Jyoti Nagpal, New Delhi vs Assessee

1. This is an appeal filed by the assessee for the AY 2003-04 against the order

of Commissioner of Income Tax (Appeals)-XVIII, New Delhi dated 25.08.2012 in

ITA No. 141/11-12 raising the following grounds of appeal:

"1. That the CIT(A) had not properly adjudicated upon the issue relating to alleged service of notice by affixture which was invalid and illegal.

2. That the issue of service of notice by affixture had been casually dealt with ignoring the submissions as well as reliance placed on various judicial authorities.

ITA No.5827/Del /2012 2 3. That the CIT(A) merely relied upon the remand report of Assessing Officer wherein he stated that service by affixture was valid service without considering the facts of the case and written submissions.

4. That the alleged service of notice u/s 148 by affixture was against the provisions contained in Section 282 of the IT Act, 1961 as well as provisions contained in Order 5 Rule--17 of the Civil Procedure Code 1908.

5. That the CIT(A) was unjustified in holding that the proceedings initiated u/s 148 cannot be said to be invalid.

6. That the CIT(A) had not properly considered the written submissions filed during the course of appeal proceedings thus ignoring the case laws cited therein.

7. That the CIT(A) had not properly adjudicated upon the issue of alleged service of notice u/s 142(1) by affixture.

8. That the remand report of the Assessing Officer is silent on this issue.

9. That the Assessing Officer failed to make any justification of service of notice u/s 142(1) by affixture. This itself establishes that there was no valid service by affixture.

10 That the CIT(A) erred in sustaining addition of Rs.3,30,000/-

made by the Assessing Officer u/s 68 of the I.T. Act, 1961.

11. That the CIT(A) had not properly appreciated the facts stated in the written submissions made during the course of appeal proceedings.

12. That the CIT(A) is wrong in stating that the appellant produced additional documents in the form of confirmation from Shri Satish Kumar and a copy of Bank statement showing withdrawal of Rs.3,30,000/- on 17.04.2002 without moving an application u/s 46A.

13. That the CIT(A) is wrong in stating that there was no response to summons u/s 131. The summons were duly complied with by Shri Satish Kumar by reconfirming the loan given by him and also by furnishing the required information called for by the Assessing Officer.

ITA No.5827/Del /2012 3 That no interest u/s 234B is leviable.

That the AO was not justified in changing maximum slab rate on assessed income.

That the appellant craves to add, alter or amend any grounds of appeal.

It is prayed that the addition being unjustified and arbitrary may kindly be deleted. The assessment being bad in law as the initiation as well as service of notice u/s 148 and 142(1) by affixture being bad in law is liable to quashed and thus may kindly be quashed."

2. The facts of the present case are that the assessee is an individual. As we

understand from the material available on record no return of income was filed

voluntarily for the assessment year under appeal. The Income Tax Officer, Ward

26(2) New Delhi received information from DIT(Inv.) that the assessee had

received amount of Rs.3,30,000/- from one Mr. Shri Satish Kumar on 17.04.2002

through a cheque drawn on State bank of Patiala. The said Mr. Satish Kumar is

alleged to be entry provider as per the investigations done by the Investigation

Wing, New Delhi. Therefore, the Assessing Officer drawn the inference that the

assessee should have given its unaccounted cash to the entry provider and the same

has been received back by the assessee by cheque. Based on the strength this

information the Assessing Officer had issued notice u/s 148 on 17.01.2008. It is

noticed from the assessment order that notices u/s 148 as well as u/s 142(1) went

unattended by the assessee. Consequently, the assessment order dated 10.12.2008

came to be passed u/s 144 r.w.s. 147 of the I.T. Act bringing the said amount of

Rs.3,30,000/- to tax.

ITA No.5827/Del /2012 4

3. Aggrieved by the above order, the assessee preferred an appeal before the

Commissioner of Income Tax (Appeals)-XVIII, New Delhi challenging inter alia

that the notice u/s 148 was not served upon him and also challenged the addition

on merits. The appellant for the first time before the CIT(A) filed a confirmation

letter from the said Mr. Satish Kumar without filing the application for admission

of additional evidence as stipulated under provisions of Rule 46A of I.T. Rules,

1962. The Ld. CIT(A) had held that there was proper service of notice u/s 148 and

therefore, the reassessment proceedings were held to be valid. On the merits of

addition, the Ld. CIT(A) held that the confirmation letter from Mr. Satish Kumar

filed as additional evidence cannot be admitted since there was no application as

stipulated under the Rule 46A of IT Rules for admission such evidence. And

finally it was held by CIT(A) that the appellant had failed to discharge the onus

that was lying on him as per the provisions of the Act and confirmed the addition.

Aggrieved the present appeal filed before us.

4. It was argued on behalf of the appellant that there was no proper service of

notice u/s 148 of the Act as well as notice u/s 142 of the Act and therefore, the

assessment made consequent to such notice is not valid in support of this he has

relied upon the following decisions:-

i) The Hon'ble Punjab and Haryana High Court in the case of CIT Vs. Naveen Chander, 323 ITR 49 (P&H).

ii) The Hon'ble Delhi High Court in the case of CIT Vs. Eshan (P) Ltd. (2012) 344 ITR 541 (Delhi).

ITA No.5827/Del /2012 5 iii) CIT Vs. Mascompel India Ltd., (2012) 345 ITR 58 (Delhi).

iv) 361 ITR 17 (Gauhati)

v) The Hon'ble Punjab and Haryana High Court in the case of CIT Vs. Kishan Chand, (2011) 224 Taxation 264 (P&H).

On the merits of the issue in appeal, Ld. AR vehemently argued that the addition

should be deleted as the amount was received by cheque an identity of the creditor

is proved. On the other hand, the Ld. DR had submitted that the notice u/s 148 of

the Act was served on the appellant through notice severer at the address last

known to the Department. On the merits of the issue, the Ld. DR submitted that the

addition should be confirmed as the appellant failed to comply with the statutory

notice issued u/s 148 and 142 of the Act.

5. We heard the rival submissions and perused the material available on record.

The appellant had raised 13 grounds of appeal out of which ground nos.1 to 9 are

relating to the service of notice u/s 148 of the Act and rest of grounds on the merits

of the issue. At first instance, we shall deal with the ground relating to the

challenge of service of notice u/s 148 of the Act. We find from the Page No.12 of

the P.B. filed by the appellant the notice server of the department had affixed the

notice u/s 148 of the Act on the address given in the return of income i.e. Jyoti

Nagpal, Tagore Garden, New Delhi with the remarks that "Makan Khali Para Hai,

ab yahan nahi rahti notice chipka diya gaya". We also find from the Page No.13

of the Paper Book filed by the department that the notice u/s 142 sent by speed

post on 1.12.2008 received by the appellant on 06.12.2008. We fail to understand ITA No.5827/Del /2012 6

when the house was vacant in the month of January, 2008 how same person was

residing at the same address in the month of December, 2008. This goes to prove

that the appellant is determined to decline to accept the notice. We are further

strengthened in taking the view by the fact that the appellant never brought on

record as to how he had come to know of the passing of the assessment order

against which he had pursued the legal remedies available under the Act within the

stipulated time. In other words there was due service of notice u/s 148 upon the

appellant by refusal. In this connection, the observations made by the Hon'ble

Apex Court in the case of Har Charan Singh Vs. Shiv Rani reported in AIR 1981

SC 1284 at Page No.1288:

"........It is impossible to accept the contention that when factually there was refusal to accept the notice on the part of the appellant he could not be visited with the knowledge of the contents of the registered notice because, in our view, the presumption raised under section 27 of the General Clauses Act as well as under section 114 of the Indian Evidence Act is one of proper or effective service which must mean service of everything that is contained in the notice. It is impossible to countenance the suggestion that before knowledge of the contents of the notice could be imputed the sealed envelope must be opened and read by the addressee or when the addressee happens to be an illiterate person the contents should be read over to him by the postman or someone else. Such things do not occur when the addressee is determined to decline to accept the sealed envelope. It would, therefore, be reasonable to hold that when service is effected by refusal of a postal communication the addressee must be imputed with the knowledge of the contents thereof and, in our view, this follows upon the presumptions that are raised under section 27 of the General Clauses Act, 1897 and section 114 of the Indian Evidence Act."

ITA No.5827/Del /2012 7 6. The Hon'ble Apex Court in the cases of Jgdish Singh Vs. Natthu Singh

reported in [1992] 1 SCC 647, State of M.P. Vs. Hiralal reported in [1996] 7 SCC

523 and V. Raj Kumari Vs. P. Subbarama Naidu reported in [2004] 8 SCC 774

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. Similarly,

when the notice server affixed notice on the last known address with the remark

that not available in the house, on the same analogy, it has to be presumed that

notice was served properly. The case laws cited by the Ld. AR are of not any help

in the facts of the case.

7. Having held that there was a proper service of notice u/s 148 of the Act, we

shall now deal with the merits of the addition. The assessment came to be passed

ex-parte for non compliance with the statutory notices u/s 142 of the Act. It was

only during the course of the proceedings before the CIT(A) the appellant made

attempt to file the confirmation letter from Mr. Satish Kumar as additional

evidence without even filing an application for admission of such additional

evidence as required under Rule 46A of the IT Rules. Therefore, the CIT(A) was

justified in not taking cognizance of such additional evidence. There was no

ground before us challenging the refusal of CIT(A) to admit the additional

evidence. As a result, there was no explanation on the record explaining the

sources for the cash deposited in the Bank account of the assessee on 17.04.2012. ITA No.5827/Del /2012 8

The appellant miserably failed to discharge the onus that was lying upon him under

the provisions of the Section 69 of the Act. Therefore, we hereby confirm the

addition of Rs.3,30,000/- made by the Assessing Officer.

8. In the result, appeal filed by the assessee is dismissed.

The Order pronounced in the open Court on 22nd April, 2015.

Sd/- Sd/- (G.C. GUPTA) (INTURI RAMA RAO) Vice President Accountant Member

Dated: 22nd April, 2015. Aks/- DCOM

Copy forwarded to 1. Appellant 2. Respondent 3. CIT 4. CIT(A) 5. DR Asst. Registrar, ITAT, New Delhi