RM CONSTRUCTION (P) LTD,NEW DELHI vs. ITO WARD - 20(3), NEW DELHI

The aforesaid appeal has been filed by the assessee against the impugned order dated 07.08.2019, passed by ld. CIT (Appeals)-VII, New Delhi for the quantum of assessment passed u/s.147/143(3) for the Assessment Year 2010-11. In the grounds of appeal, the assessee has challenged the validity of reopening u/s.148 on various grounds including that no notice u/s.148 was ever served on the assessee, therefore, entire re-assessment proceedings are bad in law.

The brief facts, apropos this issue are that the assessee is a company having a registered office at “302, Krishna Apara Business Square, Netaji Subhash Nagar, Pritampura, Delhi-110034”. However, at the time of filing of original return of income for the Assessment Year 2010-11 filed on 30.03.2011 wherein old address, i.e., “15-B, Barakhamba Road, Connaught Place, New Delhi-110001”. Later on, the assessee shifted its registered office to 302, Krishna Apartment, Business Square, Netaji Subhash Nagar, Pritampura, Delhi-110034. Accordingly, the assessee informed Income Tax PAN Service unit for change of address vide intimation/letter dated 12th July, 2010, the copy of which has been placed at page 14 of the paper book. Accordingly, in PAN database the new address was incorporated. This information shows that place of business address was changed to Pritampura address. Further on 20.12.2012, ITO, Ward-20(3), New Delhi issued a letter to the assessee company at this new address for non filing of income tax return, the copy of the said letter has also been placed in the paper book wherein the AO had required the assessee to file the return of income for Assessment Year 2014-15. Thus Assessing Officer was fully aware of the changed address. The assessee-company also intimated to the Registrar of Companies for the change of address on 26.05.2010, the copy of which has been placed in the paper book from pages 11 to 13.

However, the Assessing Officer while issuing the notice u/s. 148 on 29.03.2017 had issued and sent the notice at the old address, i.e., 15-B, Barakhamba Road, Cannought Place, New Delhi-110001. Surprisingly, all the subsequent notices issued u/s. 142(1) by the Assessing Officer were sent to the assessee at the new address of Pritampura, which is evident from the copy of various such notices placed in the paper book from pages 29 to 34. The assessee claimed before the Assessing Officer that it could not receive any notice u/.148 sent on the old address nor was aware of such proceedings. And it was only when notice u/s.142 dated 27.08.2017 which was sent on the correct/ new address of the assessee, the assessee wrote to the Assessing Officer that it was not aware of any proceedings u/s 148 having been commenced for which the information has been asked for. Accordingly, the assessee requested the Assessing Officer to provide the copy of notice u/s 148 and proof of the service of such notice and about the commencement of the reassessment proceedings for the Assessment Year 2010-11. The scan copy of letter filed before the Assessing Officer reads as under:

The Assessing Officer though at page 2 of his order has acknowledged that the assessee vide letter dated 04.08.2017 has submitted that it was not aware of any proceedings had commenced in pursuance of notice u/s 148 and also request for providing the copy of assessment and thereby assessment proceedings for Assessment Year 2010-11 which has been sought to be reopened. The Assessing Officer instead sent the proof of issue of notice vide letter dated 6th October, 2017 stating that the same has been issued as per the address mentioned in the ITR for Assessment Year 2010-11, the copy of the said letter has been incorporated in the impugned assessment order. Accordingly, he rejected the said objection on the ground that notice was sent on the address mentioned in the original ITR.

Before the ld. CIT (A), the assessee has taken a specific ground and also submission. The relevant observation of the assessee as incorporated in the appellate order is reproduced hereunder: 1.6. As per AO, a notice u/s 148 was issued on 29J13.2017 a told address of the appellant 4-B, Hansalaya, 15, Barakhamba Raod, Connaught Place, New Delhi-110001 which had ceased to exist w.e.f 29.04.2010 much prior to issue of notice u/s 148 and that fact was in the public domain in the master data of the MCA (Ministry of Corporate Affairs). The above change of address of appellant was duly updated in the PAN database of the appellant as initiated by the Income Tax PAN Services Unit (managed by NSDL) vide letter dated 12.07.2010 (PB 14). The above notice issued u/s 148 being addressed at the wrong address has not ever been served on the appellant till completion of assessment. Even during the reassessment proceedings, the AO has not served notice on the appellant personally or at the correct address at 302, Krishna Apra Business Square, Netaji Subliash Place, Pitampura, New Delhi-110034 available at the time of issue of notice u/s 148; 1.7. During assessment proceedings, the AO, served notice dated 27.07.2017 issued u/s 142(1) of the Act personally on the All of the appellant on 04.08.2017.The All of the appellant vide letter dated 02.08.2017 (PB 35)in response to above notice has submitted that the appellant was not aware of any proceedings have been commenced for the AY 2010-11 and has prayed that a copy of the notice issued u/s 148 in respect of reopening of the assessment for AY 2010-11 be kindly provided along with proof of service of such notice. The above fads are on record as evident from para 2.1 at page 2 of the impugned order; 1.8. The AO vide notice dated 06.10.2017 (PB 31) provided speed post booking list as proof of dispatch of notice u/s 148 which has been issued at old address of the appellant 4-B, Ilansalaya, 15, Barakhamba Road, Connaught Place, New Delhi-110001 which had ceased to exist w.e.f 29.04.2010 but never served the notice issued u/s 148 of the Act on appellant; 1.9. The appellant vide letter dated 02.11.2017(PB 36)lo the AO submitted that the appellant submitted on 02.11.2017 e filed return of income vide Acknowledgment No.285577801021117 in response to notice u/s 148 of the Act and the AO was requested to provide the copy of the performa of reasons recorded u/s 148 along with satisfaction note of approving authority taken, if any, u/s 151 of the Act. Further, the Appellant also submitted an objection to the reassessment proceeding regarding non-issue of notice u/s 148 before the limitation period; 1.10 The reasons for reopening was provided by AO on 06.11.2017 but the objection of the appellant regarding non-issue of notice u/s 148 before the limitation period was never disposed off by the AO;”

Ld. CIT (A) rejected the said ground by following the decision of Hon’ble Supreme Court in the case of Sukhdev Industrial Ltd. vs. CIT, wherein the validity of reassessment proceedings was upheld when the notice was served by the Inspector at factory premises of the assessee to security guard and the assessee has duly responded to the said notice.

Before us, ld. counsel after referring to the aforesaid documents submitted that here in this case, it is an admitted fact that the notice u/s. 148 has been issued at old address and the change of address was in the domain of the Department for the reason that, firstly, way back in July, 2010 when the assessee had intimated about the change of address and requested for change in the PAN data base, the same was duly done by the Department and intimation of Income Tax PAN service unit was given wherein the place of the registered office of the assessee stood amended. Secondly, the assessee has also intimated the new address to the Registrar of Companies long back as on 26.05.2010. Once the notice u/s. 148 was issued on 29.08.2017, already the changed address of the assessee was in the records of the Department and this fact has also been acknowledged by the Assessing Officer that all the subsequent notices issued u/s.142(1) was sent at the new address. Not only that, the assessee has objected the same before the Assessing Officer who has merely stated that notice has been issued on the basis of address given in the original return of income. Thus, here in this case, it is an admitted fact that notice has not been served upon the assessee which has also been confirmed by the Assessing Officer.

At the time of hearing, we directed the Ld. DR to verify the contention of the assessee and also to intimate whether any such notice was sent through e- mail or otherwise. Ld. DR in response has submitted his report and stated that only one notice has been sent which was sent through speed post on the old address. However, he stated that the requirement of law is that the notice should be issued on time on the address mentioned in the return of income which has been duly complied with. Thus, there is no legal infirmity and strongly relied upon the order of CIT (A).

After considering the aforesaid submission and on perusal of the relevant finding given in the impugned orders as well as material referred to before us, we find that long before the proceedings u/s 148 sought to be initiated, assessee has changed the address and got it incorporated on the PAN data base and has duly informed the Department that the address has been changed from 15-B, Barakhamba Road, Connaught Place, New Delhi-110001 to Pritampura address (supra). This intimation was also given to all the statutory authorities like Registrar of Companies and all the subsequent Income Tax returns were also filed from the new address. One very important fact apparent from the records is that the Assessing Officer was well aware of the changed address and had sent all the notices u/s 142(1) to the new address even before assessee had pointed out to him. The Assessing Officer admittedly has issued the notice u/s.148 on the old address mentioned in the original return of income without verifying the PAN data base on the records of the Department or his own records. When assessee received the notice u/s. 142(1) on the new address, at that instance only, assessee had clearly intimated the Assessing Officer that it is not aware of any such proceedings nor any such notice u/s 148 has been served. This fact is clear from the Assessee’s letter as incorporated above. Not only that, same has been acknowledged by the Assessing Officer also at pages 2 and 3 of the assessment order. Instead of disposing off the objection, Assessing Officer is trying to justify that even if the notice has been sent on the old address he is justified in law. Even the ld. CIT (A) relying upon the judgment Sukhdev Industrial Ltd. vs. CIT has dismissed the very foundation of acquiring the jurisdiction which has no bearing on the facts of the case. In the case before the Hon’ble Court, notice was served on the correct address and the same was responded too. Here, in this case, not only the notice has been sent on the wrong address but there was no compliance made by the assessee, because assessee had not received any notice nor was aware of such notice. Thus, it stands established from the records that, no notice u/s. 148 has been issued and served upon the assessee in accordance with law which is a condition precedent for acquiring the jurisdiction u/s.148. Once the jurisdiction has not been acquired by the Assessing Officer as per law, then the entire proceedings u/s 147/148 ensued thereafter becomes null and void. This is well settled law that service of notice u/s 148 upon the assessee is condition precedent to acquire jurisdiction and Assessing Officer cannot proceed with reassessment proceedings without such mandatory compliance. Accordingly, the entire reassessment proceedings and the notice u/s. 148 is quashed, because it has neither been issued nor served in accordance with law, and therefore, Assessing Officer did not had any jurisdiction to proceed with the reassessment proceedings. 10. In the result, the reassessment proceeding is quashed and the appeal of the assessee is allowed. 11. Since, we have quashed the reassessment proceedings; therefore, we are not adjudicating the issue on merits. 12. In the result, the appeal of the assessee is allowed.