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Income Tax Appellate Tribunal, PUNE BENCHES “A”, PUNE
Before: DR.MANISH BORAD & SHRI VINAY BHAMORE
आदेश / ORDER
PER DR. MANISH BORAD, ACCOUNTANT MEMBER :
1. This appeal filed at the instance of assessee pertaining to the Assessment Year 2013-14 is directed against the order dated 24.03.2022 passed by National Faceless Appeal Centre, Delhi which in turn is arising out of the Assessment order dated 31.03.2016 passed u/s.143(3) of the Act.
2. Assessee has raised following grounds of appeal :
“Modified Grounds 1) Lower Authorities/Commissioner of Income Tax (Appeals) has grossly erred in not holding the Assessment Order u/s 143(3) as Bad in Law, void and ab-initio invalid. Appellant pray to hold so and cancel the Order. 2) Commissioner of Income Tax (Appeals) has erred in holding the Order u/s 143(3) as valid.
Appellant prays to annul the same holding it as Bad in Law, without jurisdiction for lack of service of notice u/s 143(2) on the Assessee. 3) Commissioner of Income Tax has erred in confirming the addition of Rs.2,20,09,000/-u/s. 68 made by Assessing Officer. Appellant prays to delete the same as provisions of Sec.68 are not at all applicable to the Facts of the case. " 4) Commissioner of Income Tax (Appeals) has further erred in observing "The Claim u/s 54F @Rs.2,05,78,694/- Which is investment in residential house, is rejected because Transaction leading to Capital Gain itself is rejected and is treated as business income." Appellant prays for declaring claim of Long Term Capital Gain & u/s 54F is valid and allowed, And declare that order is Bad in Law, being without application of mind and violative of powers of CIT(A). 5) Commissioner of Income Tax (Appeals) has erred in not being Just & Fair, Appellant pray for relief accepting Returned Income. 6) Assessee denies liability to Interest u/s 234A, 234B, 234C etc. Prays to cancel the same. 7) Appellant prays to add, alter, amend, take additional grounds, submit additional evidence and / or during or pending proceeding. Additional Ground Income Tax Officer Ward-3(3), Pune has erred is passing Order u/s 143(3) without having Pecuniary Jurisdiction. Appellant prays to declare the said Order as bad in law being without Jurisdiction.”
3. At the outset, Ld. Counsel referring to the legal grounds challenging the validity of the assessment proceedings on the ground that notice u/s.143(2) of the Act was not served upon the assessee within the statutory time limit provided under the Act and this being a fatal error, goes to the root cause, therefore, the assessment proceedings deserves to be quashed being bad in law, illegal and void ab-initio. Considering the legal issued raised by the assessee, we proceed to deal with the same and in case the legal issue about validly serving notice u/s.143(2) of the Act within the statutory time limit is decided against the assessee, then this appeal will be re-fixed for hearing the remaining legal issues as well grounds raised on merits for which due opportunity shall be granted to both the sides. Both the sides agreed and accordingly the parties proceeded ahead to argue the case on this legal issue of valid service of notice u/s.143(2) of the Act.
Brief facts of the case are that the assessee is an individual declaring income from business, capital gain and from other sources. Return of income for A.Y. 2013-14 filed on 27.09.2013 declaring income of Rs.1,76,25,230/-. Case selected for scrutiny under CASS. Thereafter, notice u/s.143(2) of the Act was issued on 03.09.2014 and in the assessment order it is mentioned that it has been served to the assessee. Thereafter, there was change in incumbent and fresh opportunity was provided and notice u/s.142(1) of the Act was issued on 17.08.2015. But this notice was returned back with the remarks that “the assessee is not in given address”. The observation of the AO and the replies filed by the assessee on various dates in connection the valid service of notice has been captured in the assessment order from para 2 from page 1 to 4 which reads as follows :
“2. The case was selected for scrutiny under CASS. Accordingly, the notice under section 143(2) was issued on 03.09.2014 and served to the assessee. As there was change in incumbent, fresh opportunity was provided to the assessee as provided under section 129 of the Income Tax Act, 1961 by issuing notices under section 142(1) dated 17-08- 2015. The case was assigned to the undersigned vide Addl. CIT Range- 3, Pune's Order No.PN/Addl.CIT/R-3/Assign Order-1/2015-16/414 dated 05-08-2015.
The notice issued on 17-08-2015 was returned back with the remarks that the assessee is not in given address. The address of the assessee is 'Shri Dhanottam Vasant Lonkar, 268-A, Shivajinagar, Pune 411005' on which Notice u/s 143(2) was sent. xxxxxxxxxxxxxxx xxxxxxxxxxxxxxx On perusal of the PAN data base of the assessee, it is found that the assessee's new address is 301, Kamla Residency, CTS No. 1050, Pune - 411016 having land-line and mobile no. 20-25677702 and 9822325282 respectively. A notice u/s 142 rws 129 issued on 15-02-2016 and served to the assessee on his new address requesting to submit the details as per notice by 24-02-2016. Assessee was also contacted over landline and mobile from time to time to submit the details. A SMS from mobile also sent to the assessee to submit the details.
Assessee vide his letter dated 01-03-2016 has stated that:
.... Further, I reiterate that neither had I received any notice nor any communication as per the provisions of the Income Tax Act, 1961 for the assessment proceedings for A. Y. 2013-14 till date except an SMS received on 27-02-2016. In absence of any notice or communication as required to be given under the Act, how can you expect us to attend the assessment proceedings.
Again, assessee vide his letter dated 05-03-2016 received in this office on 07-03-2016 has submitted that:
'Kindly refer you notice u/s 142 r.ws. 129 of the Income Tax Act, 1961 dated 15-02-2016 send to me through our servant the same notice was again received by RPAD on 04-03-2016. This is the first notice/communication received from the Income Tax department regarding the scrutiny assessment proceedings for A. Y. 2013-14. Til date neither we received any communication nor any notice regarding the initiation of scrutiny assessment proceedings for A. Y. 2013-14, hence neither I nor my A/R appeared and or submitted any details.
As per the provisions of section 143(2)(ii), no notice under clause (ii) shall be served on the assessee after the expiry of 6 months from the end of the financial year in which the return is furnished. In my case, notice u/s 143(2) was not served before the expiry of 6 months from the end of the F. Y. in which the return is furnished and hence the scrutiny proceedings are time-barred.'
In view of the above, the undersigned vide this office letter No./Pune/Ward-3(3)/DVL/2015-16/ dated 22-03-2016 served by the Inspector of Income Tax of this Ward and received by Mrs. Lonkar and stated that:
'In your above referred letter, you had talked about the objection w.r.t. the non-service of the notice. It may be noted that once a notice is sent through RPAD and is not received back, it is assumed to be deemed served on the assessee. Reliance in this regard is placed on Ramesh Khosla vs. ITO & Ans. (P & H) 155 556 whereby the Hon'ble Punjab & Haryana High Court has ruled that the notices dispatched by registered post which has not been received back are deemed to be served upon the assessee. Further in the case of Sonal Industries (P) Ltd. vs Delhi of Income Tax, the Delhi ITAT has also taken the same view. ITAT, Delhi ITA
No. 5677/Del/2011. Hence, in your case you can't stated that the service was not done. Further, it is worthwhile to mention here that Notice u/s 143(2) are generated online and bear the address as provided by the assessee in its PAN database. It is verified that the notice was sent through RPAD on the address i.e. 268A, Shivajinagar, Pune available in your PAN database and there is no reason for the same being unserved upon you. It is also seen that the notice which was sent by RPAD on 03-09-2014 has not been received back. Proof of dispatch through RPAD in the form of acknowledgement by Department of Post (dated 10-09-2016) is hereby enclosed for your reference. In respect of the above, you are once again being provided an opportunity by the undersigned to submit the documents as per Notice u/s 142 dated 15-02-2016. If your submission either personally or by your Authorized Representative will not be received in the office of the undersigned on or before 28-03-2016, it will be assumed that you have nothing to say and the assessment will be completed u/s 144 of the Income Tax Act, 1961.' On 28-03-2016, a letter dated 28-03-2016 received in this office on 28-03-2016 from the assessee submitted that: "The assessment proceedings are being conducted unlawfully without following the procedures laid down in the Income Tax Act and Rules. Hence, the proceedings are null and void ab initio. I need 2 days time to submit the information as asked by you'.”
5. From the above contents of the assessment order, we can notice that the issue of not serving the valid notice u/s.143(2) of the Act has been strongly raised by the assessee before AO with various details as well as the correct address which is there in the PAN database but still ld. AO did not accept the contentions and proceeded to complete the assessment making addition of Rs.2,20,09,000/- under the head capital gain on conversion of land. Ld. AO assessed the income at Rs.3,96,34,320/-. The assessee thereafter challenged the validity of notice issued u/s.143(2) of the Act as well as the validity of the assessment proceedings before the ld.CIT(A) making following submissions :
“2.APPELLANT ADDRESS:
301 Kamala Residency, CTS NO 1050 MODEL COLONY PUNE 411016.
The Address mentioned on notice us 143(2) dated 03/09/2014 and notice under section 142 r.w.s 129 dated 17/08/2015 is as follow.
268-A, Shivaji Nagar Pune Maharashtra 411005 which is not/never the address of the appellant. The notice was sent on wrong address. Notices were sent on wrong address hence are not valid notices. Assessment done by issue of invalid notices are null and void. Appellant by submission dated 29/02/2016,01/03/2016,7/03/2016, 28/03/2016 before assessing officer objected to the invalid notices. Appellant craves that notices send into wrong addresses and assessment based on that is null and void.
3. CASE LAWS:
Following case laws up held that procedure laid down in section 143(2) must be followed strictly, otherwise the assessment order passed, by issuing notices on wrong address or notices not issued within time or without jurisdiction or issue in improper way, are null and void ab initio, is not only procedural irregularity and not curable.
Supreme Court of India Asstt.Commr. Of Income Tax & Other vs M/S Hotel Blue Moon on 2 February, 2010 321 ITR 362(SC)
The Hon'ble Supreme Court in the case of AC Vs Hotel Blue Moon (supra) has held that failure on the part of the assessing authority to issue notice U/s 143(2) of the Act cannot be a mere procedural irregularity and the same is not curable. It is not a mere formality but it given the jurisdiction to the A.O. to complete the assessment U/s 143(3) of the Act, therefore, non-issuance of notice U/s 143(2) of the Act vitiates the assessment proceedings. In view of decision of Hon'ble Supreme Court in the case of ACIT Vs Hotel Blue Moon (supra) as well as other decisions in this regard cited above, the assessment proceedings completed without issuance of notice U/s 143(2) of the act and void ab initio and liable to be quashed.
Delhi High Court Commissioner of Income Tax vs Lunar Diamonds Ltd. on 3 March, 2005 Equivalent citations: (2005) 197 CTR Del 312, 2006 281 ITR 1 Delhi Gujarat High Court Deputy Commissioner Of... vs Mahi Valley Hotels And Resorts on 31 August, 2005 Equivalent citations: 2006 287 ITR 360 G M/s. Cosmat Traders Pvt. Ltd Vs ITO (ITAT Kolkata)
Date: 21/04/2021, Assessment Year: 2012-13 All ITAT Kolkata It was further submitted that issuance of notice under Section 143(2) of the Act being prerequisite, in the absence of such notice, the entire proceedings would be invalid.
Income Tax Appellate Tribunal-Mumbai Sanjeev Chandrakant Deo, Mumbai vs ITO 29(3)(3), Mumbai on 25 October, 2021 2203/1/2019 the fundamental requirement for initiation of proceedings under section 147 of the Act stands unsatisfied/unfulfilled. This being a jurisdictional error, the consequence which follows would result in invalidation of the assessment order. Therefore, we hold that the assessment order passed under section 143(3) r.w.s. 147 of the Act without valid service of notice under section 143(2) of the Act is void ab initio.
However, ld.CIT(A) was not satisfied and he observed that the address of the assessee is of 268A, Shivajinagar, Pune 411005 where the notices u/s.143(2)/142(1) of the Act were issued and dismissed the legal ground of the assessee observing as follows :
“4. Reply of CIT(Appeals)
The 1st ground of appeal is that the notice was send to the wrong address. The assessing officer has given a strong rebuttal to this argument. Once a notice is sent through RPAD and is not received back, it is assumed to be deemed served on the assessee. Reliance in this regard is placed on Ramesh Khosla vs ITO & Anr (P & H) 155 556 where by Punjab & Haryana HC has ruled that the notices despatched by registered post-which has not been received back are deemed to be served upon the assessee. Further in the case of Sonal Industries (P) Ltd Vs Delhi of Income Tax, the Delhi ITAT has taken the same view. ITAT Delhi ITA No.5677/Del/2011. Hence in the assesee's case the service of demand is done properly.
Further, it is worthwhile to mention that notice u/s 143(2) are generated online and bear the address as provided by the assessee in its PAN database. It is verified that notice was sent through RPAD on the address ie 268A, Shivaji Nagar, PUNE available in your PAN database and there is no reason for the same being unserved upon you. It is also seen that the notice which was sent by RPAD on 3/9/2014 has not been received back. Proof of dispatch through RPAD in the Form of acknowledgement by Dept of Post (dtd 1/9/2016) was send by assessing officer to the taxpayer as evidence for the same.
The assessing officer send a notice under sec 143(2) on 3/9/2014, since the case was elected for scrutiny under CASS and served to the assessee. Since there was a change in the incumbent, to provide fresh opportunity notice was issued u/s 142(1) dt 17/8/2015. The case which was under the jurisdiction of ITO, ward 3(3), Pune was later assigned to Addl CIT, Range -3, Pune. The address used for issuing notice u/s 143(2) and 142(1) are one and the same. When notice was served u/s 143(2) it is not known why the notice was not served under sec 142(1). The address on which notice was sent u/s 143(2) and under sec 142(1) are the same and is given below:
Address as per PAN database Disputed address Shri Dhanottam Vasant Lonkar, Shri Dhanottam Vasant Lonkar, 268-A 301, Kamala Residency Shivaji Nagar, CTS No.1050 Pune-411005 Pune-411016 The disputed address is entered as the new address in PAN database having landline no 20-25677702 and 9822325282 respectively. During appellate proceedings the copy of the notices filed were perused and the following picture emerges.
Table 1 Notice u/s. Date of notice Address used 143(2) 3/9/2014 Shivaji Nagar address 142(1) 17/8/2015 Shivaji Nagar address 142(1) 15/2/2016 Kamala residency, model colony address 143(3) order 31/3/2016 Kamala residency, Model colony address Letter to CIT(Appeals) 5/12/2017 Kamala residency, Model colony address Letter to CIT(Appeals) 1/2/2018 Kamala residency, Model colony address
From the above it can be seen that once the address changed in the PAN database, the new address was used in the notices send subsequently. The tax payer himself has used the Kamla Residency address in the correspondences with the dept. Moreover taxpayer has not objected to the usage of Kamla residency address in the 143(3) order. Considering these facts the argument of the taxpayer that notice was not served in the proper address is rejected.
The taxpayer has also raised the issue that 143(2) was not served within the time limit prescribed under section 143(2)(ii). This section was amended w.e.f 1/6/2016. Prior to that Finance Act, 2008 w.e.f 1/4/2008 read as under – [(2) Where a return has been furnished under section 139, or in response to a notice under sub-section (1) of section 142, the Assessing Officer shall, (i) where he has reason to believe that any claim of loss, exemption, deduction, allowance or relief made in the return is inadmissible, serve on the assessee a notice specifying particulars of such claim of loss, exemption, deduction, allowance or relief and require him, on a date to be specified therein to produce, or cause to be produced, any evidence or particulars specified therein or on which the assessee may rely, in support of such claim. [Provided that no notice under this clause shall be served on the assessee on or after the 1st day of June, 2003;] (ii) notwithstanding anything contained in clause (i), if he considers it necessary or expedient to ensure that the assessee has not understated the income or has not computed excessive loss or has not under-paid the tax in any manner, serve on the assessee a notice requiring him, on a date to be specified therein, either to attend his office or to produce, or cause to be produced, any evidence on which the assessee may rely in support of the return. [Provided that no notice under clause (ii) shall be served on the assessee after the expiry of six months from the end of the financial year in which the return is furnished.]] 6. According to the proviso under this section the notice u/s 143(2) shall be served within 6 months from the end of the FY in which Return of Income is filed. The Return of Income is filed on 27/9/2013, 6 months from the end of the FY ends on 30/9/2014. Notice under section 143(2) is served on 3/9/2014 which is within the time limit prescribed. Hence this argument of the taxpayer that notice u/s 143(2) was not served within time limit prescribed is not correct. This ground raised by the taxpayer is rejected.”
Aggrieved assessee is now in appeal before this Tribunal.
Ld. Counsel for the assessee submitted that notice u/s.143(2) of the Act needs to be served upon the assessee within six months from the end of the assessment year but the assessee has not received any such notice on the address which has been mentioned in the income-tax return as well as the one mentioned in the PAN database also. He further stated that all the facts have been narrated in the affidavit where it has been stated that the address of the assessee has always been “1286A, Shivaji Nagar Pune 411005” but the address mentioned in the notice issued u/s.143(2) of the Act is of “268A, Shivaji Nagar, Pune – 411005” which has never been his address. Details have been filed by the assessee in the paper book along with the facts about the notice being not served validly u/s.143(2) of the Act summarized by the assessee in the following manner :
“Issue: Notice u/s 143(2) not received by Assessee. As issued on different Address. i. Assessing Officer states, it is issued on address as per PAN DATA and RPAD envelop not received Back, unserved. ii. PAN DATA SHOWS THAT ADDRESS as Office Address. However, PAN DATA CARD Specifically marked Address for Correspondence as Residential Address. iii. Affidavit stating all facts submitted before ITAT with cross references of Proof. 268A Shivajinagar had never been his address, it was 1286A Shivajinagar. iv. But except this one Notice, there is no Notice, Order, Return showing said Address-From 2003-04 to 2018-19 (even till date).
(Sample Copies enclosed Paper Book.)
V. 142(1) Notice dated 15/02/2016 on same wrong address, returned back with Postman's remark. 'Not on given address'. vi. Non receipt of Notice strongly objected during Assessment proceeding which is noted by Assessing Officer in the Order. vii. Assessing Officer has no Acknowledgment as proof of Service. viii. Point raised before Assessing Officer & CIT(A), CIT(A) upheld service since Registered envelope notice is not returned back. ix. Assessing Officer to have not brought any Positive Proof of service of Notice or Status.
He should have written to Post office for Proof. x. Assessing Officer says Presumed service since said article not received back Onus of Service Proof is on Assessing Officer - Para. 20 of Supreme Court Decision V.N. Bharatv/s D.D.A. xi. Assessing Officer says Notice Issued u/s 143(2) is "generated online".
The Notice u/s 143(2) for Assessment Year 2014-15 dated 22/08/2015 is also generated online. However, addressed to my correct address 301, Kamala Residency Model Colony Pune 411016. xii. Summary Statement of Assessing Officer's Observations and Assessee's Submission before Bench. xiii. Additional Evidence 268A Shivaji Nagar, such CTS/Property no does not exist. xiv. Case referred to and relied by CIT(A) – • In these cases Notices were Issued by Correct address (283) • Postman's remark addressee refused to accept (284) (Appellant's Case - Notice not on correct address - Not served)
Case referred by Appellant a. Pr. CIT Vs. ATLANTA Capital Pvt. Ltd. 464 ITR 341(DEL) (SLP withdrawn by Revenue being Low Tax Effect)
On the other hand, ld. Departmental Representative vehemently argued supporting the order of ld.CIT(A) and also relied on the following decisions and also the judgment of Hon’ble Apex Court in the case of PCIT Vs. I. Ven Interactive Limited (2019) 110 taxmann.com 332 (SC) where the Hon’ble Court observed that since no application was made by the assessee to change address in PAN database and the old address was continued in the PAN database and further the assessee having failed to produce alleged communication intimating the AO about the new address, the Hon’ble Court held in favour of the Revenue holding that the AO was justified in issuing notice at address available as per PAN database more particularly when return has been filed in e-module scheme :
1. Ramesh Khosla vs. ITO (1985) 154 ITR 556 2. Capital Gem Overseas(P) Ltd. Vs. ITO (2006) 101 ITR 117 (Delhi) 3. ACIT Vs. M/s. Sonal Industries Ltd. – dated 29.02.2012
Ld. Counsel for the assessee gave following written note distinguishing the case of the assessee with that of the judgment of Hon’ble Supreme Court in the case of PCIT Vs. I. Ven Interactive Limited (supra) which reads as follows :
“In this case, After change in Address, Company filed Return giving new address.
However, Notice u/s 143(2) was issued and served an Old address, As per PAN data, Associate Company received Notice.
Company objected during the course of proceeding as to Non-service of Notice, in terms of Proviso to Sec.292BB.
3. On the basis of Submission before H.C. that Change in address was communicated vide letter dated 06/12/2005, High Court, confirmed ITAT order, cancelling Assessing Officer's Order for non-service of Notice u/s 143(2).
Supreme Court held in favour of Revenue for the reasons that Assessee Company' did not communicate the change that alleged communication dated 06/12/2005 is not available. In the absence of Communication of change in Address, Service of Notice on PAN DATA BASE address, is valid by Law.
4. On Revenue's Appeal before Supreme Court, Assessee's council could not produce before Supreme Court the alleged letter dated 06/12/2005 or Affidavit communicating change in Address.
Supreme Court reversed the High Court Order for Non Communication of Change in Address.
Facts of Mr. D.V.Lonkar's Case In Appellant's Case, it is not the Case of change in Address. All along from A.Y.2006-07, Assesse has been receiving Notices, Orders on the Address 301, Kamala Residency, Model Colony, Pune 411016 which is address for communication marked on PAN DATA BASE and before that on Address 1286A, Shivaji Nagar, Pune-411005.
Assesse was not even aware of existence of Address 268A, Shivajinagar on PAN DATA BASE.
On receipt of PAN DATA BASE Copy, It is found that PAN DATA BASE clearly mentions address for Correspondence 301, Kamala Residency, Model Colony, Pune.
In fact, such Property No. 268A Shivajinagar, Pune does not exist at all. It appears to be mistake on the part of Departmental Data Entry Operator is entering said address instead of 1286A Shivajinagar, Pune.
In view of these facts, Supreme Court decision is not applicable to the facts of this case.”
We have heard the rival contentions and perused the record placed before us. The only issue for our consideration at this stage is that whether a valid notice u/s.143(2) of the Act has been served upon the assessee or not. It has been consistently held by Hon’ble Courts that if a valid notice u/s.143(2) is not served upon the assessee then such assessment proceedings are vitiated and deserves to be quashed as void ab-initio. The year under appeal is A.Y. 2013-14 and the return of income was filed by the assessee on 27.09.2013. Now for carrying out the assessment proceedings in case of the assessee who has furnished the return of income, there is statutory requirement of serving a notice u/s.143(2) of the Act within six months from the end of the financial year in which the return is furnished. For necessary guidance, section 143(2) of the Act is reproduced below :
“(2) Where a return has been furnished under section 139, or in response to a notice under sub-section (1) of section 142, the Assessing Officer or the prescribed income-tax authority, as the case may be, if, considers it necessary or expedient to ensure that the assessee has not understated the income or has not computed excessive loss or has not under-paid the tax in any manner, shall serve on the assessee a notice requiring him, on a date to be specified therein, either to attend the office of the Assessing Officer or to produce, or cause to be produced before the Assessing Officer any evidence on which the assessee may rely in support of the return.
Provided that no notice under this sub-section shall be served on the assessee after the expiry of three months from the end of the financial year in which the return is furnished.”
On perusal of the above provision, we observe that for A.Y. 2013-14, the return of income which was filed on 27.09.2013 a valid notice u/s.143(2) of the Act was required to be served upon the assessee on or before 30.09.2014. Ld. AO has claimed that notice u/s.03.09.2014 was issued u/s.143(2) of the Act and was served upon the assessee. It is specifically stated that notice Dhanottam Vasant Lonkar u/s.143(2) needs to be served on the assessee within six months from the end of financial year in which return is filed. So mere issuing of notice will not serve the purpose but notice needs to be served upon the assessee.
Now comes the point about the address for communication on which such notice needs to be served. The assessee filed the return for A.Y. 2013-14 declaring the residential address “301, Kamala Residency, CTS No.1050, Model Colony, Pune 411016”, Maharashtra. Even the assessment order has also been framed stating the same address. Now the notice dated 03.09.2014 issued by the AO u/s.143(2) of the Act to be delivered to the assessee at the address “268A, Shivaji Nagar, Pune 411005”. Before us, the assessee has claimed that no such address exist and the office address is “1268A, Shivaji Nagar, Pune 411005”. In the PAN database, he specifically opted for the address of residence as the address for communication.
Now during the course of hearing before us when it was asked to the Revenue authorities that whether the notice dated 03.09.2014 was served on the assessee within the stipulated time limit then it was stated that there is no report from the postal authority about the notice being served nor there is copy of the notice returned back unserved. Thereafter, our attention was drawn to the PAN database address which has been provided by the Revenue authorities and placed at pages 26 to 30 of the paper book. Now specifically at page 28 of the screenshot of ITBA portal two addresses have been mentioned under the PAN address details . Office Address is stated to be “D.V. Lonkar, 268-A, Shivaji Nagar, Pune Maharashtra 411005” and the Residence address is stated to be “301, CTS No.1050, Kamala Residency, Shivaji Nagar, Model Colony, Pune Maharashtra, India-411016”. Thereafter, the assessee has opted the residence address as communication address. In other words, the communication address requested by the assessee has been 301, CTS No.1050, Kamala Residency, Shivaji Nagar, Model Colony, Pune Maharashtra, India-411016” and even the return of income has been filed at this address.
Now it was argued by the ld. DR that notice was issued on the address mentioned in the PAN database. He also stated that assessee should bring copy of PAN application in which the address has been mentioned and then it can be verified whether there was a mistake at the end of the assessee to have mentioned the address 268A, in place of 1268A, Shivaji Nagar in the PAN application or it was the mistake of the Data Entry operator if the details in the PAN data which is wrongly mentioned as 268A instead of 1268A. However, copy of PAN application should be filed but again it was argued by the ld. Counsel for the assessee that they have specifically mentioned communication address to be the residence address and therefore no valid notice was served.
We further observe that section 282 of the Act deals with the provisions for service of notice generally and the same is reproduced below:
“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 such courier services as may be approved by the Board; or (b) in such manner as provided under the Code of Civil Procedure, 1908 (5 of 1908) for the purposes of service of summons; or (c) in the form of any electronic record as provided in Chapter IV of the Information Technology Act, 2000 (21 of 2000); or (d) by any other means of transmission of documents as provided by rules made by the Board in this behalf.
Dhanottam Vasant Lonkar (2) The Board may make rules providing for the addresses (including the address for electronic mail or electronic mail message) to which the communication referred to in sub-section (1) may be delivered or transmitted to the person therein named. Explanation.—For the purposes of this section, the expressions "electronic mail" and "electronic mail message" shall have the meanings as assigned to them in Explanation to section 66A of the Information Technology Act, 2000 (21 of 2000).”
From going through the above provision, we notice that ld. AO has only issued the notice by post and therefore section 282(1)(a) of the Act comes into operation as per which the notice has to be delivered by post or by such courier service as may be approved by the Board. It is further admitted that ld. AO had not resorted to any of the other modes provided in section 282(1)(b)/(c)/(d). Now to discharge the burden, the Revenue authorities have to prove that a valid notice has been served on the assessee through post. Notice u/s.143(2) was issued by RPAD through post office vide Article Receipt No.RM2139220091N on the address 268A, Shivajinagar, Pune 411 005. The assessee through RTI has applied for delivery report of the above referred Article number to which the a letter dated 27.02.2023 was received from CPIO (placed at page 42 of the paper book which was filed on 06.05.2024) informing that “records not available with post office. Even when ld. DR was asked during the course of hearing to examine the assessment records and see whether any proof is available about the service of notice to which the ld. DR after referring to the assessment records denied to have any such evidence of having served the notice at 268A, Shivajinagar, Pune 411005.
The fact that valid notice u/s.143(2) of the Act was not served upon the assessee further gets corroborated with the observation of the AO in the assessment order itself where he Dhanottam Vasant Lonkar states that when notice u/s.142(1) of the Act was issued on 17.08.2015 at “268A, Shivaji Nagar, Pune 411005” on which notice u/s.143(2) of the Act was served, the same was returned back with the remarks that “the assessee is not in given address”. Thereafter, ld. AO observed that the PAN database indicates that the assessee’s new address is “301, Kamala Residency, CTS No.1050, Pune 411016” and then the notice u/s.142(1) was issued and served upon the assessee. Here. Ld. AO has referred the address “301, Kamala Residency, CTS No.1050, Pune 411016” as new address. We however find that this observation of ld. AO is totally incorrect because this was always the address of the assessee as per the PAN database and also the address mentioned in income-tax return and there is no change in that address. Ld. AO has himself observed that “268A, Shivaji Nagar, Pune 411005” is wrong address, therefore, when the notice u/s.142(1) was issued on 17.08.2015 it was returned unserved, the same would have been the fate of the notice u/s.143(2) of the act dated 03.09.2014 issued u/s.143(2) of the Act at wrong address “268A, Shivaji Nagar, Pune 411005”.
We therefore find that the address of “301, Kamala Residency, CTS No.1050, Pune 411016” is not a new address given by the assessee after the filing of the income-tax return but this address always existed in the PAN database and was the address on which the assessee opted for receiving any communication and also mentioned the same address furnishing its return of income for impugned as well as past three assessment years. We also find that ld. AO has himself accepted that “268A, Shivaji Nagar, Pune 411005” is a wrong address as the notice was returned unserved and therefore in absence of any other evidence from the side of the Revenue authorities, it can be Dhanottam Vasant Lonkar easily inferred that the first notice issued on 03.09.2014 was actually issued on wrong address and was never served upon the assessee. Ld. AO had access to the PAN database and the address of communication and even the address of “301, Kamala Residency, CTS No.1050, Pune 411016” was mentioned in the income-tax return, but then no efforts was made to serve the notice. Ld. AO has even not resorted to any other modes available for serving the notice u/s.282(1)(b)/(c)/(d).
At this juncture, we would like take note of the judgment of Hon’ble Bombay High Court in the case of CIT v. Abacus Distribution Systems (India) (P.) Ltd. [2017] 78 taxmann.com 321 (Bom.) wherein it was held that issue of notice within time and sending it to the proper address is the basic requirement before proceeding further with the assessment proceedings. In this case the return of income was filed on 20th November, 2006 and, therefore, the time to serve notice expired on 30th November, 2007. The assessee had informed the Assessing Officer on 23rd November,2006 about change in its address since filing of the return on 20th November, 2006. Notwithstanding the above communication from the assessee the Assessing Officer sent a notice dated 30th November, 2007 under section 143(2) of the Act mentioning the old address by handing over it in the post office and sought to argue that handing over of letter in the post office within due date would be due compliance of the provisions of the Income-tax Act, so far as service of notice within time was concerned. Later on 11th December, 2007 the Assessing Officer sent one more notice under section 143(2) of the Act at the company's new address. Under the above circumstances, the Hon’ble Bombay High Court held that as the objection to the assessment proceedings was taken much before completion of Dhanottam Vasant Lonkar such proceedings on the basis of no service before the expiry of the period, i.e., 30th November, 2007 in this case the Assessment Order would not be saved by Section 292BB of the Act. Hon’ble High Court before arriving at a decision favourable to the assessee referred to the provisions of section 282 of the Act and section 27 of the General Clauses Act to understand/explain the expressions "serve" or "given" or "sent".
In yet another case, Hon’ble Bombay High Court in the case of Asstt. CIT v. Geno Pharmaceuticals Ltd. [2013] 32 taxmann.com 162/214 Taxman 83 has held that notice under section 143(2) of the Act is mandatory, and in absence of such service, the Assessing Officer cannot proceed to make an inquiry on return filed in compliance with notice issued under section 148 of the Act.
In the case(s) of Baljhadar Mal Kuthiala Vs. CIT 31 ITR 930 (Pun), Mangat Ram Kuthiala Vs. CIT 38 ITR 1 (Pun) and in the case of The Bhopal Trading Company Vs. CIT 28 ITR 478 (All HC), it has been held that if the notice duly addressed comes back with the word ‘refused’ endorsed thereon by the postal authorities, proper service may be presumed unless the contrary is proved by the assessee. In the instant case, the Revenue authorities have failed to place any record from the side of postal authorities of having not been able to serve the notice due to refusal to receive notice. Also, the Revenue authorities have admitted at a later stage that the address mentioned on the notice issued u/s.143(2) of the Act, dated 03.09.2014 was wrong. Thus, the Revenue authorities have failed to discharge their burden and it remains a uncontroverted fact that no valid notice u/s.143(2) of the Act was served upon the assessee within the statutory time limit.
Dhanottam Vasant Lonkar 23. Hon’ble Apex Court in the case of ACIT Vs. M/s. Hotel Blue Moon 321 ITR 362 (SC) has held that failure on the part of the AO to issue notice u/s.143(2) cannot be a mere procedural irregularity and the same is not curable. Hon’ble Apex Court further held that it is not a mere formality but it gives the jurisdiction to the AO to complete the assessment u/s.143(3) of the Act, therefore, non-issuance of notice u/s.143(2) of the Act vitiates the assessment proceedings and in absence of valid issuance of notice u/s.143(2) of the Act the assessment proceedings are held to be void ab-initio and liable to be quashed.
From the perusal of the ratios laid down by the Hon’ble Courts and considering the facts and circumstances of the case, we are of the considered view that issuing of valid notice u/s.143(2) of the Act is mandatory and without complying to the said provision and not issuing a valid notice u/s.143(2) of the Act, ld. AO cannot assume jurisdiction for proceeding ahead with carrying out of the assessment proceedings. Therefore, since in the instant case, notice u/s.143(2) of the Act was issued at a wrong/non-existing address and this mistake having been accepted by the Revenue authorities at the later part of the assessment proceedings during which the assessee has strongly raised objection about non-receipt of valid notice u/s.143(2) of the Act on the address of communication mentioned in the PAN database, we are of the considered view that no valid notice was issued and served upon the assessee u/s.143(2) within the statutory time limit provided under the Act. We further hold that in absence of issuance of valid notice u/s.143(2) ld. AO failed to assume jurisdiction for carrying out the assessment proceedings. We therefore quash the assessment order dated 31.03.2016 framed by the ld. AO in the case of assessee for A.Y. 2013-14 Dhanottam Vasant Lonkar being bad, illegal and void ab-initio and the impugned additions stands deleted. Finding of ld.CIT(A) is set aside and legal ground raised by the assessee challenging the validity of assessment proceedings in absence of valid notice u/s.143(2) of the Act not served upon the assessee within the statutory time limit is hereby allowed.
Since we have allowed this legal grounds in favour of the assessee and quashed the re-assessment proceedings, the remaining grounds raised by the assessee on merits as well as legal issue becomes academic in nature and needs no adjudication.
In the result, the appeal of the assessee is allowed.
Order pronounced on this 08th day of April, 2025.