2017 (9) TMI 969 - AT - Income Tax

Validity of assessment u/s 144 - notice u/s 143(2) was not served at correct address - Held that - In view of the frequent change in addresses, the assessee was required to inform the Assessing Officer to record the changes in his address. The Income Tax Department has provided the facility of change of address in Permanent account Number Database through form No. 49A and the assessee can request for change of jurisdiction of the Assessing Officer in view of the change address or place. In view of rival assertion on the issue of the known address of the assessee, it is important to know whether the assessee provided the address at which notice was served by the Assessing Officer i.e. U- 51/384, DLF-III, Qutab Enclav, Gurgaon in PAN data base or it is the mistake on the part of the Assessing Officer in mentioning the correct address. After verification of the above facts, the CIT-(A) is directed to adjudicate the issue of validity of service of notice. If he finds notice of service as valid, then he is directed to decide the issue on merit of the addition also. It is needless to mention that assessee as well as Assessing Officer shall be afforded adequate opportunity of being heard. The grounds of appeal are accordingly allowed for statistical purpose.

Issues Involved:
1. Validity of service of notice under section 143(2) within the statutory time.
2. Acceptance of the remand report by the CIT(A).
3. Legitimacy of the assessment under section 144.
4. Unlawful order and demand based on alleged whimsical and baseless addition.

Issue-Wise Detailed Analysis:

1. Validity of Service of Notice under Section 143(2) within the Statutory Time:

The appellant contended that the notice under section 143(2) was not validly served within the statutory time frame. The notice dated 30.11.2009, served with a wrong PAN number, was not received within 12 months from the filing of the return, which was due by 31st October 2008. The initial notices were sent to incorrect or incomplete addresses, which were confirmed during inspection. The Tribunal examined whether the notice was served at the proper address as per the PAN database or if there was a mistake by the Assessing Officer. The Tribunal directed the CIT(A) to verify the address in the PAN database and the physical existence of the address, and to examine the Inspector who served the notice.

2. Acceptance of the Remand Report by the CIT(A):

The appellant argued that the CIT(A) erred by accepting a vague remand report from the ACIT, which did not address the challenge regarding the addresses where the notices were allegedly served. The CIT(A) concluded that the notice was served both by speed post and affixture at the address "U-51/384, DLF-III, Qutab Enclave, Gurgaon," and also at the business premises. However, the Tribunal noted the need for verification of whether the address was ever provided by the assessee in the PAN database or any prior assessment proceedings.

3. Legitimacy of the Assessment under Section 144:

Due to non-compliance by the assessee, the Assessing Officer completed the assessment under section 144, making an addition of ?2,20,76,705/- to the returned income. The appellant claimed that the assessment under section 144 was void ab initio due to the invalid service of notice. The Tribunal directed the CIT(A) to adjudicate the validity of the service of notice and, if found valid, to decide on the merits of the addition.

4. Unlawful Order and Demand Based on Alleged Whimsical and Baseless Addition:

The appellant contended that the CIT(A) unlawfully justified the first notice dated 30.11.2009 and confirmed the assessment and consequent demand of ?99,37,760/-. The Tribunal found that the frequent change in addresses by the assessee required informing the Assessing Officer to record the changes in his address. The Tribunal restored the issue to the CIT(A) for further enquiry and verification of the address details and the connection of the assessee with the address where the notice was served.

Conclusion:

The Tribunal allowed the appeal for statistical purposes, directing the CIT(A) to carry out detailed verification regarding the address and service of notice, and to adjudicate the validity of the notice. If the notice is found valid, the CIT(A) should decide on the merits of the addition. The decision was pronounced in the open court on 15th September 2017.

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