(b) of the Act that was imposed on him for noncompliance of the notices issued u/ss. 148/142(1) of the Act. Before parting, we may also observe, that though the A.O had initiated the reassessment proceedings and assumed jurisdiction on the basis of Notice u/s 148, dated 06.06.2012, however, he had thereafter issued another Notice u/s 148, dated 03.09.2012, and had carried out the impugned service of the said latter notice, while for the Notice u/s 148, dated 06.06.2012 on the basis of which he had assumed jurisdiction by - 19 - IT(SS)A No.90/CHNY/2008 recording the requisite ‘reasons to believe’ was never served upon the assessee. Be that as it may, we are of the considered view, that as the A.O had framed the impugned assessment u/s 144 r.w.s 147, dated 18.03.2014 without effecting a valid service of Notice u/s 148 upon the assessee prior to the framing of the assessment, therefore, the same cannot be sustained and is liable to be vacated. We, thus, in terms of our aforesaid observations quash the assessment framed by the A.O vide his order passed u/s 144 r.w.s 147, dated 18.03.2014 for want of valid assumption of jurisdiction on his part. The Ground of appeal No. 2 is allowed in terms of our aforesaid observations. 11.3 As referred by ld.counsel, the case law of Co-ordinate Agra Bench of the Tribunal in the case of K.P. Coldstorage vs. ITO in ITA No.145/AGRA/2018, order dated 22.03.2019, where also the notice server made his very first attempt to serve the notice and the Bench has taken a view that under order V, rule 17 of the Code of Civil Procedure, the affixture can be done as a last resort when the assessee could not be found or not traceable even after due diligence. The Tribunal recorded this finding in para 25 as under:- 25. Under order V, rule 17 of the Code of Civil Procedure, the affixation can be done only when the assessee or his agent refuses to sign the acknowledgement or could not be found. Here, in the present case as per the report of the notice server he made his very first attempt to serve the notice at the cold storage which was found closed. Thereafter, rightly he went to the residence of the partner Shri. Rajesh Agarwal resident of B-23, Kamla Nagar, Agra and who being Partner of the Firm was agent of the Firm on whom service can validly be made. Here, as report of notice server an unidentified person came out who refused to receive notice, admittedly, in the present case, notice under section 148 of the Act was not tendered to the assessee nor the same was refused at all by the assessee. It is an admitted case of the revenue that when the notice server went to serve the notice under section 148of the Act at the cold storage he found the cold storage to - 20 - IT(SS)A No.90/CHNY/2008 be closed and thereafter he went to the residence of the Partner at B-23, Kamla Nagar, Agra the man who came out refused to accept the service of notice under section 148 of the Act. This unnamed man by no stretch of imagination can be said to be the agent of the Firm or even Partner of Shri. Rajesh Agarwal either in terms of order III, Rule 2 of the Code of Civil and therefore, no notice was tendered either to the assessee or his duly appointed agent nor was it refused either by the assessee or his agent who has been empowered by the Firm. 11.4 Even, the Hon’ble Madras High Court in the case of Kiran Machines vs. ITO, (2006) 156 Taxman 463, has considered a similar issue on recording of satisfaction as to why they are resorting to service of notice through affixture and what efforts they have taken to find out the assessee or his last known address as per the records. The Hon’ble High Court laid down the principle in para 7 to 9 as under:- 7. It is no doubt true that the first respondent under section 282 can invoke the provisions of Civil Procedure Code and Order 5 Rule 20 CPC provides for 'Substituted Service'. As per the said provision, before resorting to substituted service, under order 5, Rule 20, the Court should be satisfied that there is reason to believe that the defendant is keeping out of the way for the purpose of avoiding service, or that for any other reason the summons cannot be served in the ordinary way, and then only the Court shall order the summons to be served by affixing a copy thereof in some conspicuous place in the Court-house, and also upon some conspicuous part of the house (if any) in which the defendant is known to have last resided or carried on business or personally worked for gain, or in such other manner as the Court thinks fit. 8. Here in this case, admittedly, the first respondent has not recorded any such satisfaction in his order before causing service of notice by affixture. It is also pertinent to point out that as per Order 5 Rule 20 (1A), the first respondent could have ordered paper publication if the address of the - 21 - IT(SS)A No.90/CHNY/2008 petitioner was not known or same could not be furnished by his representative. But, that too has not been done in this case. When an order of assessment levying tax is being passed, it is incumbent upon the first respondent to serve the notice in accordance with the above said provisions. But, in this case, that has also not been done. Thus, the principles of natural justice have been violated and on this ground, the impugned order is liable to be set aside. 11.5 In view of the above legal position and the fact that the assessee is regularly filing his returns of income up to assessment year 1989-90 as well as in later years from assessment year 1993- 94 to 1997-98 with the given address as per income-tax records as 2, 9 th Cross Street, Dr. Radhakrishnan Salai, Mylapore, Chennai-4 and not the address as recorded by the AO while issuing notice u/s.158BC r.w.s. 158 BD of the Act as 124, Peters Lane, Royapettah, Chennai -14. Even the search conducted and as per panchanama, the address is 124A, Peters Lane, Royapettah, Chennai -14 and not 124. In entirety of facts, we are of the view that the Revenue has not taken any step to serve notice at the last known address to the Department as is available in the records of the Department and that is the correct address of the assessee. Even the Revenue has not taken any steps to find out the last known address before issuing notice through affixture, which is the last resort when the assessee could not be found or not traceable even after due diligence or diligent efforts. - 22 - IT(SS)A No.90/CHNY/2008 11.6 Hence, in view of the above facts and circumstances of the case and precedents laid down by Hon’ble Madras High Court and Co-ordinate Benches of the Tribunal, we quash the notice issued u/s.158BC r.w.s. 158BD of the Act dated 28.10.1997 and consequently, assessment framed is also quashed. The appeal of the assessee is allowed on this issue. 12. Since we have quashed the block assessment, we need not go into other legal issues raised as well as merits of the appeal. 13. In the result, the appeal filed by the assessee is allowed. Order pronounced in the court on 28 th October, 2022 at Chennai. Sd/- Sd/- (मनोज कुमार अᮕवाल) (MANOJ KUMAR AGGARWAL) लेखा सद᭭य /ACCOUNTANT MEMBER (महावीर ᳲसह ) (MAHAVIR SINGH) उपा᭟यᭃ /VICE PRESIDENT चे᳖ई/Chennai, ᳰदनांक/Dated, the 28 th October, 2022 RSR आदेश कᳱ ᮧितिलिप अᮕेिषत/Copy to: 1. अपीलाथᱮ/Appellant 2. ᮧ᭜यथᱮ/Respondent 3. आयकर आयुᲦ )अपील(/CIT(A) 4. आयकरआयुᲦ /CIT 5. िवभागीय ᮧितिनिध/DR 6. गाडᭅ फाईल/GF.