2019 (10) TMI 785 - SC - Income Tax

Section 143(2) assessment notices sent to PAN database addresses remain valid despite assessee address changes without PAN updates

The SC held that assessment notices under Section 143(2) sent to addresses in the PAN database are valid even when the assessee has changed address ... Validity of assessment under Section 143(3) where notice under Section 143(2) is issued to PAN database address - Service of notice and sufficiency of issuance within proviso period to Section 143(2) - Obligation to intimate change of address and update PAN database for service of notices - Effect of filing Form 18 with Registrar of Companies as intimation to the Assessing OfficerValidity of assessment under Section 143(3) where notice under Section 143(2) is issued to PAN database address - Service of notice and sufficiency of issuance within proviso period to Section 143(2) - Obligation to intimate change of address and update PAN database for service of notices - Whether the assessment for A.Y. 2006-07 was vitiated by non-service of notice under Section 143(2) where the notice was issued within the proviso period to the address in the PAN database despite the assessee having changed its address. - HELD THAT: - The Court held that the Assessing Officer issued the notice under Section 143(2) within the time prescribed by the proviso and did so by sending it to the address available in the PAN database. The assessee failed to prove any specific intimation of change of address to the Assessing Officer; the alleged communication dated 06.12.2005 was not produced and was stated to be unavailable. Filing Form 18 with the Registrar of Companies does not, by itself, constitute intimation to the Assessing Officer or substitute for updating the PAN database. Notices under Section 143(2) are generated by the Department's automated system that picks the address from the PAN database; therefore a change of address requires an application to the Department to change PAN records. In these circumstances issuance of the notice to the PAN database address within the proviso period satisfied the statutory requirement and actual subsequent service became immaterial. The High Court and lower authorities erred in setting aside the assessment solely on the ground that actual service occurred beyond the proviso period. [Paras 6, 7, 9]Notice issued within the proviso period to the address in the PAN database was sufficient; the assessment order cannot be held invalid on the ground that actual service occurred later.Effect of filing Form 18 with Registrar of Companies as intimation to the Assessing Officer - Whether the matter should be remitted for consideration of other grounds on merits which were not decided by the learned CIT(A). - HELD THAT: - The Court found that the learned CIT(A) set aside the assessment solely on the procedural ground relating to service of notice and therefore did not decide other substantive grounds raised by the assessee on merits. In the interest of adjudicating all contentions, the Court quashed and set aside the impugned orders and remanded the matter to the learned CIT(A) for consideration of the remaining grounds in accordance with law. [Paras 9, 10]Matter remanded to the learned CIT(A) to decide the appeal on the other grounds on merits.Final Conclusion: The appeal is allowed: the High Court, ITAT and CIT(A)'s orders setting aside the assessment for A.Y. 2006-07 on the ground of non-service beyond the proviso period are quashed and set aside; the assessment is not vitiated where the notice under Section 143(2) was issued within the proviso period to the PAN database address and the matter is remanded to the CIT(A) to decide remaining grounds on merits. Issues Involved:1. Validity of the assessment order under Section 143(3) of the Income Tax Act, 1961.2. Compliance with notice requirements under Section 143(2) of the Income Tax Act, 1961.3. Change of address notification to the Assessing Officer.4. Jurisdiction of the Assessing Officer under Section 143(2) of the Income Tax Act, 1961.Issue-wise Detailed Analysis:1. Validity of the assessment order under Section 143(3) of the Income Tax Act, 1961:The respondent-assessee filed a return of income for the Assessment Year 2006-07, which was processed under Section 143(1) of the Income Tax Act, 1961. The Assessing Officer completed the assessment under Section 143(3) on 24.12.2008, making a disallowance and computing the total income. The assessee challenged the assessment order on the grounds of jurisdiction, arguing that notices under Sections 143(2) and 142(1) were not served within the prescribed time, rendering the assessment invalid.2. Compliance with notice requirements under Section 143(2) of the Income Tax Act, 1961:The Assessing Officer issued a notice under Section 143(2) on 05.10.2007 to the address available in the PAN database. The assessee contended that the notice was not served at the correct address, as they had moved to a new address. The subsequent notices were served beyond the limitation period prescribed under the proviso to Section 143(2), leading to the argument that the assessment order was invalid.3. Change of address notification to the Assessing Officer:The assessee claimed to have informed the Assessing Officer about the change of address via a communication dated 06.12.2005. However, this communication was not produced before the Assessing Officer or the Court. The only document available was Form No.18 filed with the Registrar of Companies, which does not constitute an official intimation to the Assessing Officer. The Court held that filing Form 18 with the ROC is insufficient for notifying the Assessing Officer of a change in address.4. Jurisdiction of the Assessing Officer under Section 143(2) of the Income Tax Act, 1961:The Court concluded that the Assessing Officer was justified in sending the notice to the address available in the PAN database, as there was no formal intimation of the change of address. The notice issued on 05.10.2007 was within the prescribed period, and thus, the assessment order could not be invalidated on this ground. The Court emphasized that mere filing of a return with a new address is not enough; the assessee must specifically inform the Assessing Officer and update the PAN database.Conclusion:The Supreme Court set aside the judgments of the High Court, C.I.T (Appeals), and I.T.A.T., which had held the assessment order invalid. The case was remanded to the C.I.T (Appeals) to consider the appeal on other grounds. The Court underscored the necessity for the assessee to formally notify the Assessing Officer of any change in address and to update the PAN database accordingly. The appeal by the Revenue was allowed, and the assessment order was reinstated for reconsideration on its merits.