Gurcharan Singh S/O. S. Dalip Singh, ... vs Assessee

Gurcharan Singh of S. Dalip Vs. Income Tax Officer, Ward 2(II), Singh H. No.1172, Sector 15B, Muktsar. Chandigarh (Appellant) (Respondent)

Appellant by: Sh.Tarsem Lal DR Respondent by: Sh. Aswani Kumar & Sh. Rakesh Bansal, C.As Date of hearing: 02.02.2015 Date of pronouncement: 19.02.2015

ORDER

PER A.D. JAIN, J.M.

1. This is assessee's appeal for the assessment year 2006-07

against the order dated 21.02.2014, passed by the learned CIT(A),

Bathinda.

2. The following grounds have been taken:

i. That, order passed u/s 250(6) of the Income Tax Act, 1961 is against law and facts on the file in as much as the Ld. Commissioner of Income Tax (Appeals), Bathinda was not justified to uphold the very initiation of proceedings u/s 148.

ii. That the notice u/s 148 was not served in accordance with the provisions of section 282 of the Income Tax 2 I.T.A. No. 331 (Asr)/2014 Assessment Year: 2006-07

Act, 1961 as such the proceedings initiated are void ab-initio and deserves to be quashed.

iii. That the ld. CIT(A) gravely erred in quashing the assessment as while framing assessment, principles of natural justice were grossly violated.

iv. That ld. CIT(A) gravely erred in not providing the appellant with the opportunity to cross examine the persons on the basis of whose statement notice u/s 148 has been issued and the assessment has been framed, it is both had in law against the principal of natural justice.

v. That the ld. CIT(A) gravely erred in upholding the addition of Rs.12,64,173/- on account of alleged long term capital gain.

3. The ld. Counsel for the assessee has preferred to argue

ground No. 2(i) first.

4. As per the assessment order, notice u/s 148 of the IT Act was issued on

24.2.2012 and served on the assessee on 1.3.2012. The ld. CIT(A)

rejected the assessee's objection in this regard, by observing as follows:

" Regarding he objection of the AR of the appellant that the appellant has shifted to Chandigarh many years ago on the basis of evidence i.e., Ration card etc. it is strange that notice u/s 1489 was received by Sh. Harcharan Singh, brother of the appellant, on 01.03.2012 in village Barkandi and afterwards two notices u/s 142(1) were also issued and served on the brother and family members of the appellant but nobody brought this fact on record. The A/R of the appellant has failed to bring on record that why Sh. Harcharan Singh brother of the appellant accepted the service of notices u/s 148/142(1)/assessment order and did not inform the department regarding the address of his brother at Chandigarh. The AR of the appellant has not raised any 3 I.T.A. No. 331 (Asr)/2014 Assessment Year: 2006-07

objection regarding service of notices u/s 142(1) and assessment order and further failed to bring on record that how the appeal has been filed within time against the order passed u/s 144/142(1) on his brother or any family member. Thus the AO gave sufficient opportunities to the appellant to bring on record any evidence to prove that he was not residing in village Barkandi which he failed to furnish. The objection of the AR of the appellant is rejected."

5. The issue is as to whether the notice u/s 148 of the I.T Act was, in fact,

served on the assessee or not.

6. As per the assessment order, such a notice was issued on 24.2.2012,

which was duly served on the assessee on 1.3.2012. According to the

order under appeal (para 2 at page 9 of the impugned order),the notice

u/s 148 was received by Sh. Harcharan Singh, brother of the assessee, on

1.3.2012 in village Barkandi. The stand taken by the assessee remains, as

before the ld. CIT(A), that no notice u/s 148 of the Act was served either

on the assessee, or on any person authorized by the assessee. Reliance

has been placed on the following case laws:

i) Hon'ble Delhi High Court, in the case of 'CIT vs. Hotline International P. Ltd.', reported in (296 ITR 133).

ii) Hon'ble High Court of Delhi, in the case of 'CIT vs. Rajesh Kumar Sharma', reported in ( 311 ITR 235).

iii) ITAT Delhi Bench 'B' in the case of 'Chetan Gupta vs. ACIT, Circle-5, New Delhi', reported in ( 144 ITD 344).

7. On the other hand, the ld. DR has contended that the ld. CIT(A) has

observed that after the serving of the reassessment notice on the brother 4 I.T.A. No. 331 (Asr)/2014 Assessment Year: 2006-07

of the assessee, two notices u/s 142 (1) of the Act were also served on the

brother and family members of the assessee, which was not objected to

by the assessee and pursuant thereto, the assessment order was passed

u/s. 144 of the Act, which order was appealed against within limitation.

The ld. DR contends that the finding of the ld. CIT(A) that the assessee

thus acknowledged the service of notices u/s.148 /142(1) of the Act on

his brother and family members and that though the AO giving sufficient

opportunity to the assessee to bring evidence to prove that he was not

residing in village, the assessee failed to do so.

8. In this regard, it is seen that the issue is governed by section 282 of the IT

Act, as per which, a notice under the Act may be served on the person

named therein, either by post, or as if it were a summon issued by Court

under the Code of Civil Procedure, 1908. Now Order V, C.P.C. governs

the service of summons issued by a Court. As per Rule 12 of Order V of

the C.P.C, wherever it is practicable, service shall be made on the

defendant in person, unless he has an agent empowered to accept service,

in which case, service on such agent shall be sufficient.

9. In accordance with Rules 13 and 14 of Order V of the C.P.C, it is only if

a summons is accepted by a person who is authorized to do so, that the

defendant can be said to have received the summons, or that service is

good service.

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10.In this case, it remains undisputed, as noted by the ld. CIT(A) in the

impugned order, that notice u/s. 148 of the Act was served on the brother

of the assessee and not on the assessee in person. Now, this service has

been sought to be justified by seeking refuge of the alleged fact that later,

two notices u/s 142(1) of the Act were also served on the brother of the

assessee and that the assessment order passed in pursuance thereto was

challenged by the assessee in time by way of appeal, though the said

assessment order was passed u/s 144 of the Act. It has been alleged that

Harcharan Singh, brother of the assessee, accepted the service of the

notices u/s. 148/142(1) of the Act and of the assessment order passed u/s

144 of the Act and did not inform the department regarding the

Chandigarh address of the assessee. It has been observed by the ld.

CIT(A) and put forward as argument by the ld. DR before us, that if the

assessment order received by his brother stands acknowledged by the

assessee by filing appeal there against within time, this amounts to the

assessee having acknowledged due service of the notice u/s 148 of the

Act.

11. However, as evident from the afore-discussed provisions of the C.P.C, as

applicable to Income Tax proceedings, as per section 282 of the I.T. Act,

no such "acknowledgement" can clothe non-service of notice with the

garb of valid service of notice. The provisions of Order V, Rsules 12 to 6 I.T.A. No. 331 (Asr)/2014 Assessment Year: 2006-07

15, C.P.C., as deliberated upon hereinabove, are absolutely clear and

direct on the issue. Their mandate is undeniably that in the absence of

service on any person who is authorized by the noticee to accept such

service on behalf of such noticee, the service cannot be held to be valid

service.

12.In the present case, the department has not brought anything on record to

establish that the brother of the assessee, namely Harcharan Singh, had

been authorised by the assessee to accept service of notice on behalf of

the assessee. Harcharan Singh, brother of the assessee, also not been

shown to be an agent of the assessee, entitled to receive the notice u/s

148 of the Act.

13.In these facts, it cannot be held that receipt of the notice u/s 148 of the

Act by Harcharan Singh, brother of the assessee, amounted to service of

notice on the assessee, irrespective of the fact that the assessment order

passed under section 144 of the Act had been challenged in appeal by the

assessee within limitation.

14.In " the Commissioner of Income Tax vs. Rajesh Kumar Sharma", 311

ITR 235 (Delhi), it has been held to the effect that in a case where the

reassessment notice was received by a person other than the assessee, and

where there was no material on record to show that such other person

was authorized to receive such notice and the assessee was not in receipt 7 I.T.A. No. 331 (Asr)/2014 Assessment Year: 2006-07

of the notice and the onus of the revenue to prove due service of notice

did not stand discharged, it could not be held that the receipt of the notice

by such other person amounted to service of the notice on the assessee.

15.In view of the above, finding force in the grievance sought to be raised

by the assessee in this regard, the same is accepted. Therefore, the order

under appeal, concerning this issue, is cancelled. As a consequence, the

proceedings initiated u/s 148 of the Act and all things pursuant thereto,

including the re-assessment order dated 30.11.2012, passed u/s.

147/143(3) of the Act, which has merged in the impugned order, are also

cancelled.

16. Since the proceedings u/s. 148 of the Act against the assessee stand

cancelled, as above, nothing further remains to be adjudicated. As such,

Ground Nos. 1 & 3 to 5 are rejected as infructuous.

17. In the result, the appeal filed by the assessee is allowed.

Order pronounced in the open court on 19th February, 2015.

Sd/- Sd/- (B.P. JAIN) (A.D. JAIN) ACCOUNTANT MEMBER JUDICIAL MEMBER Dated: 19 .02. 2015 /PK/ Copy of the order forwarded to: 1. The Assessee: Sh. Deepak Mittal

2. The Assit. Commissioner of Income tax, Hoshiarpur Circle

3. The CIT(A),

4. The CIT,

5. The SR DR, I.T.A.T. Asr.

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I.T.A. No. 331 (Asr)/2014 Assessment Year: 2006-07

True copy By order

(Assistant Registrar) Income Tax Appellate Tribunal,