Why summon to a 3rd person

Sunil (Trader) (2611 Points)
Replied 09 December 2009

What you did wrong was put a refusal on the initial notice. That itself implied you know the person and he may have given your address for communication. When anyone does like this you should simply put 'NO SUCH PERSON' when returning summons. Refusal implies you know the addressee. You may have also accepted previous communications from Mutual Funds on his behalf. You ought to have returned them undelivered.

Now you send a letter to the AO as per addresses on the notice affixed. You write a simple few lines without agitation as follows:-

1) Your office pasted notices u/s ___ addressed to Mr. _______ PAN Number________.

2) This person _________ is not living and never lived in our premises.

3) I am the owner / tenant of the premises and living in these premises continuously since _____.

4) At no point of time have I or any of my family members let out / sublet or authorised this person to use my address for any communications.

I therefore request you to withdraw these notices from premises and deliver them to this person at his address. Your action has caused me a lot of social embarassment and I request you to help me in regaining my self esteem by removing these notices and ensuring that I am not put up with this embarassment in future.

Due to your brother or other family members accepting any statements in these premises from MF, ITD will continue its correspondence here and attach your property for recovery of its dues from your friend. This is basically an illegal action against you to make you pressurise your friend to settle the dues. You will have to go through hassles of legal and paper work to get the attachment void. The TRO or AO is not accountable for his actions even if they are illegal and wrong and may cause you harm. They have immunity against all their actions during course of assessment and recovery of tax whether their action is right or wrong.

A.K.Agrawal (Investments & Finance) (132 Points)
Replied 10 December 2009

Thank you Sunil. Amazing, out of so many CAclub members IT experts, only a trader person facing problems frequently, could reply.

All notices were actually not accepted previously by saying to the postman / IT inspector that we do not know this person & he does not live here.

Should I send a copy of request, as you suggested, to Public Grievaces CBDT.

Sunil (Trader) (2611 Points)
Replied 11 December 2009

You can send a copy of whatever you write to the AO to the CBDT.

What actually happened in your case is that your friend may have taken a copy of the notice bearing your address personally from the AO. Normally every person going to the department office is very highly stressed and do not realise implication of what they are doing. AOs also try to make all action look legal. They have the acceptance of the assessee on the copy of the notice that bears your address. AOs also are very tricky in such matters and they sweet talk the person into signing many things. This is exactly what has happened in your case. AO took an acknowledgement on the copy of the notice by sweet talk and your address has now got recorded as your friends address. The AO may not have even taken signature of your friend on any process sheets and is making out a case of non response of the assessee. Officers Government Departments also resort to such tricky actions. Whenever you go there, if you do not have the ability to maintain a cool frame of mind, always have someone accompany you (maybe employee) whose specific task is to read or understand implications of whatever documents you accept and acknowledge.

Whenever I have personally accepted a notice with bearing an old address I always add a remark 'Address changed. Change notified by letter dated ______'. this way AO has to take cognizance of new address and correspond there rather than correspond at old address. Otherwise all notices keep going there and one find day you get an exparte order. Your friend has not done this and it is problem for both of you. You will have to ensure your friend represents himself properly and you should have a copy of his letter to department of his change of address. Now the AO has tricked your friend and is trying to buildupa case for an exparte order. His performance is also reviewed and appraised and he wouldnot like to have an undisposed matter of overseas person who take the excuseof being abroad for not attending. Therefore AO is trying todispose matters exparte locally so as far as his performance is concerned with his superiors,there is a disposal of a case. Your friends acceptance of notice at the dept office is sufficient for AO to write in the order 'Notice u/s___ was duly served on the assessee on _______. For all you know, he may have sweet talked your friend into accepting back dated or your friend in assuming cooperation may not have dated acknowledgement at all.

A.K.Agrawal (Investments & Finance) (132 Points)
Replied 11 December 2009

General nature querry - In case any NRI giving any local address of his known / friend / relative in india as temporary, address in his investments done from his own NRE accounts & does not comply to tax issues in india or is not appearing in time due to not obtaining leave or salary loss from his employer abroad, or any other reason, whether known / friend / relative persons are in any manner liable for NRE own actions, non complaince or liability ,etc.? If yes, under which section?

Sunil (Trader) (2611 Points)
Replied 11 December 2009

Ref to Section 163 that clearly indicates that the agent or the employee of a non-resident are responsible for compliance of the non-resident for Income Tax Act 1961.

In your case you are not knowing whether your brother consented to NRI using your address. Whether it was consented due to an ongoing friendship, business or any relationship from which he derived any mileage. In your case, as you had not consented to giving the address, what you had to do was at worst write to AO that person is not known to youand there is no such person and NEVER informed your friend of the notice. Informing your friend regd. the notice has caused problem to you as he went and represented in reply to the notice. Had you not informed and written to the department of the non existence of the person, they would have just continued having an unserved notice and the onus would have been on them to find the person. They would have attacked the mutual fund company to find out the basis of the address being given and would have informed you accordingly if there would have been any evidence of your brother allowing use of addresss. If your brother may have given any consent in writing that would have also surfaced up and you would have had the plea of having no knowledge of the particular person as your brother is no more.

Now the AO would possibly be having one correctly served notice in record and that to on your address. With a locally available address that he knows will inform the overseas person, he will continue process locally and he has the powers to rightly or wrongly attach your property to recover dues of your friend. You will have to work hard on getting the attachment vacated but right now if you do not put anything on record, later when you approach the court to have attachment vacated, they will ask you where you were all the time while the process was in progress. You should have some evidence of having communicated the fact to the government.

This is the very common problem. People allow friends going abroad use of address without understanding repurcussions due to gaining social or business mileage. When such problems happen, they do not want the friend to suffer also because of the relationship. In such matters, you cannot think of protecting the friend also and at the same time being left unharmed. The AO / TRO can rightly assume that the assessee is having some interest by ownership or tenancy in the premises on record and you will have to prove otherwise and that is really not going to be easy for you.

As a trader I have knowledge of such matters because I have seen many people get into similar problems. The CAs in this forum would be very professional in their work and no professional would allow the matter to go out of hand the way your friend's matter has gone out of hand to such an extent. In fact they avoid taking cases of such persons who will not pay suitably for professional help to get matters sorted out. By my experience,people like your friend try to get as much work done for very little from professionals.

kabirsen (student) (251 Points)
Replied 11 December 2009

no person can be treated as an agent unless a notice has been served by the depptt treating a person as an agent.

also only following person can be treated as an agent.

1.an employee.

2.person who has businees connection with the nri.

3.trustee of nri

4.a person frm whom a non resident directly/indirectly receives any income.

clearly mr agarwal u do not fall in any of the category. so u can be treated as an agent.plz consider the following cases

case1

if the depptt is serving u notices treating u as an agent.

then, mr agarwal, u will have to reply to the notice to the satisfaction of the a.o. otherwise he will be entitled to pass order u/s 163 treating u as an agent.

case2

if depptt has already served the order...then only remedy is to file ab appeal to cit(A) u/s 246. order u/s 163 is an appeallable order.

case3

and if ao. has served the order u/s 163 treating u as an agent w/o serving a proper show cause notice then order is null and void and has no existence in law.

Sunil (Trader) (2611 Points)
Replied 12 December 2009

Kabirsenji, Mr. Agarwal is not being treated as an agent and he cannot be treated as an agent. If he is then he has the remedies as mentioned by you.

His problem is that his friend's case is somehow recorded on his address and is being built up towards an exparte order. After that happens then demands and recovery procedures follow and TROs start all coercive measures. Normally a person is always stressed when facing a tax officer or tax recovery officer. The latter normally are rough and resort to action that could be illegal but they have immunity. They attach properties on assumption that the possession of the property is in the hands of the person on whom demand is served. They just paste notices and you cannot remove them.

Long time backI had this problem on a property which I had taken on leave and license basis where the TRO practically asked me to vacate and taking inventory of things inside like computer, typewriters,table and chair so he could place his lock and seal. This was for a demand on a previous licencee of the landlord and both landlord and I had to face a lot of inconvenience at that time. He made the landlord deposit some a challan against a demand on his tenant. Therefore I never ignore anything that comes wrongly to my place. If I receive even a post addressed to someone else in my letter box, I immediately communicate to sender that there is no such person at my premises and I will take legal action and claim compensation if he continues to send any communication to my address. If someone fabricates a proof and gives to anyone it is a crime. Remember that it is an equal crime to act on a fabrigated or false / forged document and you can really hammer a person other than a Government Agency who acts on a false or fabricated document.

What I am cautioning Mr.Agarwal to be careful of is that illegal action can be taken against him only to get him to influence his friend to pay. Department officers are immune for consequences of such actions. They dont even apologise. The mistake was already made to inform the friend of such proceedings. The friend has regularised all proceedings and probably given a waiver of notice period. Being connected to people who goon employment overseas and taking any responsibility of theirs is normally dangerous as these people always make excuse of not being abletocome back to India to handle their matters if they find it too inconvenient. You should dothis only for someone very close to you.

A.K.Agrawal (Investments & Finance) (132 Points)
Replied 13 December 2009

Thanks Sunil & Kabirsen for sparing so much time & efforts for giving opinions & sharing my problems.

Emotional status: NRI’s Father was a renowned freedom-fighter. NRI was an officer in Indian navy. During 1971 war, he got severe burns, so had to leave job on medical grounds. Being a mechanical engr. later on he got a suitable job overseas. We had regards for them. Iam not comfortable to expose or to encash our ancestor’s similar devotion to our nation. Mostly all nationals are patriots & devotated to their nation in some or other way. We are not exceptions.

Taxation is must to run the nation & to curb inflation. Tax is a small matter for the people inclined to devote their lives for their nation. We are paying taxes willingly. Some times more than our self assessments, on agreed basis too.

Problem starts when the dept. acts against their own slogans that “ Taxpayers are honourable persons” , & “ Bharo tax karo relax” & even then takes illogical & illegal measures. Some Aos told me-

“Persons sitting before me are all cheaters & dishonest.”
“Why to listen your explanations & discuss the case? I give in writing & take in writing. You go to the appeal.” (Whereas he himself writes on the order sheet that the case was discussed!!)
I was called over phone to attend his office & told “ Your case has come under scrutiny, what do you want?” I asked for querries. He told that firstly he would take permission from CIT then will send notice. (Then what for this call was?)

What to do in such cases ? This is defamation & rude statements, full of different meanings.

Legal status: We do not come under purview of sections 159 & 163,so can not be held representative or agent of NRI. So I think there is no other room left for them to act legally? To achieve their revenue taget, they can enhance tax rates, but their law implementation should be logical, lenient & decent.

Sunil (Trader) (2611 Points)
Replied 13 December 2009

You cannot be held as an agent of the NRI. Only having your address on record will invoke an assumption that you could be having some landlord tenant relationship and may have received a consideration for allowing your address. Maybe you could be having a deposit from the person for use of premises. This is what they usually attacked on. If an exparte order is passed against your friend, you will have a little inconvenience when March 31 is round the corner and the TROs are under pressure to fulfil their recovery targets. Targets given in all departments are usually very stiff. However, I do not know the situation of today when the department collects proof of identity and address before entering even a change in address.

If someone furnishes to you a fabricated proof of address and you act based on it, for you the crime is as bad as dealing in stolen goods. However, if department issues a PAN against a fabricated proof, the person making the mistake is not accountable. That is the difference between government officers resorting to illegal actions. You do anything illegal, you are a criminal. They do it, they are smart and using their best judgement.