SHRI RAVINDER SINGH,PANCHKULA vs. ITO, W-3, PANCHKULA

Brief facts of the case are that the AO received an information that during F.Y. 2011-12 the assessee had deposited cash amounting to Rs. 32,80,000/-. Since the assessee had not filed his return of income, A.O. issued notice to the assessee under section 148 of the Act. However, the AO did not receive any response to the said

At the outset Ld. Counsel for the assessee submitted that the Ld. CIT(A) has wrongly confirmed the order passed by the AO without taking into consideration the fact that the AO had passed the assessment order in violation of the mandatory provision u/s 148 of the Act, i.e., without serving notice to the assessee before initiating proceedings u/s 147 of the Act. The Ld. Counsel invited our attention to the copy of notice dated 31/03/2016 issued under section 148, available in the paper book and pointed out that the A.O. had not mentioned the name of the father of the assessee due to which the notice could not be served upon the assessee. The Ld. counsel further invited our attention to the remarks on the copy of notice that the notice could not be served upon the assessee as father’s name of the assessee was not written in the same. The Ld. Counsel accordingly submitted that since the notice was not served upon the assessee, the Ld. CIT(A) ought to have set aside the assessment order. 4.1 Ld. Counsel further pointed out that AO initiated reassessment proceedings and passed the order u/s 147 of the Act in aassessee’s case for year 2011-12 in the similar set of facts. The assessee challenged the assessment order before the Ld. CIT(A) and the Ld. CIT(A) after hearing the assessee and inspecting the office record set aside the assessment order holding that since there was no service of notice u/s 147 of the Act, the order passed u/s 147 of the Act is not sustainable. 5. On the other hand, the Ld. DR supporting the impugned order passed by the A.O. submitted that since the A.O. had passed the assessment order after service of notice under the provisions of the Code of Civil Procedure (CPC), the Ld. CIT(A) has rightly confirmed the order. Hence, there is no infirmity in the findings of the Ld. CIT(A).

We have heard the rival submissions of the parties and perused the material available on the record. We noticed that the Ld. CIT(A), Panchkula has set aside the re- assessment order passed by the A.O. in assessee’s case for the assessment year 2011-12 in the similar set of facts. The findings of the Ld. CIT(A) read as under: 5. I have gone through the facts of the case, the assessment record and written submission filed by the appellant, remand report of the AO and rejoinder submitted by the appellant. In Ground No. 1 the appellant his challenged the validity of re-assessment by claiming that no notice u/s 148 was served to the assessee before the completion of assessment. In this regard, it is noted from a peruskl of assessment record that after receiving NMS information the AO issued a letter dated 08.04.2015 seeking information from assessee and in this letter proper address of Sh.Ravinder Singh S/o Sh.Karnail Singh, Village Ram Nagar, Tehsil Kalka, Panchkula-134102 was mentioned. This letter was replied by the appellant vide tis letter received on 28.04.2015 by AO wherein the appellant stated that his income for the relevant assessment year was below taxable limit However, proceedings for issue of notice u/s 148 to appellant were initiated by AO after due approval from JCIT, Panchkula Range as reply of assessee was not found satisfactory by AO. The notice u/s 148 dated 31.03.2016 has been issued at the address: Sh.Ravinder Singh, Village Ramnagar, Kalka, Panchkula and sent for service through Notice Server. Notice was not sent for service by way of registered post. The notice server has noted on 31.03.2016 on a copy of notice placed on record that "करदाता के �पता का नाम ह� नह�ं है इस�लए तामील नह�ं हुआ ।" Thereafter the AO on the same date recorded satisfaction that service of notice cannot be done in ordinary course and ordered service in the manner as provided under rules or order of CPC and directed the notice server to effect service of notice u/s 148 by affixture in the presence of Inspector of the office and copy of order was also to be affixed on notice board of the office of AO. The notice server and Inspector have noted on the copy of this order under Rule 5 of the CPC dated 31.03.2016 that notice was affixtured but have not stated about premises where it was affixtured. Later statutory notice u/s 142(1) and questionnaire dated 01.07.2016 are found to have been addressed to Sh.Ravinder Singh S/o Sh.Karnail Singh (Pyara Singh), Village Ram Nagar, P.O. Nanakpur. Final opportunity notice was also found to be issued at the same address on 29.09.2016 which was dispatched on 14.10.2016 for hearing fixed on 20.10.2016. The appellant claims in affidavit filed by him that no notice u/s 148 was received by him during or after the assessment for the relevant year. He has also claimed that no affixture of notice dated 31.03.2016, as stated in assessment order issued u/s 148, was done at his residence. Thus, the proper service of notice u/s 148 is not evident from the records of assessment. Service of notice could not be effected at the Village address of assessee as the father's name was not mentioned in the notice. Thus,

In the said case, the AO passed the order u/s 147 of the Act, recording his satisfaction regarding service of notice u/s 148 the Act. The assessee challenged the reassessment order inter alia on the legal ground that initiation of proceedings u/s 147 without proper service of notice u/s 148 is bad is in law. Ld. CIT(A) allowed the appeal of the assessee and held that the reassessment proceedings initiated by the AO is invalid and not sustainable in law for the reason that the AO has passed the assessment order without serving notice u/s 148 of the Act by either by delivery of the copy of notice or under Order V Rule 20 of the CPC. Since the findings of the Ld. CIT(A) were in accordance with the settled principles of law, the department did not challenge the same before the Tribunal. 8. Admittedly, in the present case since AO had not mentioned the father’s name of the assessee in the notice dated 31.03/2016 issued u/s 148 of the Act, the same was received back unserved. So far as the contention of the AO that the notice was served under Order V Rule 20 of the CPC is concerned, the satisfaction recorded by the AO on 31.03.2016 (copy of which is available in paper book) does not establish that the notice was served upon the assessee in terms of Order V Rule 20 of the CPC because the AO has not mentioned the complete address of the assessee including father’s name House No. and the premises where the notice was to be affixed.

The Hon'ble Supreme Court in the case of R.K. Upadhyay vs. Shanabhai P. Patel 1987 (3) SCC 96 has held that the A.O. cannot initiate proceedings under section 147 of the Act, without service of notice under section 148 of the Act. Further the coordinate Bench of the Tribunal in the case of Shri Balbir Singh S/o Dharam Singh, Shri Navpreet Singh S/o Late Shri Balbir Singh Vs. the ITO, Ward-1&3, Khanna [2019] 72 ITR (Trib) 389 (ITAT Chand) has set aside the reassessment order passed by the A.O. without serving notice to the assessee under section 148 of the Act. In the present case the documentary evidence on record establishes that the notice u/s 148 was neither served to the assessee personally or by post nor served by affixing the copy thereof in terms of order V Rule 20 of CPC. On the other hand, there is no merit in the contention of the department that the AO had passed the reassessment order after serving notice to the assessee u/s 148 of the Act. Hence, in our considered view, since the AO had passed the assessment order u/s 147 of the Act, in violation of the mandatory provision under section 148 of the Act, the Ld. CIT(A) has wrongly affirmed the order passed by the AO, therefore the impugned order is not sustainable in law. 10. In view of the discussion in the foregoing paras, we hold that the action of the AO was contrary to the expressed provisions of law and also contrary to the ratio laid down by the Hon’ble Supreme Court in the case of R.K. Upadhyay vs. Shanabhai P. Patel (supra). Hence, we find merit in the contention of the Ld. counsel that since the order passed by the AO was void ab initio, the Ld. CIT(A) has wrongly upheld the action of the AO. We therefore, allow the legal ground raised by the assessee and set aside the order passed by the Ld. CIT(A).

Since we have set aside the impugned order on legal ground raised by the assessee, remaining grounds have become academic. Hence, we do not deem it necessary to adjudicate the same. In the result appeal filed by the Assessee is allowed. Order pronounced on 29th June,2021.