Commissioner Of Income Tax 1, Ludhiana v. Sh. Naveen Chander

IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH. ITA No.7 of 2010Date of decision 8.2.2010 Commissioner of Income Tax 1, Ludhiana... Appellant Versus Sh. Naveen Chander ... Respondent CORAM:HON'BLE MR. JUSTICE M.M. KUMARHON'BLE MR. JUSTICE JITENDRA CHAUHAN Present:Mr. Vivek Sethi ,Advocate for the appellant 1.To be referred to the Reporter or not ? 2.Whether the judgement should be reported in the Digest ? M.M.KUMAR, J. The Revenue has approached this Court by invoking theprovisions of Section 260A of the Income Tax Act,1961 (for brevity 'theAct') challenging order dated 24.2.2009 passed by the Income TaxAppellate Tribunal, Chandigarh (for brevity 'the Tribunal') in IT(SS)ANo.28/CHANDI/ 2004 for the block period 1.4.1989 to 24.6.1999. TheRevenue has claimed that following substantive questions of law wouldarise for determination of this Court: “i) Whether on the facts and in law, the Hon'ble Income TaxAppellate Tribunal was justified in ignoring the fact that videorder sheet entry dated 19.5.2003, the assessee had duly notedthe fact that notice u/s 158 BD was initially issued by registeredpost, which was received back and lateron the same was servedby affixture on 23.7.2001 and service by affixture was notobjected to by the assessee at the time of assessment. The Hon'ble ITAT in its order has misquoted the fact that the AO noted in para 4.1 of his order the objection of assesseeregarding improper service of notice which is not correct; ii)Whether on the facts and in law, the Hon'ble Income TaxAppellate Tribunal was justified in holding the service of notice u/s 158 BD made by affixture (which was not objected to by theassessee at the time of assessment) as invalid and consequentlyholding the assessment proceedings resulting in the order dated27.6.2003 bad in law; and iii)Whether on the facts and in law, the Hon'ble Income TaxAppellate Tribunal was justified in not adjudicating thegrounds raised by the Revenue on merits of the case “? The basic controversy raised is as to whether the assessee- respondent was served under Section 158 BD of the Act at his last knownaddress on 23.7.2001 by way of affixture. The Tribunal considered theaforesaid issue as a 'fundamental' controversy because it was necessary toestablish that such a notice was served to confer jurisdiction. The Tribunalplaced reliance on the provisions of Order V Rule 17 of the Code of CivilProcedure, 1908 (for brevity 'the Code') and has concluded on principle thatwhere notice of service is claimed to have been served by affixation underOrder V Rules 17, 18 and 19 of the Code then it becomes necessary toexamine whether such service has been made in accordance with theprocedure, as it is mandatory. The first requirement is to ensure that theplace is properly identified and secondly the report is authenticated byindependent persons to avoid any attempt by the Process Server to preparethe report sitting in his office. The Tribunal has referred to the report dated ITA No. 7 of 2010 23.7.2001 issued by the Process Server. According to the report of theInspector/ Notice Server dated 23.7.2001 the notice was affixed on the maindoor of Shop No. 33, Anajmandi, Mullanpur. There was no evidence of anylocal person having been associated with in identifying the place of businessof the assessee- respondent and the report is not witnessed by any person atall. It has been found to be flagrant violation of Rule 17 of Order V of theCode which lays down a procedure to serve notice by affixture. Theconclusion is recorded in paras 13 and 14 of the order which reads thus: ITA No. 7 of 2010 23.7.2001 issued by the Process Server. According to the report of theInspector/ Notice Server dated 23.7.2001 the notice was affixed on the maindoor of Shop No. 33, Anajmandi, Mullanpur. There was no evidence of anylocal person having been associated with in identifying the place of businessof the assessee- respondent and the report is not witnessed by any person atall. It has been found to be flagrant violation of Rule 17 of Order V of theCode which lays down a procedure to serve notice by affixture. Theconclusion is recorded in paras 13 and 14 of the order which reads thus: “ 13. So, however, in the report of the Inspector/ NoticeServer, who claimed to have affixed the notice, there is noevidence of any independent local person having beenassociated with the identification of the place of business of theassessee. Infact such report is not witnessed by any person atall. Evidently, it is in clear violation of the mandate of Rule 17of Order V of the Civil Procedure Code, which lays down theprocedure to serve notice by affixture. It mandates that theserving officer shall affix the notice on the outer door or someother conspicuous part of the house in which the personordinarily resides or carries on business or personally works forgain and shall thereafter report that he has so affixed the copy,the circumstances under which did so and, the name andaddress of the person by whom the house was identified and inwhose presence the copy was affixed. The impugned report ofthe Inspector/ Notice Server is benefit (bereft ?) of any suchlawful requirements enshrined in the Code of Civil Procedure.Infact it would not be out of place to observe that there is no assertion even by the Inspector/ Notice Server that they hadpersonally checked the business place of the assessee and werein a position to identify the same. For all the above reasons, aninference which cannot escape, is that there has been no validservice of notice issued u/s 158 BD upon the assessee. 14.Before concluding, we observe that having regard to thereport of the Inspector- Notice Server dated 27.3.2001, therequirements of the Code of Civil Procedure have not beenfulfilled and, therefore, in view of the aforesaid discussion andthe case laws referred to, we are of the view that there has beenno valid service of notice issued u/s 158 BD on the assessee.Since there has been no proper service of notice on theassessee, it has to be held that the impugned assessmentproceedings resulting in the order dated 27.6.2003 are bad inlaw. The same is hereby set aside. The Assessing Officer canissue afresh notice, if so authorized under the law.” It is thus obvious that finding with regard to service of notice toconfer jurisdiction is absent. The only argument raised by Mr. Vivek Sethi, learned counselfor the revenue- appellant is that there are signatures of the assessee in theorder sheet entry dated 19.5.2003 which acknowledges the fact that he hadduly noted the notice under Section 158 BD of the Act. However, on closescrutiny, we find that the claim made by the Revenue in the grounds ofappeal and in the questions of law that there is order sheet entry dated19.5.2003 showing that the assessee had noted the factum of notice underSection 158 BD of the Act is without any substance. The Tribunal had taken ITA No. 7 of 2010 the view that registered AD letter was received back unserved and thereafterservice was sought to be affected by affixation which was required to bedone in accordance with the procedure laid down by Order V Rule 20 of theCode. These are necessarily findings of fact coupled with the finding on lawthat requirement of Order V Rule 20 of the Code were not complied with.Therefore, we find that no question of law much less a substantive questionof law would arise for determination of this Court. Accordingly, the appealfails and the same is dismissed. (M.M.Kumar) Judge 8.2.2010org (Jitendra Chauhan)Judge