Case Law Details
Brief of the Case
ITAT Lucknow held In the case of ITO vs. Shri Rajesh Agarwal that undisputedly notice of hearing under section 143(2) was issued on the last day of limitation/prescribed period for issuance of notice i.e. on 30.9.2011 at 15.19 hours by speed post. Therefore, the CIT (A) has rightly held that probability of service of the said notice by midnight on the same day is very remote. Further as service of notice by affixture is concerned, under Code of Civil Procedure, the mode of service by way of substituted service can only be invoked when service upon the assessee is not possible in the ordinary course. Therefore, it means that the mode of substituted service can only be adopted when notice was issued by ordinary means i.e. by post or process server and service is not being affected. Hence, notice was not served upon the assessee within the prescribed period; therefore, the assessment order was annulled.
Facts of the Case
This appeal is filed by the Revenue against the deletion of addition of Rs.19,07,379/- after holding the assessment to be null and void on account of non-service of notice under section 143(2). As per notice u/s 143 (2), the notice has been served by affixture. The person who has affixed the notice is Income tax Inspector. The assessee contention is that notice has been issued on 30.9.2011 at 15.19 hours. The probability of serving the said notice by midnight on the same day is very remote. Accordingly, notice under section 143(2) was not served upon the assessee within the prescribed period; therefore, the assessment order was annulled.
Contention of the Assessee
The ld counsel of the assessee submitted that onus is upon the Revenue to establish that notice under section 143(2) was served upon the assessee within the prescribed period. Order V, Rule 20 of the Code of Civil Procedure for service of notice can only be invoked when it is established that the assessee is not available and the service in the ordinary course is not possible upon the assessee. But in the instant case, according to the Assessing Officer, first time notice was issued through affixture as well as by speed post. Therefore, it cannot be held that notice under section 143(2) was timely served upon the assessee.
Contention of the Revenue
The ld counsel of the revenue placed reliance upon the order of the Assessing Officer.
Held by CIT (A)
CIT (A) held that under order V, Rule 17 of the Code of Civil Procedure, 1908, the affixation can be done only when the assessee or his agent refuses to sign the acknowledgement or could not be found. In the instant case, the assessee has neither refused to sign the acknowledgement nor was any effort made by the Assessing Officer to locate and serve the notice upon him. Further since there is no material on record to establish that the conditions contemplated by order V, Rule 17 and 20 existed in the case of the assessee, the notice served by affixture is not a valid service. Accordingly, notice under section 143(2) of the Act was not served upon the assessee within the prescribed period; therefore, the assessment order was annulled.
Held by ITAT
ITAT held that undisputedly notice of hearing under section 143(2) was issued on the last day of limitation/prescribed period for issuance of notice under section 143(2) i.e. on 30.9.2011 at 15.19 hours by speed post. Therefore, the CIT (A) has rightly held that probability of service of the said notice by midnight on the same day is very remote. However, onus is upon the Revenue to place evidence on record with regard to the service of notice within the period of limitation.
Further as service of notice by affixture is concerned, ITAT held that under order V, Rule 17 read with Rule 20 of the Code of Civil Procedure, the mode of service by way of substituted service can only be invoked when service upon the respondent or assessee is not possible in the ordinary course. Therefore, it means that the mode of substituted service can only be adopted when notice was issued by ordinary means i.e. by post or process server and service is not being affected. But in the instant case, according to the Assessing Officer, notice by affixture was issued at the threshold along with ordinary notice by post.
It appears that notice by affixture was issued only with an intention to create evidence with regard to the service of notice under section 143(2) of the Act upon the assessee. This is a case of clear negligence of the Assessing Officer. He should have initiated action within the prescribed period and should not have waited till last day of limitation. This type of practice by the Assessing Officer should be curtailed by the Senior Officers of the Department by issuing warning or taking action against the guilty officer, as it effects the collection of revenue of the nation. By issuing a notice by affixture, the assessment cannot be made to be valid on account of issuance of notice under section 143(2) of the Act in time. Undisputedly there is no evidence on record with regard to the service of notice under section 143(2) on the assessee within the prescribed period. We accordingly upheld the order of the CIT (A) who has rightly held the assessment to be illegal and void ab initio.
Accordingly appeal of the revenue dismissed.
