ORDER

I.P. Bansal, Judicial Member. - A search action under section 132 of the Act was carried out in the case of the assessee on 21-1-1999. Consequently, notice under section 158BC was issued and assessment is framed vide order dated 29-1-2001 vide orders passed under section 158BC of the Income-tax Act, 1961. The assessment order is silent about issuance of notice under section 143(2) and no such objection was taken by the assessee either before the Assessing Officer or CIT(A) that in the absence of notice under section 143(2) the assessment framed under section 158BC cannot be held valid. For the first time the assessee raised this issue by way of an additional-ground before the Tribunal in its appeal against the impugned order of CIT(A) dated 9-7-2001 in respect of block period 1-4-1988 to 25-1-1999. The additional ground raised vide letter dated 1-8-2007 is as under:—

"That under the facts and circumstances, the block asst. proceedings and consequential block assessment order is without jurisdiction in the absence of issuance of mandatory legal notice under section 143(2) of the Income-tax Act."

2. For raising the contention that without issuance of notice under section 143(2) the assessment is invalid, the assessee has placed reliance on the following three decisions:-

(i) Smt. Bandana Gogoi v. CIT [2007] 289 ITR 28 (Gau.).
(ii) Smt. Tulika Mishra v. Jt. CIT [IT(SS) No. 81 (Delhi) of 2003, dated 21-3-2007].
(iii) Gangaour Foods (P.) Ltd. v. Dy. CIT [IT(SS) No. 11 (Delhi) of 2002, dated 15-6-2007].

3. As against that contention of the assessee, it was the contention of the revenue that in view of insertion of section 292BB which is inserted by Finance Act, 2008 with effect from 1st April, 2008, the assessee cannot take the plea that assessment should be held invalid merely for the reason that no notice under section 143(2) was issued and the assessee is barred from taking this plea. It is in these circumstances, the following question was referred to Special Bench for its opinion.

"Whether the assessee who has participated in the block assessment proceedings is precluded from taking any objection that notice under section 143(2) was not served upon him or was not served upon him in time in view of the provisions of section 292BB inserted by the Finance Act, 2008 with effect from 1-4-2008 and if so, since when he can be said to be so precluded."

4. Parties were heard on 11-11-2008 by the Special Bench. The intervenors were represented by Shri Ashwini Taneja and Shri Tarun Kumar, Advocates.

5. Shri Raj Kumar Gupta, CA along with Shri Saurav Rahatgi, CA's who appeared on behalf of the assessee pleaded that the grievance of the assessee is not represented by the question referred to the Special Bench. According to him, as per facts of his case no notice under section 143(2) was issued at all. It was pleaded that issue of notice and service of notice are two separate and distinct things and such distinction has been clearly spelt out in the following decisions:—

1. CIT v. Bhan Textiles (P.) Ltd. [2006] 287 ITR 370 (Delhi);
2. CIT v. Lunar Diamonds Ltd. [2006] 281 ITR 1 (Delhi); and
3. R.K. Upadhyaya v. Shanabhai P. Patel [1987] 166 ITR 163 (SC).

6. Referring to the language of section 292BB, Ld. Counsel pleaded that the said section has no application to the facts of the present case. It was contended that it presupposes the issue of notice under section 143(2) and accordingly there should be an existence of notice itself. He pleaded that to commence the assessment proceedings the issuance of notice under section 143(2) is mandatory and service is a second step. He contended that according to the facts of the case there is no dispute that notice under section 143(2) was never issued and if it is so, the question framed does not cover the controversy existing in the case of the assessee. Reference was made by him to the decision of Hon'ble Gauhati High Court in the case of Smt. Bandana Gogoi ( supra) wherein it has been held that defect of non-issue of notice under section 143(2) in the case of block assessment cannot be cured and such assessment suffers from both procedural as well as jurisdictional error. He further referred to the decision of Hon'ble Delhi High Court in ITA No. 1203/2008 dated 20-10-2008 (name of the appellant as well as the respondent was not mentioned in the copy of order supplied by Ld. AR to us) wherein it has been observed by their Lordships that section 292BB of the Act which is introduced with effect from 1-4-2008 cannot be relied upon to uphold the validity of re-assessment for the two reasons; firstly, the said provision is not applicable to assessment year 2001-02 and, secondly, that the said argument was not at all being raised before the Tribunal.

7. Ld. AR further pleaded that this appeal was heard by the Bench on 17-7-2008 and it was listed for pronouncement on 8-8-2008. He contended that the date of pronouncement is usually fixed when the order is ready in all respects. He contended that the issue regarding applicability of section 292BB was not raised at all during the course of hearing therefore, applicability or otherwise of section 292BB cannot be considered. Thus, it was pleaded by Ld. AR that section 292BB has no application to the facts of the present case and assessment framed in the case of the assessee should be held invalid for the reason that notice under section 143(2) was never issued for framing the assessment under section 158BC.

8. Shri Ashwini Taneja, who appeared on behalf of the interveners pleaded that the provisions of section 292BB are inserted by Finance Act, 2008 with effect from 1-4-2008 and are applicable prospectively and not retrospectively. For contending so he relied upon the following two decisions of ITAT, Delhi:—

(i) Cebon India Ltd. v. Addl. CIT dated 27-6-2008, copy placed at pages 1 to 12 of the paper book. He invited our attention to the following observations :
"7. Coming to the introduction of section 292BB, with effect from 1-4-2008, in the Act, it was argued that the assessee had not participated in the assessment proceedings, which was clear from the fact that the assessment was framed under section 144 of the Act. This provision came into effect from 1-4-2008 and, therefore, was not applicable to the proceedings for assessment year 1996-97. In this connection, reliance was placed on the decision of Hon'ble Supreme Court in the case of Virtual Soft Systems Ltd. v. CIT [2007] 289 ITR 83, dealing with the interpretation of the phrase, "tax sought to be evaded" used in section 271(1)( c), Explanation 4. It was held that unless expressly stated or clearly implied, the amendment in the fiscal statute cannot be taken to be retrospective in nature. Further, reliance was placed on the decision of the Hon'ble Delhi High Court in the case of Shyam Gopal Charitable Trust… v. Director Of Income Tax (Exemption)….) [2007] 290 ITR 99, dealing with the service of notice under section 272(A)(2) of the Act regarding delay in filing the return. The assessee denied the service of notice. There was no finding given by the learned CIT(A) or the Tribunal that the notice in question was actually served on the assessee. Therefore, it was held that the assessee was not served with these notices and consequently was deprived of the opportunity of being heard before the levy of the penalty, which by itself was sufficient to set aside the order of the penalty.
10. Coming to the provisions contained in section 292BB, it is pointed out that the same came into force with effect from 1-4-2008. If it is considered to be a procedural section, its provision will apply where the hearing was conducted on or after 1-4-2008, in which the assessee participated. If it is considered to be a substantive provision, it will apply to the proceedings of the assessment year 2008-09 and subsequent years and not to any earlier year. Therefore, this provision does not advance the case of the revenue."
(ii) Gangour Foods (P.) Ltd.'s case ( supra) wherein following the Hon'ble Gauhati High Court in the case of Smt. Bandana Gogoi ( supra), the assessment was quashed in case where assessment was framed without giving notice under section 143(2). Reference was invited to the following observations:—
"10. It is to be pointed out that no other decision or authority has been brought to our notice by the revenue against the decision of Hon'ble Gauhati High Court in the case of Bandana Gogoi v. CIT ( supra ) and it is a settled legal position that the decision of the Hon'ble High Court is a binding authority which has to be followed by the Income-tax Appellate Tribunal, unless there is any contrary decision of the Jurisdictional High Court. It is to be clarified that there is no other decision of Hon'ble Delhi High Court on this issue, which is contrary to the view taken by the Hon'ble Gauhati High Court nor there is any decision of any other High Court contrary to the decision of Hon'ble Gauhati High Court. Thus, this decision has binding authority and is to be followed. In view of this authority, the block assessment order passed by the Assessing Officer without giving notice under section 143(2) is liable to be quashed.
11. Hence, we quash the assessment order on this ground. Consequently, ground Nos. 1 & 2 taken by the assessee are allowed."

9. He further pleaded that section 292BB is a substantial provision. Initiation of assessment proceedings require issuance of notice under section 143(2) which is a right vested in the assessee and the said right has been taken away by the provision of section 292BB and, thus, in a case where some right has been taken away, the provisions are substantive in nature and they cannot be held to be retrospective unless specifically so stated by the Legislature. He contended that by the introduction of section 292BB, the assessee is precluded from taking a plea which is the right of the assessee and, therefore, this provision cannot be held to be retrospective.

10. Shri Ashwani Taneja further submitted that section 292BB introduced explicitly with effect from 1-4-2008 and therefore, it may be applied only upon those assessment/re-assessment proceedings which are taken up after 1-4-2008. In the present case the assessment proceedings are com-pleted prior to 1-4-2008. The assessee at that point of time was well within its right to challenge service of notice beyond limitation period. When the appeal is pending before the Tribunal, even though the section is intro-duced at a time when the appeal is pending, the effect of such amendment cannot be applied to curtail the right of the assessee of appeal and of taking any objection in this regard. Any such curtailment of vested right cannot be construed to be retrospective especially when new law has been specifically stated to be effected from 1-4-2008. For framing assessment under section 143(3) service of notice under section 143(2) is a precondition. Therefore, service of notice under section 143(2) is vested as well as substantive right and not merely procedural in nature. Only after service of notice the Assessing Officer assumes jurisdiction to frame assessment under section 143(3). He submitted that any amendment in law affecting vested right is always prospective in nature. The Hon'ble Punjab & Haryana High Court in the case of CIT v. Raman Industries [1980] 121 ITR 405 held—

". . . From the above observation it emerges that a statute dealing with procedure is always retrospective and its provisions also apply to the proceedings pending at the time of its enactment but where some provisions of a statute of procedure affect vested rights, these are prospective in operation unless there is an indication in the statute to the contrary. . . ."

11. He further invited our attention to the decision of Hon'ble Supreme Court in the case of Govindas v. ITO [1976] 103 ITR 123 wherein it was observed at page 132 as under:—

"11. Now it is a well settled rule of interpretation allowed by time and sanctified by judicial decisions that, unless the terms of a statute expressly so provide or necessarily require it, retrospective operation should not be given to a statute so as to take away or impair an existing right or create a new obligation or impose a new liability otherwise than as regards matters of procedure. The general rule as stated by Halsbury in Vol. 36 of the Laws of England (3rd Edn.) and reiterated in several decisions of this Court as well as English Courts is that all statutes other than those which are merely declaratory or which relate only to matters of procedure or of evidence are prima facie prospective and retrospective operation should not be given to a statute so as to affect, alter or destroy an existing right or create a new liability or obligation unless that effect cannot be avoided without doing violence to the language of the enactment. If the enactment is expressed in language which is fairly capable of either interpretation, it ought to be construed as prospective only."

12. Reliance was also placed on the following decisions :—

(i) R. Rajagopal Reddy v. Padmini Chandrasekharan [1995] 213 ITR 340 (SC);
(ii) M.G Pictures (Madras) Ltd. v. Assistant Commissioner Of Income-Tax [2003] 263 ITR 83 (Mad.);
(iii) Gem Granites v. Commissioner Of Income Tax, T.N [2004] 271 ITR 322 (SC).

13. Shri Taneja further submitted that if a notice which is required to be served on or after 1-4-2008 and if not so served that notice only can be considered as deemed to have been served under section 292BB of the Act. The proviso restricts the application of section 292BB in a case where assessee raises a question regarding non-issuance/non-service of notice during the course of assessment/re-assessment proceedings. If assessment is completed before 1-4-2008 and as appellate proceedings is continuation of assessment proceedings that as a matter of right assessee could well raise an objection with regard to validity of assessment/re-assessment proceedings during the appellate proceedings. If section 292BB is construed to be retrospectively applicable then such right of the assessee is taken away without express intention of the legislation. It was pleaded that in the case of intervener though the notice under section 143(2) was issued but the same was issued beyond time limit and as assessment order is prior to 1-4-2008, the assessee will be well within his right to challenge the validity of assessment in the ground of non-service of notice under section 143(2) within the limitation period and such right has not been taken away by the legislation.

14. Shri Durga Charan Dash, Ld. CIT, DR pleaded that no format has been prescribed in Income-tax Rules, 1962 for notices under section 143(2) and the format of notice under section 143(2) is non-statutory. Notice in the ordinary sense is to apprise of initiation of some proceedings against specific person to give him an opportunity to explain/defend the action proposed to be taken against such person. If the said person has attended the proceedings and is known of such proceedings then the very purpose of issuance/service of notice is served. In that circumstances it will be wrong to say that principle of "audi alteram parten" is not satisfied. Therefore, non-issuance/service of notice cannot render the assessment/re-assessment invalid but at best it can be a case of irregularity which can be removed. In support of such contention, Ld. CIT, DR relied on the decision of Madras High Court in the case of Areva T & D India Ltd. v. Asstt. CIT [2007] 294 ITR 233 . He submitted that where the invalid assessment is to be set aside, it should be remanded to the Assessing Officer so that the assessee is not set at large without payment of tax as held in the case of CIT v. Analmugan Transports (P.) Ltd. [1995] 215 ITR 553 (Mad.) .

15. He further submitted that where an assessment order is passed without giving notice to the assessee, assessment only vitiated but not warranting annulment as held in the case of C.G.G Panicker v. Commissioner Of Income-Tax [1999] 237 ITR 443 (Ker.) . He further submitted that where the assessee for the first time filed an affidavit before the Tribunal in which it denied receipt of notice under section 143(2), the Hon'ble Delhi High Court held that the presumption of service of notice not being successfully rebutted by the assessee, the Tribunal erred in placing reliance on such belated affidavit as held in the case of CIT v. Bins Overseas (P.) Ltd. [1987] 163 Taxman 95 (sic). The Hon'ble Delhi High Court also held in the case of Commissioner Of Income-Tax… v. Shanker Lal Ved Prakash…. [2008] 300 ITR 243 that burden is on the assessee to prove that there is no service of notice under section 143(2) within time. It was submitted that the liability to tax arises by virtue of charging section alone and the machinery (Procedural) provision cannot be interpreted in such a way as to restrict the scope of charging section. This was held in the case of CWT v. Pachigolla Narasimha Rao [1982] 134 ITR 640 (AP) . The machinery provisions are to be construed in a manner that would not defeat or render the charging provision otiose. The jurisdiction of the Assessing Officer to determine the tax liability arises pursuant to the search conducted under section 132(1) and issuance of notice for framing assessment is only a method prescribed to assess the tax liability in assessment under section 158BC. After completion of search, assessment to be framed under Chapter XIV-B partake the character of procedural or machinery provisions and default in any sequence of procedural provision or irregularity therein would not be fatal to the proceedings per se so as to render the charging section otiose. As regards interpretation of statute with reference to charging provision and machinery provision etc., reliance was placed on the following decisions:-

(1) CIT v. Shrawan Kumar Swarup & Sons [1994] 210 ITR 886 (SC);
(2) Associated Cement Co. Ltd. v. CTO AIR 1981 SC 1887;
(3) Vishwanath Prasad Bhagwati Prasad v. Commissioner Of Income-Tax. [1993] 202 ITR 469 (All.);
(4) Sant Baba Mohan Singh v. Commissioner Of Income-Tax, U.P [1973] 90 ITR 197 (All.);
(5) Kapurchand Shrimal v. CIT [1981] 131 ITR 451 (SC);
(6) Rasik Ramji Kamani v. S.K. Tripathi [1993] 203 ITR 848 (Bom.); and
(7) Commissioner Of Income Tax, Shillong v. Jai Prakash Singh. [1996] 219 ITR 737 (SC).

16. It was also submitted that the presumption against retrospective construction has no application to enactments which affect only the procedure and the practice of the courts as held in the case of CWT v. Man Bahadur Singh [1994] 208 ITR 658 (Raj.) . The appeal before the Tribunal is a continuation of assessment proceedings and hence the assessee who has participated in any proceedings or co-operated in any enquiry related to assessment or reassessment, section 292BB deems that the notice which is required to be served has been duly served. Since no objection was raised before the Assessing Officer, the assessee is precluded from raising such objection now before the Tribunal.

17. It was also submitted that since section 292BB is introduced after the present appeal has been filed, though there is no curtailment of right of appeal, what is curtailed is only raising an objection as regards service of notice and not as regards computation of income. Therefore, there is only limited curtailment of right but such curtailment will apply even to the pending proceedings.

18. Summarizing his arguments Shri Durga Charan Dash submitted that—

(a) Section 292BB is procedural in nature and hence is applicable to all pending proceedings;
(b) That the same would apply to all pending appellate proceedings;
(c) That non-issuance of notice under section 143(2) being a supervening irregularity; however, in view of the participation of the assessee in the assessment proceedings cannot be sought recourse to by assessee in ITAT proceedings to defeat the charging section and administration of justice by thwarting the machinery and is in fact a stalling tactics on part of the assessee as the revenue had granted a fair opportunity to assessee as per audi alteram partem rule;
(d) That in the instant case there has been no prejudice caused to assessee by non issue of 143(2) notice since opportunity of being heard has been granted to the assessee.

19. In reply the learned counsel for the assessee submitted that section 292BB is a deeming provision. The deeming provision cannot be made applicable with retrospective effect and cannot curtail the existing right. The Hon'ble Delhi High Court in ITA 1203/2008 by order dated 20-10-2008 have held that section 292BB introduced with effect from 1-4-2008 is not applicable to assessment year 2001-02. Notice under section 143(2) is a statutory notice though no form is prescribed thereto but is mandatory to be issued and served and that too within the time prescribed as per proviso to section 143(2). When a time limit is prescribed for service of notice, no court or authority has power to extend such time or to presume the service of notice. However, if any such presumption is to be drawn, the same can be only by way of legislative amendment which cannot be made applicable prior to such amendment. If it is considered that the appellate proceeding are continuation of assessment proceedings, the assessee is empowered to raise such objection before such appellate authority and hence in terms of proviso to section 292BB, the deeming provision of section 292BB will not apply.

20. We have carefully considered the rival submissions in the light of the material placed before us. Section 292BB read as under :—

"Section 292BB. Deemed to be valid in certain circumstances.— Where an assessee has appeared in any proceeding or co-operated in any inquiry relating to an assessment or re-assessment, it shall be deemed that any notice under any provision of this Act, which is required to be served upon him, has been duly served upon him in time in accordance with the provisions of this Act and such assessee shall be precluded from taking any objection in any proceeding or inquiry under this Act that the notice was—

(a) not served upon him; or
(b) not served upon him in time; or
(c) served upon him in an improper manner :

Provided that nothing contained in this section shall apply where the assessee has raised such objection before the completion of such assessment or re-assessment."

21. Notes on clauses explaining the aforesaid section read as under :

"Clause 52 seeks to insert a new section 292BB in the Income-tax Act, laying down certain circumstances in which notice shall be deemed to be valid. It is proposed to provide that where an assessee has appeared in any proceeding or co-operated in any inquiry relating to an assessment or re-assessment, it shall be deemed that any notice under any provision of this Act, which is required to be served upon him, has been duly served upon him in time in accordance with the provisions of the Act and such assessee shall be precluded from taking any objection in any proceeding or inquiry under this Act that the notice was, (a) not served upon him; or (b) not served upon him in time; or (c) served upon him in an improper manner.

This amendment will take effect from 1-4-2008".

22. It will also be relevant if the Memorandum explaining the provisions warranting the insertion of above section are also reproduced:—

"Service of notice and the time-limit for issuance of notice under section 143(2) of the Income-tax Act.

Sub-section(2) of section 143 of the Income-tax Act provides that the notice under this sub-section shall be served on the assessee within a period of 12 months from the end of the month in which the return is furnished. Further, the service of such notice must be effected in a manner laid down in sections 82, 283 and 284 of the Income-tax Act, read with General Clauses Act.

Instances have come to the notice of the Department, where notices under sub-section (2) of section 143, though issued by registered post within 12 months from the end of the month in which the return was furnished, have been held "invalid" on the ground that the notice was actually received by the assessee after the limitation date and there was no 'service' as postulated under the section. This is notwithstanding the fact that the assessee has attended the assessment proceedings in response to the notice served on him. Instances have also come to notice where the orders of the Assessing Officer are being quashed on the consideration that there is no evidence of issue or service of notice, even though the assessee and his AR have attended the hearing before the Assessing Officer during the assessment proceedings. Further, the design of the limitation period with reference to the end of the month leads to administrative inconvenience inasmuch as the last day of every month becomes a time-barring date.

In order to address these issues and to reduce litigation, it is proposed to insert a new section 292BB in the Income-tax Act to provide that where an assessee has appeared in any proceeding or co-operated in any inquiry related to an assessment or re-assessment, it shall be deemed that any notice under any provision of this Act has been duly served upon him in time in accordance with the relevant provision of the Act.

Further, such assessee shall be precluded from taking any objection in any proceeding or inquiry under this Act that the notice was,—

(d )not served upon him; or

(e )not served upon him in time; or

(f )served upon him in an improper manner.

Similar amendment is also proposed in the Wealth-tax Act.

Further, it is also proposed to amend clause (ii) of sub-section (2) of section 143 to provide that the notice under sub-section (2) of section 143 shall be served on the assessee within a period of 6 months from the end of the financial year in which the return is furnished. This amendment will take effect from 1-4-2008."

23. It is observed that while in the Memorandum explaining the provisions of section 292BB reference is made to sub-section (2) of section 143, however, the section does not limit its applicability only to notice under section 143(2). The scope of section is that where any assessee has appeared in any proceedings or has co-operated in any inquiry relating to assessment or re-assessment, then the consequences ensued will be that it will be deemed that any notice under any provisions of the Act which is required to be served on an assessee has been duly served on him and it will further be deemed to be served in time and in accordance with the provisions of the Act. The assessee is debarred from taking the defence or raise any objection in any proceedings or inquiry that the notice was—

(a) not served upon him;
(b) not served upon him in time; and
(c) served upon him in any improper manner.

24. Thus, simple reading of the section covers any notice under any provisions of the Act and not just the notice under section 143(2). Section 282 in the same Chapter XIII relates to "service of notice generally". Section 282 read as under:—

"Section 282. Service of notice generally.—(1) A notice or requisition under this Act may be served on the person therein named either by post or as if it were a summons issued by a court under the Code of Civil Procedure, 1908 (5 of 1908).

(2) Any such notice or requisition may be addressed —

(a) in the case of a firm or a Hindu undivided family, to any member of the firm or to the manager or any adult member of the family;
(b) In the case of a local authority or company, to the principal officer thereof;
(c) In the case of any other association or body of individuals, to the principal officer or any member thereof;
(d) In the case of any other person (not being an individual), to the person who manages or controls his affairs."

25. According to section 282 any notice under Income-tax Act has to be served on the person named therein either by post or as if it were a summons issued by a Court under Code of Civil Procedure, 1908 (5 of 1908) (CPC).

26. Order V, Rule 12 of CPC, 1908 provide that where it is practicable service shall be made on defendant in person or on his agent. The relevant Rule 12 read as under:—

"Rule 12. Service to be on defendant in person when practicable, or on his agent—Wherever 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."

27. Order V, Rule 17 of CPC lays down the procedure when the defendant refuses to accept service or cannot be found and it read as under:—

"Rule 17. Procedure when defendant refuses to accept service, or cannot be 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."

28. Order V, Rule 19A provides for simultaneous issue of summons for service by post in addition to personal service and it read as under:—

"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, acknowledgement due, 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 necessary.

(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 with an endorsement purporting to have been made by a postal employee to 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, acknowledgement due, the declaration referred to in this sub-rule be made notwithstanding the fact that the acknowledgement having been lost or mislead, or for any other reason, has not been received by the Court within 30 days from the date of the issue of summons."

As to who are the recognized agents of the parties, the same has been defined in order 3, rule 2 of the CPC, which reads as under :

"Rule 2. Recognised agents.—The recognized agents of parties by whom such appearances, applications and acts may be made or done are—

(a) persons holding power of attorney, authorizing them to make and do such appearances, applications and acts on behalf of such parties.
(b) Persons carrying on trade or business for and in the names of parties not resident within the local limits of the jurisdiction of the Court within which limits the appearance, application or act is made or done, in matters connected with such trade or business only, where no other agent is expressly authorized to make and do such appearances, applications and acts."

29. As per law as it stood before insertion of section 292BB the assessee could raise objections to invalid notices and certain instances of decided cases are as under:—

"(i) It has been held by Hon'ble Calcutta High Court in the case of B.K. Gooyee v. CIT [1966] 62 ITR 109 that the notice under section 34 of Income-tax Act, 1922 (corresponding section 148) should be a valid and legal notice which is required to be signed by the Assessing Officer and if it is not so signed it will make the notice bad and all the proceedings started thereafter would be without jurisdiction. Notice is a condition precedent for assumption of jurisdiction and, thus, is not merely a procedural requirement.
(ii) Hon'ble Punjab & Haryana High Court in the case of Vijay Kumar Jain v. CIT [1975] 99 ITR 349 (P&H) wherein it was held that Assessing Officer has not issued notice under section 148 disregarding a return filed under section 139(4), Tribunal was not justified in refusing to consider the validity of notice under section 148 simply on the ground that the same was not pressed before first appellate authority. Reference was made by Hon'ble High Court to the decision of Hon'ble Supreme Court in the case of CIT v. Kurban Hussain Ibrahimji Mithiborwala 82 ITR 821 wherein it was held that Assessing Officer's jurisdiction to re-open an assessment under section 34 depends upon the issuance of a valid notice and if notice is invalid for any reason the entire proceedings taken by him would be come void for want of jurisdiction.
(iii) In the case of CIT v. Naraindas Dwarkadas 102 ITR 767 (Bom.) it was held by Hon'ble Bombay High Court that the Tribunal was right in taking the view that the notice which have been served for both the assessment years on 2-3-1961 are on the individual non-resident, and not upon the firm of M/s. ND as in that case proceedings for re-assessment are adopted against the firm of M/s. ND without a proper notice as contemplated by section 34, the entire proceedings are ab initio void and orders and re-assessment proceedings passed as a result of such notices are also liable to be set aside.
(iv) In the case of CIT v. Hotline International (P.) Ltd. 296 ITR 333 (Delhi) it was held that there was no valid service of notice under section 148 where it was not tendered to the assessee or his agent nor refused by them, no effort was made by serving officer to locate the assessee before affixation of notice and notice sent by registered post was not accompanied by acknowledgement, hence, re-assessment was bad in law."

30. From the above decisions it can be noted that assessee has a right of being served with the notice in case proceedings are taken against him and in case of invalid notice the whole proceedings taken pursuance to that notice would be void ab initio (subject to provisions of section 292B) and will have no legal consequences. To overcome some of such situations section 292BB has been brought on the statute as explained in the Memorandum explaining the provisions as well as notes on clauses. It has already been pointed out that the applicability of section 292BB is not strictly restricted to issue of notice under section 143(2) but it is in respect of other notices relating to any provisions of the Act which include notice to initiate re-assessment proceedings and other proceedings also.

31. It has been the contention of the Ld. AR that in his case notice was not issued at all. Therefore, there was no question of valid service thereof and, hence, provisions of section 292BB are not applicable. With regard to this contention of Ld. AR, it may be mentioned that if provisions of section 292BB are held to be applicable to the case of assessee, then the question of considering the issuance of notice separately will become irrelevant according to well established rule of interpretation explained by Hon'ble Supreme Court in the case of Commissioner Of Income Tax, Delhi v. S. Teja Singh [1959] 35 ITR 408 . It will be relevant to reproduce the following observations of their Lordships from the said decision:—

"It is in the light of this distinction that the effect of the legal fiction enacted in section 18A(9)(b) that when a person fails to send an estimate of tax on his income under section 18A(3) he shall be deemed to have failed to furnish return of his income, will have to be judged. The respondent contends that its effect is only to place the estimate to be sent under section 18A(3) on the same footing as the return under section 22 for purposes of section 28, and that does not abrogate the other conditions laid down in that section on which alone action could be taken thereunder and penalty imposed, and one of those conditions is the issue of notice under section 22(1) or section 22(2). But it must be noted that section 18A(9)(b) does not merely say that an estimate under section 18A(3) shall be deemed to be a return. It enacts that the failure to send an estimate in accordance with section 18A(3) is to be deemed to be a failure to make a return. Now, there can be no failure to make a return, unless notice had been issued under section 22(1) or section 22(2) and there has been a default in complying with that notice. Therefore, the fiction that the failure to send an estimate is to be deemed to be a failure to send a return necessarily involves the fiction that notice had been issued under section 22, and that had not been complied with. It is a rule of interpretation well settled that in construing the scope of a legal fiction it would be proper and even necessary to assume all those facts on which alone the fiction can operate. The following oft-quoted observations of Lord Asquith in East End Dwellings Co. Ltd. v. Finsbury Borough Council may appropriately be referred to :

'If you are bidden to treat an imaginary state of affairs as real, you must surely, unless prohibited from doing so, also imagine as real the consequences and incidents which, if the putative state of affairs had in fact existed, must inevitably have flowed from or accompanied it. One of these in this case is emancipation from the 1939 level of rents. The statute says that you must imagine a certain state of affairs: it does not say that having done so, you must cause or permit your imagination to boggle when it comes to the inevitable corollaries of that state of affairs.

The fiction under section 18A(9)(b ) therefore, that failure to send an estimate under section 18A(3) is to be deemed to be a failure to send a return must mean that all those facts on which alone there could be a failure to send the return must be deemed to exist, and it must accordingly be taken that by reason of this fiction, the notices required to be given under section 22 must be deemed to have been given, and in that view, section 28 would apply on its own terms." [Emphasis supplied]

32. From the above observations of their Lordships of Apex Court, it is clear that when construing a deeming provision full effect must be given to the statutory fiction. It should also be carried to its logical conclusion. To that end it would be proper and even necessary to assume all those facts on which alone the fiction can operate. Because of that principle only it was held by their Lordships that "all those facts on which alone there could be a failure to send the return must be deemed to exist, and it must accordingly be taken that by reason of the fiction, the notice required to be given under section 22 must be deemed to have been given and in that view section 28 would be applicable on its own terms." It has, therefore, to be followed that in a situation when the statute says that you must imagine certain state of affairs; it does not say that having done so, you must cause or permit your imagination to boggle when it comes to the inevitable corollaries of that state of affairs. Therefore, where the statute under section 292BB deems service of notice, it will always include issue of notice as service cannot be effected without issuance thereof. Thus, the argument of Ld. AR that unless there exist issuance of notice, service thereof cannot be presumed or deemed and section 292BB will not be applicable, cannot be accepted and has to be rejected.

33. No doubt the issue of notice as well as service of notice is a procedural section, but when the same has time limitation, the obligation of the Department to issue notice within a prescribed time become the right of the assessee to receive that notice in time to validly commence the proceedings and validly completing the same.

34. Their Lordships of Hon'ble Supreme Court in the case of H.V. Thakur v. State of Maharashtra AIR 1994 SC 2623 (at page 2641) have culled out the following principles of interpretation after considering the various cases decided by Hon'ble Supreme Court and have observed that these principles are illustrative though not exhaustive which will cover the ambit and scope of amending Act and its retrospective operation :—

"(i) A statute which affects substantive rights is presumed to be prospective in operation, unless made retrospective, either expressly or by necessary intendment, whereas a Statute which merely affects procedure, unless such a construction is textually impossible is presumed to be retrospective in its application, should not be given an extended meaning, and should be strictly confined to its clearly defined limits.
(ii) Law relating to forum and limitation is procedural in nature, whereas law relating to right of action and right of appeal, even though remedial, is substantive in nature.
(iii) Every litigant has a vested right in substantive law, but no such right exists in procedural law.
(iv) A procedural Statute should not generally speaking be applied retrospectively, where the result would be to create new disabilities or obligations, or to impose new duties in respect of transactions already accomplished.
(v) A Statute which not only changes the procedure but also creates a new rights and liabilities, shall be construed to be prospective in operation, unless otherwise provided, either expressly or by necessary implication."

35. The Hon'ble Supreme Court in the case of Maharaja Chintamani Saran Nath Shahdeo v. State of Bihar AIR 1999 SC 3609 observed as follows:—

"22. In Garikapatti Veeraya v. N. Subbiah Choudhury, 1957 SCR 4888 : (AIR 1957 SC 540), the Chief Justice S.R. Das speaking for the Court observed as follows (at p. 553 of AIR) :—

'The golden rule of construction is that, in the absence of anything in the enactment to show that it is to have retrospective operation, it cannot be so construed as to have the effect of altering the law applicable to a claim in litigation at the time when the Act was passed.'

23. We may also refer to Francis Benion's Statutory Interpretation, 2 Edn., at p. 214 wherein the learned author commented as follows :

'The essential idea of a legal system is that current law should govern current activities. Elsewhere in this work a particular Act is likened to a floodlight switched on or off, and the general body of law to the circumambient air. Clumsy though these images are, they show the inappropriateness of retrospective laws. If we do something today, we feel that the law applying to it should be the law in force today, not tomorrow's backward adjustment of it. Such, we believe, is the nature of law. Dislike of ex post facto law is enshrined in the Untied States Constitution and in the Constitutions of many American States, which forbid it. The true principle is that Lex prospicit non-respicit (law looks forward not back). As Willes, J. said, retrospective legislation is contrary to the general principle that legislation by which the conduct of mankind is to be regulated ought, when introduced for the first time, to deal with future acts, and ought not to change the character of past transactions carried on upon the faith of the then existing law'."

36. In para 24 their Lordships have referred to the above mentioned decision of the Apex Court in the case of H.V. Thakur (supra) and principles of interpretation laid down therein.

37. Now, we will proceed to examine the present issue in the light of principles of interpretations laid down in the above mentioned two cases decided by Hon'ble Supreme Court.

38. First and foremost rule of construction of interpretation is that in the absence of anything in the enactment to show that it is to have retrospective operation, the said enactment cannot be construed to have retrospective operation and when amendment relates to a procedural provision results into creating a new disability or obligation and which imposes new duty in respect of transactions already completed, then, the said procedural provision also cannot be applied retrospectively. Similar is the position where a statute which not only changes the procedure, but also creates a new rights and liabilities which shall be construed to be prospective in operation unless otherwise provided either expressly or by necessary implication.

39. Now, we proceed to examine that whether section 292BB can be construed to be retrospective in the light of the above principles. It is also observed that section 292BB has been made effective by the Legislature from 1st April, 2008 and there is nothing in the enactment to show that section 292BB has retrospective operation. If it is so, according to Rule of Interpretation described above, section 292BB cannot be construed retrospectively.

40. According to above mentioned principles laid down by the Hon'ble Supreme Court, every litigant has a vested right in substantive law, but no litigant has such right in procedural law. No doubt, issue and service of notice though may relate to procedural law, but where procedural statute creates a new disability or obligation and imposes new duties in respect of transactions already accomplished, then the statute cannot be construed to have retrospective effect.

41. It has already been pointed out that issue and service of notice in the manner prescribed by the statute has played a vital role in determining the validity or otherwise of assessment/reassessment and other proceedings under the Act and where the courts have found defect either in the notice or in its proper service, the validity of assessment/reassessment and other proceedings have been struck down by the Courts subject, of course, to section 292BB of the Act introduced with effect from 1-10-1975. Thus, to challenge the validity of a particular action of the Department of making assessment or re-assessment on the basis of invalidly issuance/service of notice had become right of litigant assessee during the course of appellate proceedings even though such contention was never raised during the course of assessment proceedings. Instances of striking down the validity of assessment and reassessment proceedings have already been discussed in the earlier part of this order. By insertion of section 292BB such right of the assessee to challenge the validity of assessment or re-assessment proceedings during the course of appellate proceedings has been taken away by the statute with effect from 1-4-2008. It is also observed that the issue and service of notice relates to procedural law, but, at the same time, it created a new disability on the assessee litigant to the extent that he is debarred from taking a plea in the appellate proceedings to challenge the validity of the same on the ground of valid issuance/service of notice required to be given by the statute in a case where assessee has appeared in such proceedings or cooperated in the inquiry relating to assessment or reassessment. Therefore, applying the above principles of interpretation and keeping in view above discussion it has to be held that section 292BB cannot be construed to have retrospective operation and it has to be applied prospectively.

42. Having arrived at the conclusion that section 292BB has no retrospective effect and is to be construed prospectively, it has to be held that prior to 1-4-2008 i.e., upto 31-3-2008, as per section 292BB, the assessee is not precluded from taking any objection ('such objection') regarding invalidity of assessment/re-assessment on the ground of improper/invalid issuance/service of a notice.

43. The second aspect which requires to be considered is that when assessee can be said to be precluded from taking such objection section 292BB has been made applicable with effect from 1-4-2008 by the Finance Act, 2008. As per well established law as explained by Hon'ble Supreme Court in the case of Karimtharuvi Tea Estate Ltd. v. State Of Kerala [1966] 60 ITR 262 (which is a decision rendered by five Judges of Supreme Court) that the Income-tax Act as it stands amended on the first day of any financial year must apply to the assessments of that year. The facts in that case were that for assessment year 1957-58 the company was assessed to agricultural income-tax under. The Kerala Agricultural Income-tax Act, 1950 and in the assessment surcharge @ 5 per cent on the agricultural income-tax and super tax was levied and collected from the assessee under the provisions of Surcharge Act. The levy of surcharge was agitated by the assessee on the ground that Surcharge Act came into force only from 1-9-1957 and, therefore, it does not have retrospective effect and surcharge could not be levied for assessment year 1957-58. Such contention of the assessee was rejected by the Assessing Officer as well as by the first appellate authority. However, the Tribunal held that surcharge could not be levied as Surcharge Act did not have retrospective operation unless there was a specific provision therein to that effect and the question of law was referred to Kerala High Court to state that whether surcharge could be levied for assessment year 1957-58. The Hon'ble High Court decided the question in favour of the Revenue and, thus, the matter went to Hon'ble Supreme Court and their Lordships of Hon'ble Supreme Court have observed that the law is well settled that the Income-tax Act as it stands amended on the first day of April of any assessment year must apply to that assessment year. Any amendment in the Act which come into force after the first day of April of an assessment year, would not apply to that assessment year, even if the assessment is actually made after the amendments come into force. Their Lordships referred to the earlier decision of Apex Court in the case of CIT v. Scindia Steam Navigation Co. Ltd. [1961] 42 ITR 589 in which similar proposition of law was laid down while interpreting section 10(2)(vii) and proviso (iv) and section 66(1), (2) and (5) and in the said case it was held that the proviso though came into force on 5-5-1946 could not be made operative from 1-4-1946 and, therefore, no retrospective effect could be given to that provision by accepting the contention of the Revenue. In that case the Revenue has sought to apply proviso for assessment year 1946-47 despite the fact that the proviso had come into force from 5-5-1946 and it was held that the proviso is not retrospective and it was held that the court cannot import into its construction matters which are 'ad extra legis' and thereby alter its true effect. It will be relevant to reproduce the observations of their Lordships from the said decision.

"It is well settled that the Income-tax Act, as it stands amended on the first day of April of any financial year must apply to the assessments of that year. Any amendments in the Act which come into force after the first day of April of a financial year, would not apply to the assessment for that year, even if the assessment is actually made after the amendments come into force.

In Scindia Steam Navigation Co. Ltd. v. Commissioner of Income-tax a Division Bench of the Bombay High Court consisting of Chagla C.J. and Tendolkar J., has considered the question as to the effect of an amendment which came into force after the commencement of the financial year. The fact in that case were these. The assessee's ship was lost as a result of enemy action.

The Government paid the assessee in 1944 a certain amount as compensation which exceeded the original cost of the ship. The Income-tax Officer included the difference between the original cost and the written down value of the ship in the total income of the assessee for the assessment year 1946-47. The Tribunal upheld that decision and referred the question, whether the sum representing the difference between the original cost and the written down value was properly included in the assessee's total income computed for the assessment year 1946-47. It was argued that the fourth proviso to section 10(2)(vii) of the Income-tax Act (inserted by the Amendment Act of 1946 with effect from May 4, 1946) under which the inclusion of the amount was justified by the department, had no application to the case.

The learned judges held that as it was the Finance Act of 1946 that imposed the tax for the assessment year 1946-47, the total income had to be computed in accordance with the provisions of the Income-tax Act as on 1-4-1946; that as the amendments made by the Amendment Act of 1946 with effect from 4-5-1946, were not retrospective, they could not be taken into consideration merely because the assessee was assessed after that date and that the assessee was not liable to pay tax on the sum because the fourth proviso to section 10(2)(vii) of the Income-tax Act under which it was sought to be taxed was not in force in respect of the assessment year 1946-47."

44. If the present issue is considered in the light of the above decision of Hon'ble Supreme Court, then, it has to be held that section 292BB is applicable to assessment year 2008-09 and subsequent years. Therefore, answer to the second aspect of the question is that assessee is precluded from taking such objection for and from assessment year 2008-09.

45. Summarising our findings we hold as follows:—

(i) Section 292BB even if it is procedural it is creating a new disability as it precludes the assessee from taking a plea which could be taken as a right, cannot be construed retrospectively as the same is made applicable by the statute with effect from 1-4-2008.
(ii) Section 292BB is applicable to the assessment year 2008-09 and subsequent assessment years.

46. Now the matter will be placed before the regular Bench to decide the appeals in regular manner.