ORDER
P.K. Bansal, A.M.
1. This appeal has been filed by the assessee against the order of the CIT(A), dt. 12th Feb., 2001 by taking the following effective grounds of appeal :
1. That the learned GIT(A) has erred in law and on facts of the case in treating the assessment as valid in law. The assessment is framed without jurisdiction and is barred by limitation should have been annulled.
2. That in absence of proper service of notice under Section 158BC, the assessment framed by the AO is without jurisdiction ought to have been annulled by GIT(A) being illegal ab intio.
3. That the assessment is barred by limitation as framed beyond the limitation period provided in the IT Act, 1961.
4. That in view of Supreme Court’s decision in the case of Mohanlal Industries v. CST 101 STC 461 (SC) since the assessment order was not put in transit for service within limitation is illegal and barred by limitation is liable to be struck down.
5. That alleged service of notices under Sections 158BC and 142(1) are in contravention of provisions of Section 282(1) and Rule 19, O. 5 of CPC does not give jurisdiction to the AO to complete the assessment. The order is thus without jurisdiction should be cancelled.
6. That the learned GIT(A) erred in holding the service of notice as proper without making enquiry as requested and confirming the assessment valid. The assessment should have been cancelled.
2. The brief facts of the case are that the assessee was searched by the Police authorities at Arhora Police Station, District Mirzapur, and a sum of Rs. 3.64 lacs was taken possession of by tne Police, while he was travelling in the car. This amount was requisitioned under Section 132A on 1st March, 1997 by Dy. Director of IT, Varanasi. Notice under Section 158BC dt. 12th Feb., 1999, was issued asking the assessee to file the return for the block period ending on 1st March, 1999, within 15 days. The AO mentioned that the notice under Section 158BC was returned by the notice-server that the assessee refused to receive the notice. Later on Inspector Shri G.M. Wate was deputed to get the notice served upon the assessee. During his visit it was reported to the Inspector that the assessee is out of station. Therefore, the notice under Section 158BC was served upon the assessee on 16th Feb., 1999 by affixture. Other copy of the notice was served upon Shri P.D. Shrivastava, advocate, who represented the assessee once. The return was not filed till 26th Feb., 1999. The notice under Section 142(1) dt. 3rd March, 1999, fixing the case for 15th March, 1999 was issued. This notice was also alleged to have been served by affixture. The AO, therefore, in the absence of non-compliance of the notice under Section 158BC went on completing the assessment ex parte on the basis of the material received from the investigation branch. The AO noted that the ITO, Rewa, vide his letter dt. 2nd Jan., 1998 stated that the assessee has filed the IT return on 8th Sept., 1997 as proprietor of M/s Mahakaleshwar Trading Agencies, Singarauli, District Sidhi, from the asst, yr. 1993-94 to 1997-98 disclosing the returned income at Rs. 30,000, Rs. 33,000, Rs. 39,500, Rs. 47,000 and Rs. 50,000, respectively. Upto asst. yr. 1996-97 the source of income was disclosed to be repairing work while for the asst. yr, 1997-98 the source was disclosed to be repairing and coal business. The assessee has also shown the gift received amounting to Rs. 1.20 lacs, Rs. .30,000 each dt. 6th Jan., 1994, 22nd Jan, 1995, 18th Feb., 1996 and 10th Jan., 1997 from Smt. Savitri, Shri Ramchandra Mishra, Ajay Kumar Mishra and Shri K.P. Mishra and the loans amounting to Rs. 19,000 and Rs. 19,500 from Shri Laloo Prasad Mishra and Shri Agrasen Prasad Mishra, respectively. The capital as on 1st April, 1992 was shown at Rs. 1.10 lacs while on 31st March, 1997 it was worked at Rs. 3.84 lacs. The AO took the view that the return for the asst. yrs. 1993-94 to 1996-97 were belated returns and since the assessee has not filed the return under Section 158BC the return filed on 8th Sept., 1997 cannot be considered and, therefore, added the sum of Rs. 3.84 lacs as income from undisclosed sources, after observing that the ADI, Jabalpur, in his appraisal report mentioned that the assessee has admitted in his statement a sum of Rs. 3.64 lacs as undisclosed income. Thus the assessment was framed on an undisclosed income of Rs, 7,48 lacs.
3. The assessee being aggrieved went in appeal before the CIT(A). Before the CIT(A) it was stated that the AO has mentioned in the assessment order that the notice under Section 158BG, dt. 12th Feb., 1999 was issued for the block period ending 1st March, 1999. This notice is apparently illegal and bad in law as the AO had the power to issue notice only for the income upto 28th Feb., 1997. Therefore, the notice dt. 12th Feb., 1999 is illegal. It was contended that no notice was presented to the assessee by the notice-server. No notice was refused by the assessee nor any notice has been served by the affixture at the address of the assessee by the Inspector of income-tax. The averments made in the assessment order in this regard are false. The assessee has not appointed any advocate, therefore, the service of notice on the advocate, Shri P.D. Shrivastava, is illegal, unauthorised and unwarranted. In fact the AO has not served the notice under Section 158BC or 142(1), therefore, he cannot assume the jurisdiction, and assessment was barred by limitation. The AO failed to appreciate the returns filed by the assessee for the asst. yrs. 1993-94 to 1997-98 and the return for the asst. yrs. 1996-97 and 1997-98 were filed in time. The AO only mentioned in the assessment order that the return was filed to cover the cash of Rs. 3.64 lacs but even then the addition was made not only of the cash found but also Rs. 3.84 lacs being the capital shown by the assessee on 31st March, 1997. Both the assets and liabilities cannot be added together. The registered letters sent by the AO were served on 19th Nov., 1999 prove that the assessment has been framed after 31st March, 1999, therefore, it must be annulled. It was also contended that under the provisions of CPC, service of notice should have been done by sending notice through registered post, The village address reflected in the record and shown in the notice under Section 158BC and under Section 142(1) is the permanent residence of the assessee and it was impossible that no one would have met the notice-server and the Inspector at that place, Thus it was contended that after the receipt of the file returned from ITO, Rewa, the AO overlooked the whole matter and allowed the assessment to get barred by limitation. The assessment was also served on the assessee on 24th Nov., 1999 and for which he asked for the detailed investigation by making the following submissions :
It is submitted that the statements made in the assessment older are totally wrong and false. The assessment records and other relevant material such as notice-server’s book, the claim of travelling allowances by notice-server and Inspector for making travel from Satna to Singrauli and upto the village of the assessee should also be called upon and the mode of travel may be verified and necessary enquiries be made whether the notice-server and Inspector actually travelled upto the village Pathraha, Tehsil Mouganj, District Rewa for affecting service on the assessee. The statement of notice-server, Inspector and witnesses, if any, may kindly be recorded and assessee be allowed an opportunity to cross-examine all of them to bring out the truth. It is also requested that the records of the assessee with AO and the record of Asstt. CIT may kindly be examined to bring out the correct facts. The assessee is submitting an affidavit in confirmation of the facts mentioned above that no notice dt. 12th Feb., 1999 was ever presented to him by the notice-server. There was no service by affixture by Inspector, Shri C.M. Wate. The assessee had not given any letter of authority in respect of block assessment to any advocates in Satna. The IT Act Section 282(1) provides the procedure for service of notice which is based on the rules of service as provided in the CPC. As per Rule 19, O. 5 “for service of summons of the Court” this also provides that apart from service through notice-server a notice should also be sent by registered post AD. This is as per amendment of the CPC in 1976 effective from 1st Feb., 1977. In this case no such notice at all has been sent in time by “registered post AD”, therefore, there is a clear violation of the mandate of Section 282(1), There is no service of any notice as provided in the proviso of Section 144 by affording an opportunity to the assessee by giving a notice calling upon the assessee to show cause on a date and time to be specified that why assessment should not be made ex parte on the basis of his judgment. No such notice was also served on the assessee. This also renders the assessment framed under Section 144 as illegal, In view of the above facts, it is submitted that since the AO has framed the assessment in violation of principle of natural justice and without serving any notice and without allowing hearing to the assessee is illegal and void and should be annulled.
4. Thus, it was contended that the assessment was barred by limitation. The CIT(A) asked for the remand report of the AO which was sent and the copy of the same was given to the assessee. The CIT(A) ultimately took the view that the notice under Section 158BC issued on 12th Feb., 1999 stood served on the assessee by affixture on 16th Feb., 1999. Further the notice dt. 3rd March, 1999 issued under Section 142(1) also stood served on 5th March, 1999 and the assessment under Section 144 was finalised on 31st March, 1999, therefore, the assessment was not barred by limitation. The CIT(A) also observed that the order passed by the AO since was approved by the Jt. CIT, Range-1, Jabalpur, through his letter dt. 30th March, 1999, therefore, it cannot be said that the order was not passed prior to 31st March, 1999.
5. The assessee being aggrieved has come before us by raising the aforesaid grounds. Before us it was contended that :
(a) the learned AO mentioned that notice under Section 158BC dt. 12th Feb., 1999 was sent for service through notice-server. That was returned by notice-server with a note that on 14th Feb., 1999 in Singaurali, the assessee refused to receive the notice. The anomalies in date itself indicate that it is a fabricated note. Thereafter it is alleged that Inspector Shri C.M. Wate was deputed for service of notice who served the notice by affixture at Singaruli. Similarly Section 142(1) notice dt. 3rd March, 1999 is also alleged to have been served by affixture on 3rd March, 1999.
(b) before service of notice by affixture, there has to be satisfaction recorded by the learned AO on the record that the assessee is keeping out of way of service of notice and the learned AO is satisfied that it is necessary to serve the notice by affixture then only a notice can be served by affixture. Inspector has no authority to decide this issue by himself. Before recording such satisfaction, the learned AO has to satisfy himself that proper efforts for personal service of notice were made by the notice-server and other person if any deputed for service. No such exercise was undertaken by the learned AO. The Rule 19A of O. 5 of CPC as amended and effective from 1977 makes it mandatory for the authority to serve a notice by registered post apart from other mode of service. No notice in time was sent through registered post by the learned AO and, therefore, it is violation of the provision contained in CPC.
(c) the assessee has filed an affidavit before the CIT(A) confirming the fact that no notice was presented for service to the assessee nor any notice was served by affixture by IT Department as alleged. There is no counter-affidavit either called by CIT(A) or submitted by any authority to controvert the assessee’s claim made on affidavit.
(d) the CIT(A) had summoned the remand report from the learned AO on assessee’s written submission. The AO in his remand report dt. 17th Oct., 2000, in last para on page No. 1 had admitted that Shri Sanjay Kumar Mishra along with Shri P.D. Shrivastava appeared before him. This clearly establishes that the assessee was not avoiding the learned AO. Why the learned AO could not serve a notice under Section 158BC immediately on the assessee. In fact it was so done but the date was 31st March, 1999. The assessee has enclosed at page No. 6 of the paper book the copy of said notice served on the assessee on 31st March, 1999. The original copy of this notice was later on retrieved by the AO from the possession of the assessee’s counsel Shri P.D. Srivastava. The learned AO later realised that it was the last day for completing the assessment and he had committed an error for serving such notice to the assessee which resulted into his action of retrieval of notice and passing exparte order. The learned AO could not even make an assessment within the time-limit as provided in the Act that is how the noting of notice-server was fabricated for the purpose of service of assessment order also.
(e) the assessee’s correct address was available on the record of the learned AO in the statement recorded by Police authorities and that was as under :
Shri Sanjay Kumar Mishra, Shri Kamlesh Prasad Mishra Village-Patharha, Tehsil and District-Rewa
and
Circuit House Road, C/o Jagjiwan Pathak, Somgarali Bazar, Singarauli
No effort was made to serve the notice on the above correct address by any of the authorities.
(f) the learned AO also did not serve a statutory notice required under Section 144 before making an ex parte assessment as per provision contained in Section 144 allowing time by fixing date and time to show cause that why an ex parte best judgment assessment should not be made. This also renders the assessment illegal and void.
(g) the learned AO did not put the assessment order in motion for service within the stipulated time limitation but it was served to the assessee only on 24th Nov.; 1999 that is almost 8-1/2 months after the alleged date of making the assessment. This establishes that the assessment was barred by limitation.
6. The reliance was placed on the Mowing decisions :
1. Kunj Behari v. ITO ;
2. Jagannath Prasad v. CIT ;
3. CIT v. Ramendra Nath Ghosh ;
4. Venkat Naicken Trust and Anr. v. ITO ;
5. Fatechand Agarwal v. CWT (1974) 97 ITR 701 (Ori).
7. It was further submitted that on the basis of the above decisions along with the O. 5, Rules 12 to 21 of the CPC may kindly be considered in respect of service of notice. Rule 19A provides that apart from service by the normal procedure a notice shall be served through registered post. In this case no notice was ever sent by the registered post to the assessee. Therefore, there is no valid service of notice to the assessee rendering the entire assessment proceeding illegal ab initio and, therefore, the assessment is liable to be annulled. That in the instant case the assessment order has been purported to be made on 15th March, 1999. Here also the record has been fabricated. If the notice-server’s notice is perused it may be seen that he has recorded noting on 3rd April, 1999 then on 4th April, 1999 and again below that on 3rd April, 1999. Such chronology of date is not possible which shows manipulation on the part of the notice-server and the Department. The West Bengal Taxation Tribunal in the case of Mafatlal Industries Ltd. and Anr. v. CTO 101 STC 461 has held that if the assessment order is not put into motion for service before the expiry of limitation so that it goes out of control of the officer so much so that he cannot make any change in the order. If that is not done then it should be treated that the assessment is barred by limitation. Similar view is taken by the Full Bench of Andhra Pradesh High Court in the case of Ushodaya Enterprises Ltd. v. CCT 111 STC 711 (AP)(FB). In this case it is held that delay of 8 months for service remains unexplained. It must be presumed that order is barred by limitation. In the case of State of A.P. v. M. Ramakishtaiah & Co. 93 STC 406 (SC) similar view has been expressed by the Hon’ble Supreme Court that was relied by West Bengal Taxation Tribunal in the case of Mafatlal (supra). The copies of these judgments were submitted before Your Honour in the paper book. The learned AO in his remand report, has not explained the inordinate delay for the service of assessment order. Therefore, it is established beyond doubt that the assessment was framed beyond the limitation period which expired on 31st March, 1999. Hence, on this ground also assessment being barred by limitation is illegal and void.
8. Learned Departmental Representative relied on the order of the AO and submitted that notice was issued under Section 158BC on 12th Feb., 1999 by granting 15 days’ time to the assessee. Since the notice-server could not be able to serve the notice, therefore, Inspector was directed on 15th Feb., 1999 to serve the notice by affixture. The assessee never attended the proceedings, even the notice issued under Section 142(1) was also not complied with. The assessment order was passed under Section 144 on the basis of material available on record. The order was passed within time and, therefore, the order passed is a valid order and cannot be quashed.
9. We have carefully considered the rival submissions and perused the materials on record and also gone through the order passed by the authorities below. From the facts on record we find that the notice under s, 158BC dt. 30th March, 1999 was issued to the assessee which is received by the assessee on 31st March, 1999 and is reproduced as under :
Office of the Asstt. CIT : Circle Satna
Central Revenue Building
Rajendra Nagar : Satna
ITNS : 274
Notice under Section 158BC of the IT Act, 1961
(Requisitioned under Section 132A on 1-3-1997)
GIR No. S-864
Block period comprising of ten previous years
ending on 31st March, 1996 [last of the ten
previous years being previous year (1995-96)
and also including period from 1st April, 1996
to 1st March, 1997] Dated 30th March, 1999
To
Shri Sanjay Kumar Mishra,
S/o Shri K.P. Mishra,
Prop. M/s Mahakaleshwar Trading Agencies,
Singrouli
R/o Vill. Patharaha, Teh-Mouganj,
District : Rewa
In pursuance of the provisions of Section 158BC of the IT Act, 1961, you are requested to prepare true and correct return of your income including the undisclosed income in respect of which you as individual are assessable for the block period mentioned in Section 158B(a) of the IT Act, 1961.
The return should be in the prescribed Form 2B and be delivered in this office within 45 days of service of the notice, duly verified and signed in accordance with the provisions of Section 140 of the IT Act, 1961.
(Shyam Lal)
Asstt. CIT, Circle Satna
Copy of which is available on p. 6 of the paper book. While the assessment order has been passed on 31st March, 1999. We were surprised to note how the assessment order can be passed on 31st March, 1999 when the notice was issued to the assessee on 30th March, 1999 asking him to file the return in Form 2B within 45 days of the service of the notice. To verify this fact we have time and again asked the learned Departmental Representative to produce the original record. The, assessee has alleged that when the AO realised that the notice dt. 30th March, 1999 was wrongly issued the AO created the evidence of.–issuing notice dt. 12th Feb., 1999 getting it served on the assessee through affixture on 15th Feb., 1999. We have asked the learned Departmental Representative to produce the evidence for the service of order on the assessee. The learned Departmental Representative could not be able to produce this evidence but he pointed out that the assessment order was sent to the assessee through registered post only on 24th Nov., 1999. This is a case where the sum of money was requisitioned on 1st March, 1997. Therefore, the assessment order must have been passed by 31st March, 1999. Thus, a natural inference will be that the order under Section 158BC must have been passed after 31st March, 1999 because the notice under Section 158BC was issued on 30th March, 1999 and the order could not be served by the registered post by 31st March, 1999. No doubt under Section 158BC the word ‘passed’ has been used. In our opinion passing of the order does not mean that the order should be drafted, signed and kept by the authority who has passed it. While passing the order, action is to be taken on the basis of the order as inbuilt therein. It is the cardinal principle of the natural law that if an order is passed the parties who are going to be effected must be made known about the order. Therefore, in our opinion the service of the order is imbued with the passing of the order. The order cannot be said to have been passed until and unless it is sent to the party or handed over to a communicating agency so that it becomes difficult for the person who has passed it to withdraw it. Until the order is not communicated to the parties it cannot be said that the order has been passed because the order can be implemented only after it has been communicated. In this case since the Revenue cannot be able to produce any evidence that the order was sent to the assessee in accordance with the provisions of Section 282 prior to 19th Nov., 1999, we are of the firm view that the order passed by the AO was barred by limitation and is liable to be quashed. Our aforesaid view is duly supported by the case law relied on by the learned Authorised Representative.
10. Since the learned Authorised Representative has advanced exhaustive argument on the service of notice, we, therefore, would like to deal with the issue whether the notice has been served on the assessee in accordance with the Section 282 of the IT Act or not. As per provision of Section 282(1) it is provided that a notice or requisition under this Act may be served on the person thereunder named either by post or as if it were summons issued by a Court under the CPC, 1908 (V of 1908). After going through the provisions of the above section, we noted that the notice has to be served on the assessee by post or as if it. were a summons issued by a Court under CPC. If the whereabouts is not traceable, then notice has to be served by affixture as per 0, V of 1908 of CPC. As per order of the AO, the assessee did not receive the notice through notice-server, therefore, he made service through affixture by his Inspector/notice-server.
11. Order 5, 1908, CPC lays down the following rules for the service on the defendant-
Rule 12. Service to be on defendant in person when practicable, or on his agent-Whenever it is practicable, service shall be made on the defendant in person, unless he has an agent empowered to accept service, in which case service on such agent shall be sufficient.
Rule 13, Service on agent by whom defendant carried on business-
(1) In a suit relating to any business or work against a person who does not reside within the local limits of the jurisdiction of the Court from which the summons is issued, service on any manager or agent, who, at the time of service, personally carried on such business or work for such person within such limits, shall be deemed good service.
For the purpose of this rule the mater of a ship shall be deemed to be the agent of the owner or character.
Rule 15. Where service may be on an adult member of defendant’s family- Where in any suit the defendant is absent from his residence at the time when the service of summons is sought to be effected on him at his residence and there is no likelihood of his being found at the residence within a reasonable time and he has no agent empowered to accept service of the summons on his behalf service may be made on any adult member of the family, whether male or female, who is residing with him.
Explanation-A servant is not a member of the family within the meaning of this rule.
Rule 16. Person served to sign acknowledgement-Where the serving officer delivers or tenders a copy of the summons to the defendant personally, or to an agent or other person on his behalf, he shall require the signature of the person to whom the copy is so delivered or tendered to an acknowledgement of service endorsed on the original summons.
Rule 17. Procedure when defendant refuses to accept service, or cannot he found-Where the defendant or his agent or such other person as aforesaid refuses to sign the acknowledgement, or where the serving officer, after using all due and reasonable diligence, cannot find the defendant, who is absent from his residence at the time when service is sought to be effected on him at his residence and there is no likelihood of his being found at the residence within a reasonable time, and there is no agent empowered to accept service of the summons on his behalf, nor any other person on whom service can be made, the serving officer shall affix a copy of the summons on the outer door or some other conspicuous part of the house in which the defendant ordinarily resides or carries on business or personally works for gain, and shall then return the original to the Court from which it was issued, with a report endorsed thereon or annexed thereto stating that he has so affixed the copy, the circumstances under which he did so, and the name and address of the person (if any) by whom the house was identified and in whose presence the copy was affixed.
Rule 19. Examination of serving officer-Where a summons is returned under Rule 17, the Court shall, if the return under that rule has not been verified by the affidavit of the serving officer, and may, if it has been so verified, examine the serving officer on oath, or cause him to be so examined by another Court, touching his proceedings, and may make such further inquiry in the matter as it thinks fit; and shall either declare that the summons has been duly served or other such service as it thinks fit.
Rule 19A. Simultaneous issue of summons for service by post, in addition to personal service-(1) The Court shall in addition to, and simultaneously with the issue of summons for service in the manner provided in Rules. 9 to 19 (both inclusive), also direct the summons to be served by registered post, AD, addressed to the defendant, or his agent empowered to accept the service, at the place where the defendant, or his agent, actually and voluntarily resides or carries on business or personally works for gain :
Provided that nothing in this sub-rule shall require the Court to issue a summons for service by registered post, where, in the circumstances of the case, the Court considers it unnecessary.
(2) When an acknowledgement purporting to be signed by the defendant or his agent is received by the Court or the postal article containing the summons is received back by the Court v/ith an endorsement purporting to have been made by a postal employee the effect that the defendant or his agent had refused to take delivery of the postal article containing the summons, when tendered to him, the Court issuing the summons shall declare that the summons had been duly served on the defendant:
Provided that where the summons was properly addressed, prepaid and duly sent by registered post, AD, the declaration referred to in this sub-rule shall be made notwithstanding the fact that the acknowledgement having been lost or mislaid, or for other reason, has not been received by the Court within thirty days from the date of the issue of the summons.
12. Order 5, Rule 17 of CPC states that where the defendant refuses to sign the acknowledgement, or where the serving officer, after using all due and reasonable diligence, cannot find the defendant and there is no agent empowered to accept service, the serving officer shall affix a copy of the summons on the outer door or some other conspicuous part of the house in which the defendant ordinarily resides or carries on business and shall then return the original to the Court from which it was issued, with a report stating that he has so affixed the copy the circumstances under which he did so and the name and address of the person by whom the house is identified and in whose presence the copy was affixed. In resorting to the method of substituted service under O.5, Rule 20 it is the duty of the Department to discharge its onus by showing that, the authority concerned had reason to believe that the assessee was keeping out of the way for the purpose of avoiding service or that there were other good reasons to come to the conclusion that the summons could not be served in the ordinary way.
13. As per the order of the CIT(A) we find that the Inspector’s report dt. 16th Feb., 1999 appears on the body of the original notice under Section 158BC. This notice states that the notice has been served at the business premises of M/s Mahakaleshwar Trading Agencies, Singrauli, before Kishore Singh and Ram Pratap, residents of Singrauli on 16th Feb., 1999. There are signatures of two witnesses Shri Kishore Singh and Ram Pratap. Rule 17 clearly laid down that notice through affixture should be served after using all due and reasonable diligence. From the report of the Inspector it appears that he has gone once and immediately he has served the notice through affixture. Although names of two witnesses are given but their fathers’ name and their postal address has not been given. The service has to be effected first at the residence of the assessee but the report does not state that the Inspector served the notice at the residence of the assessee. Report only states that during the visit of the Inspector the assessee was out of station and, therefore, the notice was served by affixture at the business premises of the assessee. The assessee has alleged that such a report has been prepared in the office of the AO and no such notice was served by affixture and for that the assessee has asked for the cross-examination of the Inspector and the witnesses and also the statement of notice-server to present the correct fact. The assessee has also submitted the affidavit confirming the fact that no notice was served either through notice-server or by affixture but no opportunity was given to the assessee. In our opinion this is the settled law that the affidavit of the assessee cannot be rejected without cross-examination of the person who has given the affidavit in view of the decision of the Hon’ble apex Court in the case of Mehta Parikh & Co, v. CIT (1956) 30 ITR 181 (SC), The affidavit is the best piece of evidence and CIT(A) in our opinion was not correct in law in rejecting the affidavit without bringing any evidence to the contrary. The CIT(A) was duty-bound to give opportunity to the assessee to cross-examine the Inspector and witnesses for bringing the truth as we feel it was necessary on the facts of the case to render substantial justice and to ascertain the fact whether the notice has been served on the assessee through the notice-server or by affixture.
14. We have gone through the record of the case and asked the copy of the order sheet from the learned Departmental Representative but the learned Departmental Representative did not give us the photocopy of all the order sheets and only the first page was handed over to us. We have also noted from Rule 19A of the CPC, O. 5 that it is mandatory on AO to serve the notice through registered post AD addressed to the assessee along with notice being served personally unless and until the AO did not record the finding that the service of notice through registered post on the facts and circumstance of the case is not necessary. Learned Departmental Representative could not bring any evidence or proof that the notice has been sent to the assessee through registered post. AD nor any evidence has been produced that the AO has given finding that sending of the notice through registered post is not necessary. Even, no such finding has been recorded on the order sheet. From the first page of the order and from the impression of the ink/writing it appears as if the entry dt. 15th Feb., 1999 to 31st March, 1999 has been made at one go. Therefore, we find force in the submission of the learned Authorised Representative that no notice has been served on the assessee prior to 31st March, 1999 and it was only notice issued on 30th March, 1999 the copy of which is available at p. 6 has been served on the assessee for the first time on 31st March, 1999 and since the assessment was getting time-barred, the AO has tried to bring the evidence on record that the notice has been served on the assessee prior to 31st March, 1999. Genuinenity of the photocopy of the notice available at p. 6 of the paper book has not been denied by the learned Departmental Representative in the open Court.
15. We have also gone through the case laws also in this regard. Hon’ble Delhi High Court in the case of R.L. Narang v. CIT (1982) 136 ITR 108 (Del), has held as under :
The above two modes of serve are alternative and it is the option of the Department to adopt either of the two. As regards the former the provisions of Section 27 of the General Clauses Act, 1897, become relevant.
Section 27 of the General Clauses Act, provides that where any Central Act or Regulation authorities or requires any document to be served by post, then unless a different intention is drawn, the serve shall be deemed to be effected properly if a correctly addressed and stamped letter containing the document is dispatched by registered post; and unless the contrary is proved, such a letters would be deemed to have been, delivered in the ordinary course of post. The IT Act is a Central Act and Section 282 provides for service by post. As such the provisions of Section 27 of the General Clauses Act, 1897 are applicable. From perusing Section 27 of the General Clauses Act, it is apparent that, in order to presume service having been effected, the document or letter should’ be sent by registered post. A notice sent under certificate of posting and not by registered post would not amount to proper service.
16. Delhi Bench of Tribunal in the case of Jain Marbles v. IAC (1989) 33 TTJ (Del) 526 held as under :
Rule 19A in O. 5 which lays down that the Court shall, in addition to, and simultaneously with, the issue of summons for service in the manner provided in Rules 9 to 19 also direct the summons to be served by registered post AD. The proviso to Rule 19A(1), however, empowers the Court to dispense with registered post AD serve in appropriate causes, But for that, in the fitness of things a special order in writing may be necessary. Further, there is and can be no presumption in law as to the exact date of service of a notice purported to be sent under registered cover much less any presumption of valid service.
17. Hon’ble Punjab & Haryana High Court in the case of Ramesh Khosla v. ITO (1984) 41 CTR (P&H) 138 : (1985) 154ITR 556 (P&H) held as under :
Under Section 282 of the IT Act, 1961, the IT authorities can adopt any one of the two alternative modes of service of notices, i.e., by post or in the manner provided in the CPC for the service of summons. The words “issue” and “service” are not synonymous, yet in the light of the provisions of Section 114 of the Indian Evidence Act, 1872, and Section 27 of the General Clauses Act, 1897, a notice is deemed to have been served on the addressee if it has been sent through prepaid registered posts or letter. Even in case where the addressee has refused to accept the registered envelope tendered to him by the postman, he is to be imputed with the knowledge of the contents thereof and in spite of that refusal, the notice or the contents of the envelope are to be deemed to have been duly served on the addressee.
18. Hon’ble Onssa High Court in the case of ITO v. Manmohan Lal (1988) 72 CTR (Ori) 109 : (1983) 173 ITR 10 (Ori) held as under:
On a reference to Order 5 of the Code, it appears that Rules 9 to 19 deal with service of summons through a process server, Rule 19 A deals with simultaneous issue of summons for service by post in addition to personal service. Sub-rule (1) thereof makes provision for service of summons by registered post with AD simultaneously with the issue of summons for service in the manner provided in Rules 9 to 19 by a bailiff. According to Sub-rule (2), service of summons by registered post with AD shall be deemed to be sufficient it is delivered either to the defendant or his agent authorised to receive the notice. In case it is refused either by the addressee or by his authorised agent, it will be presumed that the notice has been duly served. According to the proviso below sub-r, (2), if the notice is properly addressed, prepaid and duly sent by registered post with AD, a declaration by the postal employee that the notice was refused shall be presumed even through the acknowledgement slip has been lost or mislaid or for any other reason has not been received by the Court within 30 days from the date of issue of the notice.
19. Hon’ble Calcutta High Court in the case of Keshah Naiayan Banerjee v. CIT (1999) 156 CTR (Cal) 109 : (1998) 101 Taxman 512 (Cal) has held that :
the minimum that was required to (be) shown for establishing proper service by registered post was an endorsement that an attempt was made to serve the assessee and that either he was not available at his residence or that there was no one willing to accept the service on his behalf.
Tribunal, Jaipur Bench in the case of Prakash Chand Lunia v. ITO (1996) 54 TTJ (Jp) 383 : (1996) 56 ITD 1 (Jp) has held that :
Section 27 of the General Glauses Act, 1897, however lays down that if a letter has been duly posted with necessary and address of the addressee thereupon then there may arise a rebuttable presumption to the effect that letter was delivered or tendered to the addressee rebuttable presumption such presumption may come either from the endorsement of the postman himself or through the addressee.
Where the postman has returned the posted letter with the endorsement ‘left’, such endorsement itself suggests that delivery or tender of the letter could not be made on the addressee. The very endorsement itself, thus, would rebut the presumption created under s, 27 of the General Clauses Act, 1897 in favour of the service of the posted letter on the addressee.
20. As observed by the Hon’ble Calcutta High Court in Tripura Modern Bank Ltd. v. Basen & Cross-objection AIR 1952 Cal 781, in the case of service by affixation, it is not sufficient to state in the affidavit of service that the process server was satisfied upon enquiry that the defendant could not be found at his residence within a reasonable time. Facts must be stated in the affidavit to show that enquiries were made and whether it was reasonable under the circumstances to assume that the defendant could not be found at his residence within a reasonable time. The Court must be satisfied that the process server was justified in coming to such a conclusion and in the absence of particulars it cannot do so. CIT v. Hyderabad Deccan Liquor Syndicate (1974) 95 ITR 130 (AP).
21. In case of Kunj Behari (supra), the Hon’ble Punjab & Haryana High Court has held that the condition for service by affixture was not satisfied. Therefore, the service made on assessee were not valid. Hence, the appeal of the assessee was allowed.
22. In the case of Ramendra Nath Ghosh (supra), the Hon’ble Supreme Court has confirmed the order of High Court by holding that on the facts that service of notices was not in accordance with law and, therefore, could not be said that the assessee had been given a proper opportunity to put forward their case, as required by Section 33B of the IT Act. The facts in this case were that the Inspector of income-tax who had to serve notices under Section 33B of the IT Act, 1922, claimed to have served the notices by affixing them on the assessee’s place of business but in his report did not mention the names and addresses of the persons who identified the place of business of the assessees. The assessees, however, claimed that they had closed their business long before the notices were issued. On writ petitions filed by the assessees, the High Court held that there was no proper service on the assessee and the orders of the CIT pursuant thereto could not be sustained.
23. In view of the aforesaid discussion, we are of the view that the notice has not been served on the assessee in this case in accordance with Section 282 of the IT ACL earlier to 31st March, 1999. In the absence of service of notice, the assessment order passed on 31st March, 1999 is a nullity and cannot be sustained in the eyes of law. We, therefore, set aside the order of the CIT(A) on this issue and. annul the order passed by the AO.
24. We have already held that the order passed by the AO is barred by limitation. We cannot direct the AO to make a fresh assessment because that would tantamount to extending the limitation for which we are not competent. Our aforesaid view is duly supported by the decision of the Hon’ble Supreme Court in the case of Hope Textiles Ltd. v. Union of India .
25. In the result, the appeal filed by the assesseo on this issue is allowed.