Assessment void where mandatory notice under s.143(2) not served; deemed service under s.292BB inapplicable, appeal allowed
ITAT-DEL held the assessment void because the mandatory notice under s.143(2) was never served-it was sent to an incorrect postal and email address and returned-so the AO lacked jurisdiction to proceed. The tribunal found no valid alternative notice issued before the cutoff, rendering deemed service under s.292BB inapplicable. Consequently the assessment completed without a jurisdictional notice was set aside and the taxpayer's appeal was allowed.
ISSUES PRESENTED AND CONSIDERED
1. Whether assessment framed under section 143(3) is valid where notice under section 143(2) was not served on the assessee (service by speed post returned undelivered and email sent to incorrect domain)?
2. Whether attendance/cooperation by the assessee in assessment proceedings invokes section 292BB to cure any defect in service of notice under section 143(2), when the assessee had objected to non-service before completion of assessment?
3. Whether the Assessing Officer was obliged to take second steps to re-serve notice under section 143(2) after the initial notice was returned undelivered and an attempt to email failed?
ISSUE-WISE DETAILED ANALYSIS - Issue 1: Validity of assessment when notice u/s 143(2) not served
Legal framework: Section 143(2) prescribes the service of a notice to enable assessment proceedings; service of that notice within the proviso period is a jurisdictional requirement for framing assessment under section 143(3).
Precedent treatment: The Court relied on the decision holding that where the notice under section 143(2) remained unserved and no valid subsequent service was effected within the limitation period, assessment is invalid. The decision in Mascomptel (Delhi High Court) was followed insofar as it held that failure to serve notice at the correct address available on record vitiates assessment.
Interpretation and reasoning: The Tribunal examined facts showing (a) speed-post notice dated 23.09.2013 sent to an old physical address and returned undelivered, and (b) an email copy sent to an incorrect email domain (mail.com instead of gmail.com), making actual service nonexistent. The Assessing Officer's record confirmed that delivery status of the email was not available and that the notice was addressed to a wrong address/email. Given the jurisdictional nature of service, mere issuance without valid service cannot sustain an assessment.
Ratio vs. Obiter: Ratio - where notice under section 143(2) is not actually served (returned undelivered and email not delivered), the Assessing Officer lacks jurisdiction to complete assessment under section 143(3). Obiter - observations about practical steps for notice affixture or departmental practices are ancillary.
Conclusions: The assessment framed without valid service of notice u/s 143(2) was quashed for want of jurisdiction. The assessee's ground on non-service was allowed.
ISSUE-WISE DETAILED ANALYSIS - Issue 2: Applicability of section 292BB where objection to non-service was raised before completion
Legal framework: Section 292BB deems a notice to be duly served where the assessee has appeared or cooperated in proceedings, but contains a proviso that the deeming provision does not apply if the assessee raised objection to service before completion of assessment.
Precedent treatment: The Tribunal followed the line of authority which interprets section 292BB as dispensing with the requirement of service (not the issue) of notice where the assessee participates, but the proviso negates the deeming effect if objection to non-service is raised before completion. The Pune Bench decision (Anil Kisanlal Marda) was followed to the extent that an objection raised and not disposed of by the AO prevents section 292BB from curing the defect.
Interpretation and reasoning: The assessee raised objection to non-service before completion of assessment proceedings (recorded reply dated 30.10.2013 and objection before the AO). Because the objection was raised prior to completion and the AO did not adjudicate that objection, the proviso to section 292BB applied to negate the deeming effect. The Tribunal emphasized that section 292BB does not dispense with the statutory requirement of issuance when issuance itself is not established; but here actual service was lacking and objections were timely made.
Ratio vs. Obiter: Ratio - where a timely objection to non-service is made before completion and not disposed of, section 292BB's deeming provision cannot be invoked to validate service; consequently, assessment cannot be sustained. Obiter - remarks on distinction between issue and service in other factual permutations.
Conclusions: Section 292BB did not validate the proceedings because the assessee had objected to non-service before completion and the AO failed to dispose of that objection; therefore, the deeming provision was inapplicable.
ISSUE-WISE DETAILED ANALYSIS - Issue 3: Duty of AO to take further steps to re-serve notice after non-service
Legal framework: Where an initial attempt at service fails (returned undelivered), principles of reasonableness and authorities interpreted as requiring the revenue to take further steps to effect service on the latest address known to the department within the limitation period.
Precedent treatment: The Tribunal relied on precedent holding that when a notice is returned unserved, the AO must attempt re-service on the latest address available in the return or departmental records before the cut-off date; failure to do so renders the assessment invalid.
Interpretation and reasoning: Facts established that the Assessing Officer was aware of the assessee's latest address/email from the returned ITR and used the email provided in the ITR (though incorrectly typed). The Tribunal considered that once the latest address is known to the AO, he is obliged to serve notice at that address; when initial service failed, the AO should have taken reasonable second steps to re-serve within the statutory time. The AO did not effect valid re-service within the proviso period, and the attempt to email to an incorrect domain could not be treated as service.
Ratio vs. Obiter: Ratio - if initial service attempts fail, the AO must, within the limitation period and guided by available departmental information (including address in the return), take further steps to effect valid service; failure to do so invalidates subsequent assessment. Obiter - procedural suggestions for the form and timing of "second steps."
Conclusions: The AO failed in the duty to re-serve valid notice after the initial attempt failed; this reinforced the conclusion that assessment was without jurisdiction and had to be set aside.
Additional reasoning - Distinguishing other authority relied upon by Revenue
Interpretation and reasoning: The Tribunal distinguished the decision relied upon by Revenue (where an associate accepted the notice at the PAN-address) on the factual ground that, unlike that case, here no valid service was effected either by post (returned) or by email (wrong domain). Thus the precedent was not applicable and did not cure the jurisdictional defect.
Ratio vs. Obiter: Ratio - factual distinctions that negate applicability of authorities that validate service where accepted at departmental address; such precedent cannot be stretched to validate defective service where neither postal nor electronic delivery occurred.
FINAL CONCLUSIONS
1. The assessment under section 143(3) was quashed for lack of jurisdiction because notice under section 143(2) was not duly served (speed post returned undelivered and email sent to an incorrect domain), and no valid re-service was completed within the limitation period.
2. Section 292BB did not validate the proceedings because the assessee had raised an objection to non-service before completion of the assessment and the objection was not disposed of by the Assessing Officer.
3. The Assessing Officer was under an obligation to take further steps to re-serve the notice on the latest address known from the return; failure to do so compelled setting aside the assessment. Consequently, the assessee's appeal was allowed and the Revenue's appeal dismissed.
TaxTMI 
AI Drafter ✕
TaxTMI 
