2017 (2) TMI 582 - HC - Income Tax

Invalid service of notice under Section 143(2) renders assessment void. Correct address crucial.

The High Court held that the notice under Section 143(2) of the Income Tax Act was not validly served within the prescribed time limit, rendering the ... Service of notice under Section 143(2) of the Income Tax Act - limitation for service of notice (one year from end of month of filing return) - effect of incorrect addressing on deemed service by post - presumption under Section 27 of the General Clauses Act regarding service by post - protection under Section 292BB of the Income Tax ActService of notice under Section 143(2) of the Income Tax Act - limitation for service of notice (one year from end of month of filing return) - effect of incorrect addressing on deemed service by post - presumption under Section 27 of the General Clauses Act regarding service by post - protection under Section 292BB of the Income Tax Act - Whether the notice under Section 143(2) was validly served within the prescribed period so as to sustain the assessment for AY 2006-07 or whether the assessment is void for want of service within time. - HELD THAT: - The Tribunal found that the statutory requirement of service of a notice under Section 143(2) within one year from the end of the month in which the return was filed (return filed 20th November, 2006; limitation expired 30th November, 2007) was not complied with. The Assessing Officer handed an envelope to the post office on 30th November, 2007 but it was addressed to the assessee's old address; the correct address was already on record by the assessee's intimation dated 23rd November, 2006. Because the notice was wrongly addressed, the deeming presumption in Section 27 of the General Clauses Act-that service by post is effected when properly addressed, prepaid and posted-cannot be invoked. The subsequent posting to the correct address occurred on 11th December, 2007, after the limitation date. Further, since the assessee objected to the assessment on the ground of non-service within time before completion of assessment, the assessment cannot be saved by Section 292BB. On these factual findings, which the Tribunal recorded and which the court finds not shown to be incorrect, the notice was not served at the correct address on or before the limitation date and the resulting assessment is therefore void. [Paras 6, 9, 10, 11]The Tribunal's finding that the notice under Section 143(2) was not served at the correct address within the prescribed period is upheld; the assessment for AY 2006-07 is void.Final Conclusion: No substantial question of law arises; the appeal is dismissed and the assessment for Assessment Year 2006-07 stands quashed as based on a notice not served within the prescribed time. Issues:Challenge to order under Section 260A of the Income Tax Act, 1961 for Assessment Year 2006-07. Interpretation of Section 143(2) regarding notice service and limitation period.Analysis:The High Court was presented with the issue of whether the service of notice under Section 143(2) of the Income Tax Act was justified in this case. The respondent-assessee had changed their address, informing the Assessing Officer on 23rd November, 2006. However, the notice under Section 143(2) was sent to the old address on 30th November, 2007, and later to the correct address on 11th December, 2007. The Tribunal held that the notice should have been served within 12 months from the date of filing the return, which was not done in this case. The Court agreed that the notice served at the old address did not meet the statutory requirements, rendering the assessment proceedings void.The Revenue argued that the notice given to the post office on 30th November, 2007 should be considered as the date of service to the assessee, but the Court found that the notice was incorrectly addressed to the old office. The Court referred to Section 282 of the Act and Section 27 of the General Clauses Act, stating that the presumption of service by post could not be invoked due to the incorrect address. The subsequent correct service on 11th December, 2007 was based on the information already available with the Assessing Officer since 2006, and no new address was provided in the interim. As the objection to the assessment was raised before completion, the Assessment Order could not be saved by Section 292BB of the Act.The Court upheld the Tribunal's decision, emphasizing that the notice under Section 143(2) was not served at the correct address within the prescribed time limit, making the assessment proceedings invalid. The judgment concluded that no substantial question of law arose, and the appeal was dismissed without costs.