2023 (11) TMI 707 - HC - Income Tax

Reopening of assessment u/s 147 - appellant/revenue did not issue a notice u/s 143(2) - assessee had objected to the notice u/s148 being directed to the old address - belated return of income filled - HELD THAT - The notice issued under Section 148 of the Act to the respondent/assessee, was, indeed, directed to its old address even though the AO had been intimated, that there had been not only a change in the physical address of the respondent/assessee but also its email ID. Furthermore, the appellant/revenue had directed the intimation issued under Section 143(1) of the Act, concerning AY 2013-14, to the new address. This occurred even though the ROI, filed for AY 2013-14 on 01.08.2013, bore the old address. The reason, perhaps, was that the AO was already aware of the address change. Tribunal has also recorded a finding of fact that the new address was available in the record of the AO. The AO had in his record the screenshot of the material available with the MCA indicating a change of address. The argument advanced on behalf of the appellant/revenue that, as per Section 292BB, Section 148 notice would be deemed as served on the respondent/assessee as it did not object to it during the assessment proceedings is misconceived as perusal of the reply would show that, amongst other aspects, the respondent/assessee had objected to the notice under Section 148 being directed to the old address - Since the objection was taken before the completion of the assessment/reassessment proceedings, in our opinion, the provision of Section 292BB would have no application. Consequences of the failure of the appellant/revenue to issue notice under Section 143(2) of the Act before framing the assessment order - Concededly, the appellant/revenue did not issue a notice under Section 143(2) of the Act, although it had on record the ROI filed by the respondent/assessee for the AY in issue, i.e., 2010-11. The return was, concededly, filed on 04.12.2015. This return was considered while framing the assessment under Section 147/144 of the Act. The only reason furnished for not issuing a notice u/s 143(2) of the Act is that the ROI was not filed within the thirty (30) days provided via the notice dated 30.03.2015 issued under Section 148. This argument does not impress us because if we were to hold as we have , that the said notice was directed towards the wrong address, the respondent/assessee could have not adhered to the timeline provided in the said notice. Therefore, in our opinion, before framing an assessment order, the AO ought to have issued a notice under Section 143(2) of the Act. The submission advanced on behalf of the appellant/revenue that, while it could consider the invalid return while framing the assessment order, it was not obliged to issue a notice under Section 143(2) of the Act because it was not filed within the timeframe given in the Section 148 notice is untenable in law, since the ROI, which was belated, was considered by the AO while carrying out the assessment. As for the foregoing reasons, which are i) that notice under Section 148 of the Act was improperly served, and ii) that notice under Section 143(2) should have been issued before framing of assessment order u/s 147/144 of the Act, we are not inclined to interfere with the impugned order passed by the Tribunal. Decided in favour of assessee.

Summary

Issues Involved:
1. Whether the notice dated 30.03.2015 issued under Section 148 of the Income-tax Act, 1961 was served at the correct address of the respondent/assessee.
2. Whether the appellant/revenue was obliged to mandatorily serve a notice under Section 143(2) of the Act before passing the assessment order dated 28.03.2016 under Section 147/144 of the Act.

Summary:

Issue 1: Service of Notice under Section 148
The court examined whether the notice dated 30.03.2015 was served at the correct address. The respondent/assessee had informed the appellant/revenue about the change of address on 14.03.2014. Despite this, the notice was issued to the old address. The Tribunal found that the new address was available in the records of the AO, including a screenshot from the Ministry of Corporate Affairs (MCA) website. The appellant/revenue argued that service was effectuated via affixation at the old address and relied on Section 292BB, which deems service if the assessee does not object before the completion of assessment proceedings. However, the court noted that the respondent/assessee had objected to the service at the old address in its reply dated 16.03.2016, making Section 292BB inapplicable.

Issue 2: Requirement of Notice under Section 143(2)
The appellant/revenue did not issue a notice under Section 143(2) before passing the assessment order, arguing that the ROI was filed beyond the 30-day period stipulated in the Section 148 notice. The court found this argument unconvincing, noting that the ROI was considered while framing the assessment order. The absence of a Section 143(2) notice constituted a jurisdictional defect, rendering the assessment order invalid. The court cited multiple precedents, including Principal Commissioner of Income-tax v. Shri Jai Shiv Shankar Traders (P.) Ltd., affirming that failure to issue a Section 143(2) notice is fatal to the reassessment proceedings.

Conclusion:
The Tribunal's findings were upheld on both issues. The notice under Section 148 was improperly served, and the failure to issue a Section 143(2) notice before framing the assessment order was a jurisdictional defect. Consequently, the appeal was closed with no substantial question of law arising for consideration.