2016 (7) TMI 186 - AT - Income Tax

Reopening of assessment - notice sent on incorrect address - Held that - It is undisputed fact that the notice u/s. 148 of the Act dated 22.3.2011 which is foundation stone of reassessment proceedings u/s. 147, was issued at an incorrect address due to mistake attributable to the AO and could not be served upon the assessee within the statutorily prescribed time of 6 years and even thereafter, before the order of reassessment was passed. Therefore the reassessment proceedings are bad in law and deleted the addition. - Decided in favour of assessee.

Summary

Issues Involved:
1. Validity of reassessment proceedings under Section 147 of the Income Tax Act.
2. Deletion of addition of ?38,01,030/- without deciding the matter on merits.
3. Validity of notice issued under Section 148 of the Income Tax Act.

Issue-wise Detailed Analysis:

1. Validity of reassessment proceedings under Section 147 of the Income Tax Act:
The Revenue contended that the reassessment proceedings were valid. However, the Ld. CIT(A) found that the notice under Section 148, which is the foundation of reassessment proceedings, was issued at an incorrect address. The assessee had shifted from the old address and had duly informed the income tax authorities about the change. The notice was not served within the prescribed time limit, making the reassessment proceedings invalid. The Tribunal upheld this view, citing that the reassessment proceedings were "bad in law" due to the improper service of notice.

2. Deletion of addition of ?38,01,030/- without deciding the matter on merits:
The Ld. CIT(A) deleted the addition made by the AO on the grounds that the reassessment proceedings were invalid. Since the reassessment itself was held as bad in law, the addition made during such proceedings could not be sustained. The Tribunal agreed with this reasoning, noting that the addition could not stand if the foundational reassessment notice was defective.

3. Validity of notice issued under Section 148 of the Income Tax Act:
The notice under Section 148 was issued at an old address despite the assessee having informed the authorities of the new address. The Ld. CIT(A) noted that the AO admitted the mistake but still proceeded with the reassessment. The Tribunal found that the notice was not served within the statutory time limit and cited several judicial precedents, including the Delhi High Court's decision in CIT vs. Eshaan Holding (P.) Ltd., which held that reassessment proceedings are null and void if the notice is not served at the correct address. The Tribunal concluded that the notice was defective and could not be cured under Section 292BB, as the assessee had consistently objected to the validity of the notice.

Conclusion:
The Tribunal upheld the Ld. CIT(A)'s order, confirming that the reassessment proceedings were invalid due to the defective notice under Section 148. Consequently, the addition of ?38,01,030/- was rightly deleted. The appeal filed by the Revenue was dismissed, and the order was pronounced in the open court on 01/07/2016.