2024 (9) TMI 791 - HC - Income Tax

Assessment passed u/s 148 and Penalty u/s 271(1)(c) - no assessment order was served on the assessee by the ITO, no notice un/s 143(2) and 143(1) was served on the assessee and no notice u/s 271 (1)(c) was served - HELD THAT - PAN jurisdiction over the assessee was transferred to ITO, Ward 5(2), Kolkata from ITO Ward 46(1), Kolkata vide order dated 21st January, 2014. There after, the ITO, Ward No.5(2), Kolkata merged with the ITO, Ward 5(1), Kolkata. In the order u/s 127 department admits that the address of the appellant/assessee is mentioned as 22, BRB Basu Road, Canning Street, 1st Floor, Room NO.14, Kolkata 700001. Thereafter, the affidavit proceeds to state the further steps taken and in sub- paragraph (e) it is stated that notice u/s 148 was issued by ITO, Ward 5(2), Kolkata on 31st March, 2016 and the service of the said notice was made by affixation by departmental inspector on 31st March, 2016 at the address 37, Abani Dutt Road, 1st Floor, Howrah 711106. As evident that despite the department being aware of the change of address, the notice u/s 148 has been served by affixing in the old address. This is sufficient to hold that the proceeding, which was taken ex parte is not sustainable in law. For the above reasons, the appeal and the connected application are allowed. Consequently, the writ petition is allowed, the order passed u/s 148 and the consequential proceedings are set aside and the mater is restored to the file of the assessing officer.

Issues:
1. Challenge to assessment under Section 148 of the Income Tax Act and penalty under Section 271(i)(c).
2. Failure to serve assessment order and notices under various sections to the assessee.
3. Appeal against the order passed under Section 148 and consequential proceedings.
4. Direction to serve notice under Section 148 at the correct address.
5. Lack of adequate opportunity for the assessee to present its case.
6. Application of law prevailing at the time of initiation of the proceeding.

Detailed Analysis:
1. The appeal challenged the assessment under Section 148 of the Income Tax Act and the penalty imposed under Section 271(i)(c). The appellant contended that no notice under Section 147 or Section 148 had been received, and no assessment order or penalty notice had been served, questioning the validity of the penalty imposition.

2. The department filed an affidavit-in-opposition to clarify the factual position. It was revealed that despite a change in the assessee's address, the notice under Section 148 was served at the old address, rendering the ex parte proceeding unsustainable in law. The court emphasized the importance of providing the assessee with an opportunity to present their case.

3. The appeal and the connected application were allowed, setting aside the order under Section 148 and the consequential proceedings. The matter was remanded to the assessing officer with directions to serve the notice under Section 148 at the correct address within a specified timeframe, allowing the assessee to respond and ensuring a fresh order passed on merits and in accordance with the law.

4. The court noted that the penalty demand notice was served through email, but emphasized that the department was aware of the change in the assessee's address. This awareness highlighted the lack of adequate opportunity for the assessee to present its case effectively, reinforcing the need for proper service of notices and orders.

5. The judgment highlighted the importance of compliance with the directions provided within the specified timeframe, ensuring that the assessee receives a fair opportunity to respond and present their case effectively.

6. Lastly, the court clarified that since the proceeding was initiated under the pre-amended Section 148 of the Act, the law prevailing at that time would apply to the case, emphasizing the retrospective application of the relevant legal provisions.

This detailed analysis of the judgment addresses the issues raised in the appeal, focusing on the failure to serve notices and orders correctly, the importance of providing the assessee with an opportunity to present their case, and the application of the relevant legal provisions in the case at hand.

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