Issuance of notice u/s 143(2) on wrong address not confers right to get notice served by affixation

Issuance of notice on wrong address not confers right on the Assessing Officer to get the notice served u/s 143(2) by way of affixation

ABCAUS Case Law Citation:
ABCAUS 3192 (2019) (11) ITAT

Important case law relied upon by the parties:
CIT vs. Madhsy Films P. Ltd. [2008] 301 ITR 69 (Delhi) 

In the instant case, the appellant assessee company had filed the appeal seeking to set aside the impugned order passed by Commissioner of Income Tax (Appeals) on the ground inter alia that the Assessing Officer (AO) had passed the impugned assessment order without assuming jurisdiction as per law and without serving the mandatory notice u/s 143(2) of the Income Tax Act, 1961 (the Act) and applying the provision of affixture and without following the due procedure as laid down under the law.

During scrutiny proceedings, the AO stated to have issued statutory notice u/s 143(2) of the Act fixing the date for hearing. Since notice was not returned back nor someone on behalf of the assessee company come forward, the AO proceeded to serve the notice by way of affixture at the last known address.

Subsequently, questionnaire was also issued which also remained un-complied. Then, notice u/s 143(2) along with questionnaire was again issued, but none attended. However, assessee company filed objection challenging validity of initiation of assessment proceedings, which were disposed off by the AO by an order.

Then, AO issued notices on four occasion but none appeared on behalf of the assessee and the final notice issued also remained un-served. Consequently, AO proceeded to complete the assessment ex-parte u/s 144 of the Act and completed the assessment by making several disallowances.

Issuance of notice 143(2) on wrong address not confers right to affixation

The Tribunal observed that undisputedly, notice u/s 143(2) was issued by the Assessing Officer to the assessee company at the wrong address whereas the copy of acknowledgement of return, the correct address of assessee company was mentioned.

The Tribunal was of the view that the satisfaction of the Assessing Officer that the assessee could not be served through ordinary process was altogether missing thereby compelling AO to resort to substitute service by way of affixation, more particularly when correct address was available.

The Tribunal stated that when statutory requirements as to service of notice u/s 143(2) has not been completed, merely disposing of the objection does not make the assessment valid, which was otherwise invalid since very beginning.  

The Tribunal noted that a bare perusal of notice issued u/s 143(2) and another notice issued by way of affixation went to prove that this was an exercise undertaken by the Assessing Officer in futility just to bring the entire assessment process within limitation.

According to the case of the Assessing Officer that original service was valid, the service of notice by way of affixation was just issued as abundant precaution to safeguard the interest of the revenue proves that mandatory notice u/s 143(2) had never been served upon the assessee within prescribed period.

The Tribunal opined that issuance of notice on the wrong address never confers any right on the Assessing Officer to get the notice served u/s 143(2) by way of affixation. Because notice by way of affixation is only to be served on the assessee when his correct address is not available or he has refused to accept the service of notice as its not an empty formality.

Accordingly, it was held that assessment framed u/s 143(3) was void ab initio for want of issuance of statutory notice u/s 143(2) consequently, assessment was quashed.

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