TaxTMI 
TaxTMI 
2022 (4) TMI 531
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....d in 2011 and new address was available with the AO when notice was issued. 1.3 The learned CIT(A) has erred in holding that the service of notice u/s. 148 at wrong address by affixture inspite of Notice Server's report that the assessee does not stay at the given address is a valid service. 2 The learned CIT(A) has erred in holding that the disposal of objections raised by the assessee to the reasons recorded at the time of reopening is not must and it does not hold the assessment bad. 3 That the learned CIT(A) has erred in holding that the AO acquired valid jurisdiction even if he does not issue notice u/s. 143(2) after the assessee files return in response to notice u/s. 148. 4 The learned CIT(A) is not justified in conforming the addition of Rs. 22,00,000/- made by the AO. 5. Any other ground which may be raised at the time of hearing." 2. Succinctly stated, on the basis of information available with the A.O. that the assessee had purchased 22,000 shares of Lakhanpal Designs Pvt. Ltd., Ghaziabad for a consideration of Rs. 22 lac, the case of the assessee was reopened u/s. 147 of the Act. Notice u/s. 148, dated 11.03.2015 was i....
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....3(3), dated 30.03.2016 before the CIT(A). Before the CIT(A), the assessee assailed the validity of the jurisdiction that was assumed by the A.O. for reopening his case u/s. 147 of the Act, inter alia, on the ground that Notice u/s. 148 was not validly served upon him. It was claimed by the assessee, that it was only when the counsel of the company, viz. M/s. Lakhanpal Designs Pvt. Ltd., Ghaziabad of which he was a shareholder, was informed by the A.O. about the reassessment proceedings that were initiated in the case of the assessee, it was only then, that the said counsel had after getting the necessary instructions from the assessee participated in the assessment proceedings, and had after obtaining the copy of the 'reasons to believe' on the basis of which the assessee's case was reopened filed his objections as regards the validity of the reassessment proceedings. Apropos the objections filed by the assessee in the course of the assessment proceedings, it was submitted by him that the A.O. had failed to dispose off the same by way of a speaking order. Also, it was the claim of the assessee that the impugned assessment order, i.e., u/s. 148 r.w.s. 143(3), dated 30.03....
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....ejudice to his claim that the A.O. had wrongly assumed jurisdiction u/s. 147 of the Act, therein, assailed the sustainability of the assessment order passed by him u/s. 148 r.w.s. 143(3), dated 30.03.2016, i.e., in the absence of issuance of a Notice u/s. 143(2) of the Act. Apart from that, the assessee assailed the merits of the addition of Rs. 22 lac made by the A.O. 6. Backed by the aforesaid claim of the assessee, the CIT(A) called for a 'remand report' from the A.O. In reply, the A.O. rebutting the assessee's claim that the Notice u/s. 148, dated 11.03.2015 was sent at a wrong address, viz. 1-B, Guru Teg Bahadur Nagar, Jalandhar, therein stated, that as the assessee on an earlier occasion had in compliance to summons that were issued to him at the aforesaid address by the ADIT(Inv.), Jalandhar, had attended the proceedings before the said officer, therefore, it was incorrect on his part to now claim that the very same address to which the Notice u/s. 148, dated 11.03.2015 was addressed was an incorrect address. It was further stated by the A.O., that the assessee in his reply dated 26.11.2011 that was filed in the course of the proceedings before the ADIT(Inv.),....
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....he orders of the lower authorities and the material available on record, as well as considered the judicial pronouncements that have been pressed into service by them in their attempt to drive home their respective contentions. Controversy involved in the case before us lies in a narrow compass, i.e., whether or not the Notice u/s. 148, dated 11.03.2015 had validly been served upon the assessee? Admittedly, the answer to the aforesaid issue would have a strong bearing on the sustainability of the assessment in hand. As noticed by us hereinabove, it is the claim of the assessee that as the A.O. without exercising his diligence as regards verifying the whereabouts of the assessee, had despite having been informed by the notice server vide his report that no person by the name as that of the assessee was residing at the property to which the aforesaid Notice u/s. 148, dated 11.03.2015 was addressed, without putting up any efforts to locate the whereabouts of the assessee, which he could have easily gathered by going no further but referring/consulting the assessment records of the assessee, had however, most arbitrarily by way of an idle formality, or, in fact, an eye wash, got the No....
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.... A.O. is prescribed in Sec. 149 of the Act. For the sake of clarity Sec. 149 (relevant extract) is culled out as under: "149(1) No notice under section 148 shall be issued for the relevant assessment year,-- [(a) if four years have elapsed from the end of the relevant assessment year, unless the case falls under clause (b) [or clause (c)]; (b) if four years, but not more than six years, have elapsed from the end of the relevant assessment year unless the income chargeable to tax which has escaped assessment amounts to or is likely to amount to one lakh rupees or more for that year;] [(c) if four years, but not more than sixteen years, have elapsed from the end of the relevant assessment year unless the income in relation to any asset (including financial interest in any entity) located outside India, chargeable to tax, has escaped assessment.] Explanation.--In determining income chargeable to tax which has escaped assessment for the purposes of this sub-section, the provisions of Explanation 2 of section 147 shall apply as they apply for the purposes of that section.]." Insofar the mode and manner of service of a notice issued under S....
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....vailable in the PAN database of the addressee; or (ii) the address available in the income-tax return to which the communication relates; or (iii) the address available in the last income-tax return furnished by the addressee; or (iv) in the case of addressee being a company, address of registered office as available on the website of Ministry of Corporate Affairs: Provided that the communication shall not be delivered or transmitted to the address mentioned in items (i) to (iv) where the addressee furnishes in writing any other address for the purposes of communication to the income-tax authority or any person authorised by such authority issuing the communication: [Provided further that where the communication cannot be delivered or transmitted to the address mentioned in items (i) to (iv) or any other address furnished by the addressee as referred to in first proviso, the communication shall be delivered or transmitted to the following address: (i) the address of the assessee as available with a banking company or a co-operative bank to which the Banking Regulation Act, 1949 (10 of 1949) applies (including any bank or banking....
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....is 'remand report' [filed before the CIT(A)], the assessee in the course of the proceedings before the ADIT(Inv.), Jalandhar, had acknowledged the letter that was issued to him, and had vide his reply dated 26.11.2011 (at Sr. No. (i) of the reply), stated, that he was residing at the said address. But then, we cannot remain oblivious of the fact that as the Notice u/s. 148, dated 11.03.2015 was issued 3 ½ years subsequent to the date of the aforesaid reply dated 26.11.2011, therefore, the same could not have been blindly acted upon by the A.O. Our aforesaid conviction is all the more fortified by the fact that the notice server having failed to effect the service of the Notice u/s. 148, dated 11.03.2015, had returned the same with a report, viz. viz. "Shrimaan Ji, is kothi mein is naam ka kohi nahin hai" (that no one by the said name is available at this address), which thus clearly did cast an obligation upon the A.O. to have made necessary verifications as regards the whereabouts of the assessee, which we are afraid he had most arbitrarily dispensed with, and instead, by way of an idle formality got the same served by way of affixture at the aforesaid wrong address....
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....ed by the A.O. In sum and substance, the issue before us boils down to the aspect that as to whether or not the receipt of the Notice u/s. 148, dated 11.03.2015 by the assessee's counsel, i.e., after substantial lapse of time would suffice the requirement on the part of the A.O. to effect a valid service of Notice u/s. 148 of the Act. Qua the said aspect, we shall draw support from the judgment of the Hon'ble High court of Bombay in the case of Harjeet Surajprakash Girotra Vs. Union of India (2019) 108 taxman.com 491 (Bom), wherein the Hon'ble High Court had after relying on a host of judicial pronouncements, concluded, that in the absence of service of notice before the last date envisaged u/s. 149 of the Act, the reopening of the assessment would be invalid in the eyes of law. The Hon'ble High Court while concluding as hereinabove had after drawing support from the various judicial pronouncements observed as under: "7. As is well known, section 147 of the Act pertains to income escaping assessment. In terms of sub-section (1) of section 147, if the Assessing Officer has reason to believe that any income chargeable to tax has escaped assessment, he may, su....
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....make a return of his income under Section 22 for any year or to disclose fully and truly all material facts necessary for his assessment for that year, income, profits or gains chargeable to income-tax has been under assessed", he may, within the time prescribed, "serve on the assessee a notice containing all or any of the requirements which may be included in the notice under sub-section (2) of Section 22 and may proceed to reassess such income, profits or gains". The argument is that the service of the requisite notice on the assessee is a condition precedent to the validity of any reassessment made under Section 34; and if a valid notice is not issued as required, proceedings taken by the Income Tax Officer in pursuance of an invalid notice and consequent orders of reassessment passed by him would be void and inoperative. In our opinion, this contention is well-founded. The notice prescribed by Section 34 cannot be regarded as a more procedural requirement; it is only if the said notice is served on the assessee as required that the Income Tax Officer would be justified in taking proceedings against him. If no notice is issued or if the notice issued is shown to be invalid then ....
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....gislature, that it did not contemplate two stages as contended by Mr. Kaji. Section 148 provides for the service of notice before the jurisdiction for reassessment can be assumed. The marginal note of this section reads, "Issue of notice where income has escaped assessment". Section 149 provides for issuance of notice before the expiry of the prescribed period and the marginal note of this section reads: "Time limit for notice". In our opinion, therefore, these words, "service of notice" or "issuance of notice", have no fixed connotation but are interchangeable, as held by the Supreme Court in Banarsi Debi's case. The Division Bench of this court in Induprasad Devshanker Bhatt v. J.P. Jani, Income-tax Officer, Circle IV, Ward-O, Ahmedabad, was dealing with a similar contention that the words "issue" and "service" as used in section 34 cannot be equated with each other and that the stage of issue of notice is a distinct and different stage from the stage of service of notice. Mr. Justice Bhagwati (as he then was) observed as under: "Now, it is undoubtedly true that, according to the decision of Desai C.J., as he then was, and Miabhoy J. in Madanlal Mathurdas v. Chunilal....
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....the aforesaid Act. Mr. Awasthy, the learned counsel for the revenue, has argued that in the 1961 Act, the two words have been used in two different sections. According to him before making the assessment, reassessment or recomputation under section 147, it is the duty of the Income-tax Officer to serve a notice on the assessee as required by section 148, whereas he can assume jurisdiction after issuance of the notice within the prescribed period under section 149 even though the same may not be served upon the assessee. He also submits that by dividing the provisions of section 34 of the 1922 Act in the 1961 Act, the intention of the legislature has become clear. We express our inability to accept the contention of the learned counsel for the Revenue. A reading of sections 148 and 149 clearly shows that the Income-tax Officer cannot assume jurisdiction to make assessment, reassessment of recomputation unless the notice has been issued and served within the time limit prescribed under the aforesaid sections. The same question came up before a Division Bench of the Gujarat High Court in Shanabhai P. Patel v. R.P. Upadhyaya, income-tax Officer, B.K. Mehta J., while speaking for the co....
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.... of reassessment under section 148 of the Act had to be served on the assessee. In this context, we may examine the stand of the Department. We may recall, the notice dated 15.3.2018 was despatched to the petitioner's address as contained in her PAN card. This notice was returned by the postal department on or around 22.3.2018 with the remark 'left'. It is also an admitted position that the petitioner had not intimated to the Department about her change of address. After receiving the envelope containing the notice from the postal department, till 31.3.2018 which was the last date for service of such notice, the department took no further steps. In this background, the question is can the Department contend that there was due service of the notice. 13. Section 282 of the Act pertains to service of notice generally and reads as under: "Service of notice generally. 282. (1) The service of a notice or summon or requisition or order or any other communication under this Act (hereafter in this section referred to as "communication") may be made by delivering or transmitting a copy thereof, to the person therein named,- (a) by post or by su....
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.... return to which the communication relates; or (iii) the address available in the last income-tax return furnished by the addressee; or (iv) in the case of addressee being a company, address of registered office as available on the website of Ministry of Corporate Affairs: Provided that the communication shall not be delivered or transmitted to the address mentioned in item (i) to (iv) where the addressee furnishes in writing any other address for the purposes of communication to the income-tax authority or any person authorised by such authority issuing the communication: Provided further that where the communication cannot be delivered or transmitted to the address mentioned in item (i) to (iv) or any other address furnished by the addressee as referred to in first proviso, the communication shall be delivered or transmitted to the following address:- (i) the address of the assessee as available with a banking company or a co-operative bank to which the Banking Regulation Act, 1949 (10 of 1949) applies (including any bank or banking institution referred to in section 51 of the said Act); or...." 16. As per sub-rule (1) of Rule....
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....valid. No valid assessment thereon could have been framed. 19. In the result, the impugned notice dated 15.3.2018 and the consequential order of reassessment passed by the Assessing Officer are set aside. All subsequent steps for coercive recovery of the tax dues arising out of such order of assessment are also set aside. The attachment of the petitioner's bank accounts would, therefore, stand nullified. The petition is allowed and disposed off accordingly." As in the case before us the Notice u/s. 148, dated 11.03.2015 had been served on the assessee's counsel for the first time in the month of February, 2016, i.e., much beyond the prescribed period of 6 years from the end of the relevant assessment year which had expired on 31.03.2015, therefore, respectfully following the aforesaid judgment of the Hon'ble High Court of Bombay in the case of Harjeet Surajprakash Girotra (supra), we are of the considered view, that the A.O. had invalidly assumed jurisdiction for reopening the concluded assessment of the assessee company and passed the reassessment order u/s. 148 r.w.s. 143(3), dated 30.03.2016. At the same time, we may herein observe, that our aforesaid vie....
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....ters dated 25.02.2016 & 08.03.2016 of the assessee addressed to the A.O. are reproduced. Also, we have perused Page 16 of the order of the CIT(A) wherein the "Order sheet" of the A.O. had been reproduced. Admittedly, the assessee vide his aforesaid letters dated 25.02.2016 (supra) and 08.03.2016 (supra) had specifically objected to the improper service of Notice u/s. 148, dated 11.03.2015, on the ground, that the same was not as per the mandate of law. For the sake of clarity, the relevant extract of the said respective letters as are discernible from the order of the CIT(A), are culled out as under: Letter dated 25.02.2016: "From the notice itself it is crystal clear that the notice has been issued at an address at which I was not residing at that time and even your notice server has reported that there is no such person at the given address. It appears that the notice has been issued without going through my return of income. Had it been taken into consideration, the notice would have been issued at the proper address. It is a trite law that notice served at a wrong address is nothing but nullity and needs to be filed. The same being the case here it is prayed t....