APTIVAA MIDDLE EAST FZE,DUBAI vs. DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE 1(1)(2), INTERNATIONAL TAXATION , MUMBAI

That on the facts and in the circumstances of the case and in law, the notice issued under section 148 on July 29, 2022, is barred by time limitation as the Ld. AO while issuing the notice has not considered the time limit specified under first proviso to Section 149(1) of the Act. The benefit and relaxations conferred under The Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 ("TOLA') will not extend the limitation provided under the first proviso to section 149(1) of the Act.

1 That on facts and in the circumstances of the case and in law, the Ld. AO has erred in issuing notice under section 148 as the same cannot be issued as per the provisions of section 149(1)(b) in the absence of any income escaped assessment represented in the form of 'asset'

On the facts and circumstances of the case and in law, the notice dated March 17, 2023 issued under section 143(2) of the Act by the Ld. AO is invalid, bad in law and liable to be quashed as the Ld. AO has not considered the return of income filed in response to notice under 148 of the Act.

On the facts and circumstances of the case and in law, the Ld. AO has erred in initiating the re-assessment proceedings under section 148 on the basis of borrowed satisfaction of another person/department and without independent application of mind.

1. On the facts and circumstances of the case and in law, the Ld. AO/DRP has erred in making the addition by placing reliance on the statements

On the facts and circumstances of the case and in law, the Ld. AO/DRP has grossly erred in making an addition of INR 4,68,29,657/-in the assessment order by holding that the Appellant is a resident of India during the year under consideration in terms of section 6(3)(ii) of the Act.

On the facts and circumstances of the case and in law, the Ld. AO/DRP has grossly erred in holding that the Appellant has a Permanent Establishment ('PE') in the nature of fixed place PE in India in terms of Article 5 (1) of the India - UAE tax treaty while doing so:-

1 The Ld. AO/DRP has erred on facts & in law, in attributing a sum of INR 4,68,29,657/-(being 75% of its total profits) as Income of the alleged PE of the Appellant in India on conjectures and surmises.

On the facts and circumstances of the case and in law, the Ld. AO/DRP has grossly erred in alleging that bogus expenses of AED 30,91,240.90/- have been claimed by the Appellant and the cash generated from such bogus expenses were repatriated to India by placing incorrect reliance on the statements recorded in the course of survey which were subsequently retracted.

On the facts and circumstances of the case and in law, the Ld. AO has erred in initiating penalty proceedings under section 274 read with 271F of the Act and section 271(1)(e) of the Act for the subject year as the same is bad in law.”

The assessee is a non-resident company incorporated as per the regulations of UAE and is registered with the RAK Investment Authority Free Zone, UAE on 01.04.2010. The assessee is the wholly owned subsidiary of M/s Aptivaa Consulting Solutions Pvt. Ltd. (Aptivaa India) and is engaged in providing comprehensive analytical solutions cutting edge solutions, for balance-sheet management,

Though the assessee has raised several contentions on the validity of the reassessment proceedings, during the course of hearing the ld AR mainly argued that the issue of original notice under section 148 dated 31.03.2021 bearing a wrong address that does not belong to the assessee is not served on the assessee and hence the reassessment based on an invalid notice is liable to be quashed.

We heard the parties and perused the material on record. In assessee's case, the AO initiated the reassessment proceedings vide notice dated 31.03.2021 which according to the revenue is served on the assessee on 15.04.2021. Since the notice according to the revenue is served after 31.03.2021, the AO treated the said notice as notice issued under section 148A as per the directions of Hon'ble Supreme Court in the case of Ashish Agrawal (supra). Therefore the entire foundation of the reassessment proceeding in assessee's case is the notice dated 31.03.2021. The ld AR submitted that the address mentioned in the notice dated 31.03.2021 which according to the revenue was served on 15.04.2021 does not belong to the assessee. The ld AR further submitted that since the notice was issued to a wrong address, the assessee was not aware of the initiation of the reassessment proceedings and came to know of the said proceeding only when the email dated 23.03.2022 was sent by the AO to the assessee. The ld AR also submitted that the in the statement recorded during the survey proceedings of Aptivaa India on 29.08.2019, the address of the assessee and Aptivaa India were clearly mentioned and the AO though has entirely relied on the statement recorded for initiating reassessment proceedings failed to 6 ITA 1985 & CO 55/Mum/2024 Aptivaa Middle East FZE send notice to the correct address. The relevant submissions of the ld AR in this regard is extracted below – 3. From the foregoing discussion, it is unequivocally established that the notice issued under Section 148 of the Act was dispatched to an incorrect address. Consequently, the Revenue's assertion that the said notice was duly served upon the Appellant on April 15, 2021, is factually untenable. Furthermore, the reliance placed by the Revenue on the judgment of the Hon'ble Supreme Court in the case of Union of India v. Ashish Agarwal (supra) is misplaced and inapplicable to the present case as the notice was served on the Assessee for the first time on March 23, 2022 as per the Ld. AO's own admission in the letter issued by the Ld. AO dated June 28, 2022 (enclosed at Page 67 of the paperbook) and order under section 148(A)(d) dated July 29, 2022 (enclosed at Page 94 to 108 of the paperbook). 2022 Le. the date on which the notice was dispatched to the Appellant on email. Hence, the time limit to complete reassessment proceedings as per the provisions of Section 153 of the Act was March 31, 2023 (ie. 12 months from the end of the financial year in which notice under section 148 was served on the Assessee). However, However, the draft assessment order in the present case was issued on May 29, 2023 u/s 144C(1) of the Act and the final reassessment order under section 147 r.w.s. 143(3) was passed on March 18, 2024. It is clearly evident that the draft and final reassessment order passed by Ld. AO is barred by limitation, and liable to be quashed.

We notice that the AO in the order of assessment has recorded the fact the notice under section 148 was served on the assessee vide email dated 23.03.2022 and that the assessee has filed the return of income in response to the said notice on 07.04.2022. The AO has submitted a report with respect to service notice on 15.04.2021 and on the perusal of the same we notice that the address of JSP Finman Consultant, A/704, Shubh Shanti Complex MG Road, Kandivali (West) Mumbai-

During the course of hearing, report from the AO regarding the details of the address to which the notice was served was called for. The AO vide report dated 25.03.2025 has submitted that the above address as per information from public domain is that of a Tax Consultant and that the service of notice on the said address is evidenced.

From the perusal of the above report we notice that the AO in the repost has not mentioned anything as to why the notice is served on the Tax Consultant and whether the Tax Consultants are authorised representatives of the assessee. A mere fact that the notice is served on a Tax Consultant without mentioning how they are linked to the assessee and whether they are authorised to receive the notice on behalf of the assessee cannot absolve the revenue's duty to serve a valid notice on the assessee. It was argued by the ld AR that the survey was conducted in the premised of Aptivaa India which is the PE of the assessee and that the AO at the very least could have served the reassessment notice of the assessee on the PE i.e. Aptivaa India. In this regard, we notice that the Hon'ble Delhi High Court in the case of PCIT v. Atlanta Capital (P.) Ltd [2020] 119 taxmann.com 292 (Delhi) has 9 ITA 1985 & CO 55/Mum/2024 Aptivaa Middle East FZE considered the issue of notice under section 148 not being served on the correct address of the assessee where the legal position is summarised as under –

At the outset it may be noticed that recently this Court has by a decision CIT v. Chetan Gupta [2015] 62 taxmann.com 249/[2016] 382 ITR 613 discussed the entire law in detail and summarised the legal position as under: (i) Under section 148 of the Act, the issue of notice to the Assessee and service of such notice upon the Assessee are juri ictional requirements that must be mandatorily complied with. They are not mere procedural requirements. (ii) For the AO to exercise juri iction to reopen an assessment, notice under section 148(1) has to be mandatorily issued to the Assessee. Further the AO cannot complete the reassessment without service of the notice so issued upon the Assessee in accordance with section 282(1) of the Act read with Order V Rule 12 CPC and Order III Rule 6 CPC. (iii) Although there is a change in the scheme of sections 147, 148 and 149 of the Act from the corresponding section 34 of the 1922 Act, the legal requirement of service of notice upon the Assessee in terms of section 148 read with section 282(1) and section 153(2) of the Act is a juri ictional pre-condition to finalizing the reassessment. (iv) The onus is on the Revenue to show that proper service of notice has been effected under section 148 of the Act on the Assessee or an agent duly empowered by him to accept notices on his behalf. In the present case, the Revenue has failed to discharge that onus. (v) The mere fact that an Assessee or some other person on his behalf not duly authorised participated in the reassessment proceedings after coming to know of it will not constitute a waiver of the requirement of effecting proper service of notice on the Assessee under section 148 of the Act. (vi) Reassessment proceedings finalised by an AO without effecting proper service of notice on the Assessee under section 148(1) of the Act are invalid and liable to be quashed. (vii) Section 292BB is prospective. In any event the Assessee in the present case, having raised an objection regarding the failure by the Revenue to effect service of notice upon him, the main part of section 292BB is not attracted. 7 to 10 ***

Mr. Sahni submitted that the order of the CIT(A) notes the fact that a photocopy of the notice was given to the Assessee during the re-assessment proceedings and that by itself should constitute sufficient service of notice on the Assessee. In light of the law explained by the Supreme Court in R.K. Upadhyaya v. Shanabhai P. Patel [1987] 33 Taxman 229/166 ITR 163 which has in turn been followed by this Court in Chetan Gupta (supra), the requirement of both the issuance and the service of such upon the Assessee for the purposes of sections 147 and 148 of the Act are mandatory 'juri ictional requirements'. The mere fact that an Assessee participated in the reassessment proceedings despite not having been issued or served with the notice under section 148 of the Act in accordance with law will not constitute a waiver of the said juri ictional requirement.

On facts, therefore, the Court finds no legal error committed by the ITAT in holding that there was no proper service of notice on the Assessee under section 148 of the Act.

The Hon'ble Supreme Court has dismissed the SLP against the above order of the Hon'ble High Court. From the combined perusal of the facts in assessee's case as elaborated herein above, it is clear that the notice under section 148 of the Act was served on the address which does not belong to the assessee and that the revenue could not bring any valid evidence that the address on which the notice is served indeed belongs to the assessee. Accordingly the contention of the assessee that valid notice under section 148 under the old regime which is the very basis for the entire reassessment proceedings was not served on the assessee has merits. In view of this discussion and respectfully following the judicial precedence, we hold that the entire assessment based on the notice under section 148 which was not served on the assessee is liable to be quashed.

In view of our decision with regard to service of notice under section 148, the other legal contentions of the assessee and the contentions on the merits of the case have become academic and left open accordingly.

In result the appeal of the assessee is allowed. Accordingly stay has become infructuous