D.b. Income Tax Appeal v. The Commissioner Of Income Tax, Central Revenue Building Statuecircle, Jaipur

HIGH COURT OF JUDICATURE FOR RAJASTHAN BENCH ATJAIPUR D.B. Income Tax Appeal No. 202 / 2015 Mrs Shubhashri Panicker D/o Dr. Shashi Panicker aged 30 yearsresident of F-58-B, Kalidas Marg, Bani Park, Jaipur through Powerof Attorney holder Sh. Shashi Panicker S/o Shreedhar Panicker,aged 62 years, resident of F-58-B, Kalidas Marg, Banipark, Jaipur ----Appellant Versus The Commissioner of Income Tax, Central Revenue Building StatueCircle, Jaipur ----Respondent _____________________________________________________ For Appellant(s) : Mr. Mahendra Gargeiya For Respondent(s) : Mr. Anuroop Singhi with Mr. Aditya Vijay _____________________________________________________ HON'BLE MR. JUSTICE K.S. JHAVERI HON'BLE MR. JUSTICE VIJAY KUMAR VYASJudgment 24/10/2017 1.By way of this appeal, the appellant has assailed thejudgment and order of the Tribunal whereby the Tribunal hasallowed the appeal of the department and also partly allowed thecross objection of the assessee for statistical purposes. 2.This court while admitting the matter framed the followingquestion of law:- “i) Whether the ld. ITAT was right in holdingthat the notice u/s 148 dated 22.03.2010having been sent through speed post and nothaving been received back, there was apresumption as to the service of the sameignoring fact that the address on which suchnotice was sent, was altogether a completelydifferent location and hence no suchpresumption could have been considered?”that the notice u/s 148 dated 22.03.2010having been sent through speed post and nothaving been received back, there was apresumption as to the service of the sameignoring fact that the address on which suchnotice was sent, was altogether a completelydifferent location and hence no suchpresumption could have been considered?” 3.Counsel for the appellant Mr. Gargeiya has taken us to the order of the AO wherein it has been observed as under:- “3.4. On 2.12.2010, the A/R of the assessee hasfiled two letters. One is of challenging the serviceof notice. The another is challenging the validityof reasons recorded for initiating proceedings u/s148 of the Act. i) First letter challenging the service of notice u/s148 is dealt with as under:- For the sake of convenience and readyreferrence, the assessee’s letter is reproduced asunder: On 22.3.2010 a notice u/s 148 appears to havebeen sent through Speed Post vide No.ER017540747 at the following address:M/s Shubshri Pankcer E-5, Kailas Marg, BaniPark. However, no receipt or any other evidence ofservice is available. The above notice was not a valid notice to theassessee and as such bad in law since incorrectaddress is posted on envelope. The correctaddress as appears in the PAN of the assessee isF-58(B) Kalidas Marg Bani Park Jaipur. A letter dated 10.11.2010 appears to have beensent on 18.11.2010 at 14.57. by speed post...atthe same address as above. However, the samecame back on 24.11.2010 as per noting ofpostmen on the returned envelop for the reasonthat no such house exist in the Kailash Marg andendorsement of receipt by the receiving clerk ofyour ward. No evidence or other material found availableshowing personal service of the notice u/s 148 onthe assessee or any of its relative or any otherperson authorized on that behalf nor is there anymaterial material showing the dispatch of suchnotice through registered A.D. It is well settled that through various decisionsthat a valid service of a notice u/s 148 iscondition precedent for a valid assumption ofjurisdiction. Moreover, the onus lay upon therevenue to establish such service. Thus it is clearly established that there is noservice at all of the notice u/s 148 much less a valid service and therefore, your goodself waswrongly assumed jurisdiction. The furtherproceedings are void ab initio.” No evidence or other material found availableshowing personal service of the notice u/s 148 onthe assessee or any of its relative or any otherperson authorized on that behalf nor is there anymaterial material showing the dispatch of suchnotice through registered A.D. It is well settled that through various decisionsthat a valid service of a notice u/s 148 iscondition precedent for a valid assumption ofjurisdiction. Moreover, the onus lay upon therevenue to establish such service. Thus it is clearly established that there is noservice at all of the notice u/s 148 much less a valid service and therefore, your goodself waswrongly assumed jurisdiction. The furtherproceedings are void ab initio.” The above application of the assessee has dulybeen disposed of vide this office letter No.1667dated 8.12.2010 and sent to the assesseethrough registered post A/D vide No. 4801 dated10.12.2010. The letter is reproduced hereunderfor ready reference: “The notice u/s 148 was issued in the name ofMs. Shubashri Panikar, F-58, Kailash Marg, BaniPark, Jaipur on 22.3.2010 and sent for servicethrough Speed Post on 22.3.2010. Inspection ofthe assessment records were made by your A/Ron 30.11.2010 and this fact has also beenverified by your A/R. The said notice was notreceived back un-served. From the assessmentrecord it has also been noticed that a notice u/s142(1) dated 4.10.2010, issued on the sameaddress, fixing the hearing on 19.10.2010, whichwas sent for service through Speed Post, hasduly been served on you and in response towhich your A/R attended the hearing on19.10.2010 and the case was adjourned to29.10.2010. It shows that although in the noticesthe road name was mentioned as Kailash Marg,Bani Park, Jaipur, instead of Kalidas Marg, BaniPark, Jaipur the speed posts were served on theaddressee as there is no road in the name ofKailash Marg at Bani Parek. In view of the above facts your application is notaccetable, and hence, the same is thereforerejected.” The notice u/s 148 was issued in the name of Ms.Shubashri Paniker, F-58, Kailash Marg, Bani Park,Jaipur on 22.3.2010 and sent for service throughSpeed Post on 22.3.2010. The Speed Post wasnot received back from the Postal Authorities.Again, the notice u/s 142(1) dated 4.10.2010fixing hearing on 19.10.2010 was sent on thesame address. In response to which Shri N.K.Shrimal, CA/AR attended this office on19.10.2010. It is pertinent to note that there isno Road in the name of “Kailash Marg” in BaniPark, Jaipur and the Plot No. F=58 is situated at“Kalidas Marg”, Bani Park, Jaipur. From thesefacts, it is evident that the notice u/s 148 sentthrough Speed Post has duly been served on theassessee. ii) Second letter – challenging the reasonsrecorded for issue of notice u/s 148 is dealt withas under: In the impugned reasons, your goodself hasreachyed to a reason to belief that an entry ofRs. 5,01,000 dated 18.12.2002 was received bythe assessee, was a bogus entry and therefore,you had a reason to believe that there was anescapment of income of Rs. 5,01,000/- The reasons is erroneous and invalid for thefollowing reasons: 2.1. There are no details or material extracted inthe impugned reasons showing further the natureor type of the information 2.2. How your good self had a reason to belief ofescapement based on such information is notknown… 2.3… 2.4. There appears only suspicious on your part…In any case, we shall not appear nor shallcooperate in any of the proceedings in hands.” 4.He contended that all the authorities have seriously committed an error and the Tribunal has also committed an errorin observing as under:- The reasons is erroneous and invalid for thefollowing reasons: 2.1. There are no details or material extracted inthe impugned reasons showing further the natureor type of the information 2.2. How your good self had a reason to belief ofescapement based on such information is notknown… 2.3… 2.4. There appears only suspicious on your part…In any case, we shall not appear nor shallcooperate in any of the proceedings in hands.” 4.He contended that all the authorities have seriously committed an error and the Tribunal has also committed an errorin observing as under:- “3.5. The ld. DR on the other hand contends thatnotices issued u/s 148 and 142(1) were servedon the assessee. In response thereto, the ld. ARof the assessee duly appeared from time to timeand sought adjournments without raising anygrievance about non-service of 148 notice. It isonly at the fag end of the assessment by way ofan afterthought that story about non-services ofthe notices u/s 148 was concocted to defeat thestatutory process of the assessment. The noticeu/s 148 was issued in the name of Ms. ShubashirPaniker, F-58, Kailash Marg, Bani Park, Jaipur on22.3.2010 and sent for service through speedpost on 22.03.2010. This speed post was notreceived back from the postal authoritiessuggesting any non service. Again the notice u/s142(1) dated 4.10.2010 fixing hearing on19.10.2010 was sent on the same address. Inresponse to which, Shri N.K. Shrimal, CA/A/Rattended this office on 19-10-2010 which clearlydemonstrates to her CA. From these facts, it isevident that the notice u/s 148 sent throughspeed post stand duly been served on theassessee in the eyes of law. It has been held byHon’ble Delhi High Court in the case of CIT vs.Yamu Industries Ltd. (supra), if it is assumed that first notice was not served on the assesseethen in second notice if the assessee appearedand did not raise any objection after 30 days ofissuance of notice, then and it is a validpresumption under law that no notice is served.This fact is further corroborated by repeatedappearance of AR of the assessee. Aproposreasons recorded for reopening, the impugnedbogus entry was found in the books of theassessee; it has been held by the Hon’ble ApexCourt in the case of Phool Chand Bajrang Lal AndAnother vs. ITO, 203 ITR 456 that it is not forthe Court to judge the sufficiency of reasonsrecorded for forming the belief which is the initialstage of income escaping assessment. The AOhad valid information in his possession which isplaced on the record. It is pleaded that the ld.CIT(A) erred in holding that there is no service ofnotice and assumption of jurisdiction is invalid.” 5.He has relied upon the decision of the Delhi High Court incase of Commissioner of Income Tax vs. Rajesh Kumar Sharma(2009) 311 ITR 0235 wherein it has been held as under:- 5. Section 282(1) of the Act provides that a noticeor requisition under the Act may be served on theperson therein named either by post or as if itwere a summons issued by a court under theCode of Civil Procedure, 1908. The provisions ofOrder V of the CPC, more particularly Rules 12 to15 are relevant in so far as the present Appeal isconcerned. 6. Order V Rule 12 of the CPC provides thatwherever it is practicable, service shall be madeon the defendant in person, unless he has anagent empowered to accept service, in which caseservice on such agent shall be sufficient. Rules13, 14 and 15 form a part of the same scheme. Ajoint reading of these Rules suggest that if asummon is accepted by a person who isauthorised to do so, then only can it be said thatthe defendant (or the assessed in this case) hasreceived the summons or that that service is goodservice. 6. Order V Rule 12 of the CPC provides thatwherever it is practicable, service shall be madeon the defendant in person, unless he has anagent empowered to accept service, in which caseservice on such agent shall be sufficient. Rules13, 14 and 15 form a part of the same scheme. Ajoint reading of these Rules suggest that if asummon is accepted by a person who isauthorised to do so, then only can it be said thatthe defendant (or the assessed in this case) hasreceived the summons or that that service is goodservice. 7. In so far as the present Appeal is concernedthere is nothing to suggest that Lalmani was inany manner authorised to receive any summonson behalf of the assessed. It was never the caseof the Revenue that Lalmani was authorised toaccept any notice on behalf of the assessed or was an agent of the assessed who was entitled toreceive the notice under Section 147/148 of theAct. This being the position, it cannot be held thatreceipt of the notice by Lalmani amounted toservice of the notice on the assessed. 8. As far as the second contention is concerned,with regard to service of the notice by post, theproviso to Order V Rule 9(5) of the CPC providesthat the summons must be properly addressedand sent by registered post. In the present case,the notice was sent by speed post at the followingaddress as per the postal receipt: "SH R K PROP M/S KAROL BAGH NEW DELHI, PIN 110065" 9. Clearly, the above is not the address of theassessed. It would have been a different matteraltogether if the Revenue had been able to showfrom the envelope that it was addressed to thecorrect person but the receipt prepared by thepostal department was incomplete. However, forproving this, the onus would have been on theRevenue, particularly when the assessed hadcategorically deemed receipt of the notice. TheRevenue did not discharge this burden but placedreliance only upon the receipt, which as we havenoted hereinabove does not give the correct orcomplete address of the assessed. Under nocircumstances, Therefore, can it be said that thenotice was correctly addressed to the assessed. 10. It was submitted by learned Counsel for theRevenue that the envelope did not return with anyremark to the effect that it was undelivered andso it must be presumed that it was actuallyserved upon the assessed. 11. We are not in position to make any suchassumption because of the categorical stand ofthe assessed that he had not received the notice.The burden was entirely upon the Revenue toshow that the notice was dispatched to thecorrect address. It is only then that such apresumption could have been made. But learnedCounsel for the Revenue has not been able toshow that the envelope containing the notice wascorrectly addressed. We are, Therefore, notinclined to accept this contention of learnedCounsel for the Revenue. 12. It was finally contended that the assessedpresented himself in the proceedings before theAssessing Officer. However, as we have noted above, the assessed appeared before theAssessing Officer in response to a notice underSection 142(1) and 143(2) of the Act and notpursuant to a notice under Section 147/148 of theAct. In fact, as we have already noted, theassessed had written a letter to the assessed soonafter receiving the notice under Section 142(1)and 143(2) of the Act and that he was unaware ofany notice having been issued under Section147/148 of the Act. Moreover, the assessedentered appearance and filed his return underprotest making it abundantly clear that he hadnot received the notice under Section 147/148 ofthe Act. This argument does not, Therefore,advance the case of the Revenue. 5.1. He has relied upon the decision of Supreme Court in case ofY. Narayana Chetty and Anr. vs. The Income Tax Officer, Nelloreand Ors. (1959) 35 ITR 388 (SC) wherein it has been held asunder:- 5.1. He has relied upon the decision of Supreme Court in case ofY. Narayana Chetty and Anr. vs. The Income Tax Officer, Nelloreand Ors. (1959) 35 ITR 388 (SC) wherein it has been held asunder:- 4. The first point raised by Mr. Sastri is that theproceedings taken by respondent 1 under section34 of the Act are invalid because the noticerequired to be issued under the said section hasnot been issued against the assesseescontemplated therein. In the present case theIncome-tax Officer has purported to act undersection 34(1)(a) against the three firms. The saidsub-section provides inter alia that "if theIncome-tax Officer has reason to believe that byreason of the omission or failure on the part ofthe assessee to make a return of his incomeunder section 22 for any year or to disclose fullyand truly all material facts necessary for hisassessment for that year, income, profits or gainschargeable to income-tax has been under-assessed", he may, within the time prescribed,"serve on the assessee a notice containing all orany of the requirements which may be included inthe notice under sub-section (2) of section 22 andmay proceed to re-assess such income, profits orgains." The argument is that the service of therequisite notice on the assessee is a conditionprecedent to the validity of any re-assessmentmade under section 34; and if a valid notice is notissued as required, proceedings taken by theIncome-tax Officer in pursuance of an invalidnotice and consequent orders of re-assessment passed by him would be void and inoperative. Inour opinion, this contention is well-founded. Thenotice prescribed by section 34 cannot beregarded as a mere procedural requirement; it isonly if the said notice is served on the assesseeas required that the Income-tax Officer would bejustified in taking proceedings against him. If nonotice is issued or if the notice issued is shown tobe invalid then the validity of the proceedingstaken by the Income-tax Officer without a noticeor in pursuance of an invalid notice would beillegal and void. That is the view taken by theBombay and Calcutta High Court in theCommissioner of Income-tax, Bombay City v.Ramsukh Motilal : [1955]27ITR54(Bom) and R.K. Das &; Co. v. Commissioner of Income-tax,West Bengal: [1956]30ITR439(Cal) , and we thinkthat that view is right. 5.2. He has also relied upon the decision of Supreme Court incase of R.K. Upadhyaya vs. Shanabhai P. Patel (1987) 166 ITR 163(SC) wherein it has been held as under:- 2. The High Court has quashed the notice byaccepting the assessee's contention that theaction of the Income-tax Officer was barred bylimitation prescribed by the Act. There is nodispute that the notice in this case under Section147(b) of the Act was issued by registered poston March 31, 1970, and was received by theassessee on April 3, 1970. To the facts of thecase, Section 147(b) of the Act applies. The tworelevant provisions are in Sections 148 and 149 ofthe Act which provide: 148(1)-Beforemakingtheassessment,reassessment or recomputation under Section147, the Income-tax Officer shall serve on theassessee a notice containing all or any of therequirements which may be included in a noticeunder Sub-section (2) of Section 139; and theprovisions of this Act shall, so far as may be,apply accordingly as if the notice were a noticeissued under that sub-section. (2) ... 149(1) -No notice under Section 148 shall beissued, (a) ... (b) In cases falling under Clause (b) of Section147, at any time after the expiry of four yearsfrom the end of the relevant assessment year. (2) The provisions of Sub-section (1) as to theissue of notice shall be subject to the provisionsof Section 151. 148(1)-Beforemakingtheassessment,reassessment or recomputation under Section147, the Income-tax Officer shall serve on theassessee a notice containing all or any of therequirements which may be included in a noticeunder Sub-section (2) of Section 139; and theprovisions of this Act shall, so far as may be,apply accordingly as if the notice were a noticeissued under that sub-section. (2) ... 149(1) -No notice under Section 148 shall beissued, (a) ... (b) In cases falling under Clause (b) of Section147, at any time after the expiry of four yearsfrom the end of the relevant assessment year. (2) The provisions of Sub-section (1) as to theissue of notice shall be subject to the provisionsof Section 151. The High Court relied upon the decision of thisCourt in the case of Banarsi Debi and Anr. v.I.T.O., District IV, Calcutta and Ors., :[1964]53ITR100(SC) where the validity of anotice under Section 34(1) of the Income-tax,Act, 1922 and the scope of Section 4 of theIncome-tax (Amendment) Act of 1959 by whichSub-section (4) was introduced into Section 34were considered. this Court indicated, keeping theprovisions of Section 34 in view, that there wasreally no distinction between "issue" and "serviceof notice". Section 34, Sub-section (1) as far asrelevant provided thus: 34(1) If- (a) ... (b) ...he may in cases falling under Clause (a) atany time within 8 years and in cases falling underClause (b) at any time within four years at theend of that year, serve on the assessee,...andmay proceed to assess or reassess suchincome.... Section 34, conferred jurisdiction on the Income-tax Officer to reopen an assessment subject toservice of notice within the prescribed period.Therefore, service of notice within limitation wasthe foundation of jurisdiction. The same view hasbeen taken by this Court in Janni v. Indu PrasadBhat, : [1969]72ITR595(SC) as also in C.I. T. v.Robert, : [1963]48ITR177(SC) . The High Courtin our opinion went wrong in relying upon theratio of : [1964]53ITR100(SC) in disposing of thecase in hand. The scheme of the 1961 Act so faras notice for reassessment is concerned is quitedifferent. What used to be contained in Section 34 of the 1922 Act has been spread out into threesections, being Sections 147, 148 and 149 in the1961 Act. A clear distinction has been made outbetween 'issue of notice' and 'service of notice'under the 1961 Act. Section 149 prescribe theperiod of limitation. It categorically prescribesthat no notice under Section 149 shall be issuedafter the prescribed limitation has lapsed. Section148(1) provides for service of notice as acondition precedent to making the order ofassessment. Once a notice is issued within theperiod of limitations, jurisdiction becomes vestedin the Income-tax Officer to proceed to reassess.The mandate of Section 148(1) is thatreassessment shall not be made until there hasbeen service. The requirement of issue of notice issatisfied when a notice is actually issued. In thiscase, admittedly, the notice was issued within theprescribed period of limitation as March 31, 1970,was the last day of that period. Service under thenew Act is not a condition precedent toconferment of jurisdiction in the Income-taxOfficer to deal with the matter but it is a conditionprecedent to making of the order of assessment.The High Court in our opinion lost sight of thedistinction and under a wrong basis felt bound bythe judgment in : [1964]53ITR100(SC) . As theIncome-tax Officer had issued notice withinlimitations, the appeal is allowed and the order ofthe High Court is vacated. The Income-tax Officershall now proceed to complete the assessmentafter complying with the requirements of law.Since there has been no appearance on behalf ofthe respondents, we make no orders for costs. 5.3.He has relied upon the decision in case of Harcharan Singhvs. Smt. Shivrani and Ors. AIR 1981 SC 1284 wherein it has beenheld as under:- 5.3.He has relied upon the decision in case of Harcharan Singhvs. Smt. Shivrani and Ors. AIR 1981 SC 1284 wherein it has beenheld as under:- “Section 27 of the General Clauses Act, 1897deals with the topic-'Meaning of service by post'and says that where any Central Act or Regulationauthorises or requires any document to be servedby post, then unless a different intention appears, the service shall be deemed to be effected byproperly addressing, pre-paying and posting it byregistered post, a letter containing the document,and unless the contrary is proved, to have beeneffected at the time at which the letter would bedelivered in the ordinary course of post. Thesection thus arises a presumption of due serviceor proper service if the document sought to beserved is sent by properly addressing, pre-payingand posting by registered post to the addresseeand such presumption is raised irrespective ofwhether any acknowledgement due is receivedfrom the addressee or not. It is obvious that whenthe section raises the presumption that theservice shall be deemed to have been effected itmeans the addressee to whom the communicationis sent must be taken to have known the contentsof the document sought to be served upon himwithout anything more. Similar presumption israised under Illustration (f) to Section 114 of theIndian Evidence Act whereunder it is stated thatthe Court may presume that the common courseof business has been followed in a particular case,that is to say, when a letter is sent by post bypre-paying and properly addressing it the samehas been received by the addressee .Undoubtedly, the presumptions both underSection 27 of the General Clauses Act as well asunder Section 114 of the Evidence Act arerebuttable but in the absence of proof to thecontrary the presumption of proper service oreffective service on the addressee would arise. Inthe instant case, additionally, there was positiveevidence of the postman to the effect that theregistered envelope was actually tendered by himto the appellant on November 10, 1966 but theappellant refused to accept. In other words, therewas due service effected upon the appellant byrefusal. In such circumstances, we are clearly ofthe view, that the High Court was right in comingto the conclusion that the appellant must beimputed with the knowledge of the contents ofthe notice which he refused to accept. It isimpossible to accept the contention that whenfactually there was refusal to accept the notice onthe part of the appellant he could not be visitedwith the knowledge of the contents of the registered notice because, in our view, thepresumption raised under Section 27 of theGeneral Clauses Act as well as under Section 114of the Indian Evidence Act is one of proper oreffective service which must mean service ofeverything that is contained in the notice. It isimpossible to countenance the suggestion thatbefore knowledge of the contents of the noticecould be imputed the sealed envelope must beopened and read by the addressee or when theaddressee happens to be an illiterate person thecontents should be read over to him by thepostman or someone else. Such things do notoccur when the addressee is determined todecline to accept the sealed envelope. It would,therefore, be reasonable to hold that whenservice is effected by refusal of a postalcommunication the addressee must be imputed,with the knowledge of the contents thereof and inour view, this follows upon the presumptions thatare raised under Section 27 of the GeneralClauses Act, 1897 and Section 114 of the IndianEvidence Act.” 5.4. He has relied upon the decision in case of CIT vs. ChetanGupta (2015) 94 CCH 13 (Del) wherein it has been held asunder:- 24. The Court first would like to deal with the questionwhether notice under Section 148of the Act is ajurisdictional requirement. The relevant portion of Section148(1) reads as under: 5.4. He has relied upon the decision in case of CIT vs. ChetanGupta (2015) 94 CCH 13 (Del) wherein it has been held asunder:- 24. The Court first would like to deal with the questionwhether notice under Section 148of the Act is ajurisdictional requirement. The relevant portion of Section148(1) reads as under: "148. Issue of notice where income has escapedassessment - (1) Before making the assessment,reassessment or recomputation under Section 147, theIncome-tax Officer shall serve on the Assessee a noticecontaining all or any of the requirements which may beincluded in a notice under sub-section (2) of Section 139;and the provisions of this Act shall, so far as may be,apply accordingly as if the notice were a notice issuedunder that sub- section." 25. The Supreme Court in R.K. Upadhyaya (supra),explained that there was a distinct shift in the scheme of the provisions of the 1961 Act in comparison with thecorresponding provision i.e. Section 34under the 1922Act under which the mandatory requirement was thatboth the issuance and service of notice had to becompleted within the prescribed period. Consequently, theservice of notice within the limitation period was thefoundation of jurisdiction under the 1922 Act. In Y.Narayana Chetty v. Income Tax Officer, Nellore [1959] 35ITR 388 (SC) the Supreme Court observed in the contextof Section 34of the 1922 Act,: "The notice prescribed by section 34of the Income taxAct for the purpose of initiating reassessment proceedingsis not a mere procedural requirement; the service of theprescribed notice on the assessee is a condition precedentto the validity of any reassessment made under section34. If no notice is issued or if the notice issued is shownto be invalid then the proceedings taken by the Income-tax Officer without a notice or in pursuance of an invalidnotice would be illegal and void." 26. This was also the basis for the decision in BanarasiDebi v. ITR (1964) 53 ITR 100. However, under the 1961Act the procedural requirement has been spread overthree sections, being Sections 147, 148and 149. Theperiod of limitation within which notice under Section 148has to be issued is specified in Section 149. Section 153(2) of the Act stipulates that no order of re-assessmentcan be passed beyond the period of one year from theexpiry of the financial year in which service of the noticewas effected. Section 148(1), however, is clear that noreassessment can take place without service of noticebeing effected on the Assessee or his authorisedrepresentative. 27. In R.K. Upadhyaya (supra) the Supreme Courtexplained that "the mandate of Section 148(1) is thatreassessment shall not be made until there has beenservice." However, the said decision does state thatjurisdiction becomes vested in the AO to proceed with theassessment once notice is issued within a period oflimitation. It also emphasized that no reassessment shallbe made "until there has been service." The legal positiontherefore, even under the 1961 Act, is that service ofnotice under Section 148is a jurisdictional requirementfor completing the re-assessment. This has been emphasized in several other decisions of the High Courtsas well. -28. In C.N. Nataraj v. Fifth Incometax Officer (1965) 56ITR 250 (Mys), the High Court of Mysore was dealing withthe case where the notice under Section 148of the Actwas issued in the names of the Assessee who wereminors and not in the names of their guardians. Thenotices were served on a clerk of the father of theAssessee who was neither an agent of the Assessee norauthorized to accept notices on their behalf. The Court,relying on the decision in N. Narayana Chetty (supra)observed: emphasized in several other decisions of the High Courtsas well. -28. In C.N. Nataraj v. Fifth Incometax Officer (1965) 56ITR 250 (Mys), the High Court of Mysore was dealing withthe case where the notice under Section 148of the Actwas issued in the names of the Assessee who wereminors and not in the names of their guardians. Thenotices were served on a clerk of the father of theAssessee who was neither an agent of the Assessee norauthorized to accept notices on their behalf. The Court,relying on the decision in N. Narayana Chetty (supra)observed: "There is no doubt that a notice prescribed under section148of the Act for initiating reassessment proceedings isnot a mere procedural requirement ; the service of theprescribed notice on the assessee is a condition precedentto the validity of any reassessment made under section147. If no notice is issued or if the notice issued is shownto be invalid, then the proceedings taken by the Incometax Officer without a notice or in pursuance of an invalidnotice would be illegal and void." 29. In CIT v. Hotline International (P) Ltd. (supra) thisCourt held that affixation of notice on an address atwhich the security guard of the Assessee-companyrefuses to receive such notice cannot be construed to bea proper service of notice under Section 148 of the Act.The security guard was not an agent of the Assessee andtherefore, the reassessment proceedings were held to bebad in law. -30. In Dina Nath v. Commissioner of Incometax [1994]72 Taxman 174 (J & K) the notice under Section 143(2)of the 1961 Act was served upon one S, who was neithera member of the family of the Assessee nor his dulyauthorized agent. However, S had been accepting thenotice on behalf of the Assessee and prosecuting thecases on his behalf earlier before the income taxauthorities. The High Court held: "the object of issuance the notice or summons is tointimate the concerned person to appear and answer thequeries or the question sought to be clarified by a Courtor the authorities. As serious consequences are likely tofollow, a notice or summons must necessarily be issued and served in the form and in the manner prescribed bylaw." 31. The High Court in Dina Nath (supra), referred to OrderV Rule 12 CPC as well as Order III Rule 6 CPC. Itthereafter concluded that notice must be servedpersonally upon the individual or upon his agent dulyauthorized in terms of Order III Rule 6 CPC. Thecontention of the Assessee was upheld and thereassessment proceeding was quashed. 32. In Jayanthi Talkies Distributors v. Commissioner of-Incometax(1979) 120 ITR 576 (Mad) the notice wasserved by the notice-server of the Department on theManager of the Assessee-firm. The Manager wrote to theITO seeking time. Since no return was filed by theAssessee within the time granted, the ITO completed thereassessment under Section 144of the 1961 Act. Onappeal the High Court found that none of the partners ofthe Assessee-firm had been personally served with thenotice. Service was effected only on the Manager of thefirm who had no specific or written authority to receivesuch notice. It was held: "when the statute provides that a notice should be servedin a particular mode, it was not possible to hold that therehad been a proper service of notice merely from the factthat the person to whom the notice had been addressedhad received the notice through some other source orthat he had become aware of the contents of the notice.There had not been a due service of notice ascontemplated by the provisions of the Code of CivilProcedure dealing with service of notice or summons.Therefore, the service of the notice on the Manager whohad no written authority to receive the same could not beheld to be a proper service on the Assessee." "when the statute provides that a notice should be servedin a particular mode, it was not possible to hold that therehad been a proper service of notice merely from the factthat the person to whom the notice had been addressedhad received the notice through some other source orthat he had become aware of the contents of the notice.There had not been a due service of notice ascontemplated by the provisions of the Code of CivilProcedure dealing with service of notice or summons.Therefore, the service of the notice on the Manager whohad no written authority to receive the same could not beheld to be a proper service on the Assessee." 33. In Sri Nath Suresh Chand Ram Naresh v. CIT (supra)it was reiterated that service of valid notice under Section148was "the foundation for the initiation ofreassessment proceedings and a condition precedent forthe validity of the notice." It was held that the Tribunalwas not right in holding that the notices under Section148addressed as „SCR‟ and the karta „S‟ were validnotices for reassessing the income of the HUF „MM‟ or„MS‟ or its successors. Onus on Revenue to prove service of notice 34. There is sufficient judicial authority for theproposition that the burden of showing that service ofnoticed has been effected on the Assessee or his dulyauthorized representative is on the Revenue. These-include Fatechand Agarwal v. Commissioner of WealthTax[1974] 97 ITR 701 (Ori) and Venkat Naicken Trust v. ITO[1999] 107 Taxman 391 (Mad). In CIT v. Thayaballi MullaJeevaji Kapasi(1967) 66 ITR 147 (SC), the Respondentto whom the notice was directed was not in town. Theonly information which the process server had was thatthe Respondent was either in Bombay or Ceylon.Thereafter, the process server affixed the notice on thebusiness premises of the Respondent. The Supreme Courtaffirmed the essential principle that "if no notice wasserved within the period, the Income-tax Officer wasincompetent to commence proceedings for reassessmentunder Section 34of 1922 Act." It was further held that"service of notice under Section 34(1) (a) within theperiod of limitation being a condition precedent to theexistence of jurisdiction, if the Income-tax Officer wasunable to prove that the notice was duly served upon theRespondent within the prescribed period, any return filedby the Respondent after the expiry of the period of eightyears will not invest the Income-tax Officer with authorityto reassess the income of the Respondent pursuant tosuch return." On the facts of that case it was held thatthe Revenue had sufficiently discharged the onus byproducing the affidavit of the process server. 35. Under Section 282(1) of the Act, service of noticemay be made by delivering or transmitting a copy thereofto the person to whom the notice is addressed by morethan on mode. One of the modes is "in such manner asprovided under the Code of Civil Procedure, 1908(„CPC‟)". For the purpose of service of summons underOrder V Rule 12 CPC, service can be taken to complete, ifit is effected, on person to whom his address or toanother person who is empowered to receive such noticeon his behalf. Besides the appointment of such agent bythe Assessee has to be in writing in order to meet therequirement of Order III Rules 2 and 6 CPC. Therefore, inthe instant case, the Revenue had to show that the personon whom the notice was served i.e., Mr. Ved Prakash wasin fact empowered by the Assessee to receive notices onhis behalf. Apart from invoking the doctrine of „apparentauthority‟, the Revenue has been unable to show that, in fact, Ved Prakash was empowered to receive such noticeon behalf of the Assessee. fact, Ved Prakash was empowered to receive such noticeon behalf of the Assessee. 36. The reliance by the Assessee on the decision inHarshad J. Shah v. LIC of India (supra) appears to bemisplaced. The facts there were that the relationship ofprincipal and agent flowed from the contract. The agentwas employed as such by the LIC and the letter ofappointment contained an expressed prohibition on himcollecting premium on behalf of the LIC. Further therewere regulations that prohibiting the agents fromcollecting premium on behalf of the LIC. The Courtexplained the doctrine of apparent authority andobserved: "the authority of the agent is apparent where itresults from a manifestation made by the principal to thirdparties." On the facts of the case, the said doctrine washeld not to bind the LIC against third parties who mayhave been unaware of the lack of authority of the agent towhom they handed over the premium cheques. In thepresent case, however, the Revenue has not been able toshow that the Assessee held out Mr. Ved Prakash to be hisemployee or agent. 37. No attempt appears to have been made by theRevenue to serve the Assessee at the address provided byhim i.e. "c/o Jagat Theatre, Sector 17, Chandigarh". Allthe notices were addressed to him at the address "C/oKiran Cinema, Chandigarh" which was in Sector-22.Therefore, this is not a case where an attempt was madeby the Revenue to serve the Assessee at his knownaddress, and upon not finding him there the Revenuelearnt of the address where he would be found. Merelybecause other notices sent to the 'Assessee group' werereceived by the employees of Kiran Cinema it does notautomatically lead to the inference that the Assessee'splace of business was also Kiran Cinema. In any event,there could not be an inference that Mr. Ved Prakash wasduly empowered by the Assessee to receive notices on hisbehalf. In the very first notice dated 28th March 2008 theendorsement made by Mr. Ved Prakash shows himdescribing himself as "Accountant, Kiran Cinema, Sector-22, Chandigarh" and nothing more. 38. It was not as if the Revenue was not made aware ofthe lapse. Vipin Aggarwal & Associates, the CharteredAccountants (CAs) of the Assessee, by their letter dated12th December 2008 informed the ACIT that the Assessee had not till then received the notice dated 28th March2008 under Section 148 of the Act. They made a specificrequest to the ACIT that a copy of notice under Section148"along with basis and reason of opening the abovementioned case under Section 148" be provided to themto enable them to "comply with the same." However, theACIT in his reply of the same date continued to show theaddresses of the Assessee as "c/o Kiran Cinema, Sector-22, Chandigarh" and "c/o M/s. Vipin Aggarwal &Associates CA" and insisted that notice had been "validlyserved on Shri Ved Prakash, accountant of Kiran Cinema(who also receives other notices of the concerned groupconcerns)." The CAs for a second time on 19th December2008 pointed out that that "notice u/s 148 was notreceived by the assessee" and again asked for a copythereof along with the reasons for reopening theassessment. However, no attempt was made by the ACITto ascertain the correct address of the Assessee and servea copy of the notice afresh on him. Participation by Assessee in proceedings not a waiver 39. The next issue to be considered is whether the failureby the Assessee to specifically protest that Mr. VedPrakash was not his Accountant or agent or that he wasnot empowered to accept notices on his behalf should betaken to be a waiver by the Assessee of the requirementof proper service of notice in terms of Section 148of theAct. The settled legal position is that merely because anAssessee may have participated in the proceedings, therequirement of service of proper notice upon the person inaccordance with the legal requirement under Section 148of the Act is not dispensed with. Participation by Assessee in proceedings not a waiver 39. The next issue to be considered is whether the failureby the Assessee to specifically protest that Mr. VedPrakash was not his Accountant or agent or that he wasnot empowered to accept notices on his behalf should betaken to be a waiver by the Assessee of the requirementof proper service of notice in terms of Section 148of theAct. The settled legal position is that merely because anAssessee may have participated in the proceedings, therequirement of service of proper notice upon the person inaccordance with the legal requirement under Section 148of the Act is not dispensed with. -40. In B. Johar Forest Works v. Commissioner of Incometax (1977) 107 ITR 409 (J&K) the notice issued by theITO to the Assessee under Section 22(2) of the 1922 Act.The notice was served on an employee of the Assesseewho was not authorized to accept such notice.Subsequently, the General Manager of the Assesseeapplied for extension of time for filing the return, whichwas allowed by the ITO. However, the return was not filed within the extendedtime and an ex parte order was passed. Before the HighCourt it was contended that the employee on whom theservice of the notice was found to have been made wasnot duly authorized to accept such notice and that the mere fact that the General Manager of the firm appliedfor time, would not render the service of notice on theemployee a valid and a legal service. It is contended thatthe Assessee had not denied service of notice on suchemployee. The High Court however negatived the plea ofthe Revenue and held that in the absence of finding bythe Tribunal that the employee of the Assessee wasauthorized to accept such service on behalf of theAssessee, notice could not be said to have been dulyserved upon the Assessee. It was held that "acquisition ofknowledge in regard to the issuance of a notice underSection 22 (2) of 1922 Act could not be considered to beequivalent to, or a substitute for, the service of the noticeon the Assessee." It was further observed that "knowingabout the issuance of the notice otherwise than by itsservice on the person concerned is one thing and theservice of the notice on the person is another." 41. In the context of sales tax the Full Bench of theAllahabad High Court in Laxmi Narain Anand Prakash v.Commissioner of Sales Tax, Lucknow AIR 1980 All 198 itwas held that the notice of initiation proceeding underSection 21 of U.P. Sales Tax Act, 1947 was a conditionprecedent and not only a procedural requirement. Themere fact that the Assessee had obtained knowledge ofthe proceeding and participated could not validate theproceeding being initiated without ju