Mere mentioning changed address in return of income (ITR) without intimating AO new address and not getting PAN database changed is not enough – Supreme Court
Mere mentioning changed address in ITR not enough
ABCAUS Case Law Citation:
ABCAUS 3175 (2019) (10) SC
Important case law relied upon by the parties:
Assistant Commissioner of Income Tax v. Hotel Blue Moon reported in (2010) 3 SCC 259
The Income Tax Department (Revenue) had filed a SLP against the decision of the Hon’ble High Court confirming the decision of the ITAT in holding that the assessment order was bad in law as the notice u/s 143(2) of the Income Tax Act, 1961 (the Act) had been served at the old address of the company.
In the instant case, the return of the respondent assessee was filed under E-Module Scheme and thereafter a hard copy of the same was also filed. The return of income was accompanied with balance sheet and profit and loss account.
The return was initially processed under Section 143(1) of the Act. Thereafter a notice under Section 143(2) of the Act was issued to the respondent assessee. The said notice was sent at the assessee’s address available as per the PAN database.
A further opportunity was provided to the assessee vide another notice u/s 143(2) of the Act. The second notice was also issued to the assessee at the available address as per the PAN database.
Thereafter, further notices under Section 142(1) of the Act were issued to the assessee three times along with questionnaires calling for various details and were duly served on the respondent assessee company.
In response to the said notice, the representative of the company appeared before the Assessing Officer (AO). Though the assessee participated in the proceedings before the Assessing Officer, it however challenged the notice under Sections 143(2) and 142(1) of the Act on the ground that the said notices were not served upon the assessee as the assesse company never received those notices and the subsequent notices served and received by the assessee company were beyond the period of limitation prescribed under proviso to Section 143 of the Act.
The Assessing Officer completed the assessment under Section 143(3) by making disallowance u/s 14A read with Rule 8 of the Income Tax Rules.
Being aggrieved by the assessment order the assessee preferred appeal before the CIT (Appeals). Who allowed the appeal holding, inter alia, that the Assessing Officer completed the assessment under Section 143(3) without assuming valid jurisdiction under Section 143(2) of the Act, and therefore, the assessment framed under Section 143(3) was invalid. The CIT(A) observed that as the subsequent service of notice under Section 143(2) of the Act was beyond the period of limitation prescribed under the proviso to Section 143 of the Act and earlier no notices were served upon the assessee and/or received by the assessee as the same were sent at the old address and in the meantime company assessee changed its address and therefore the assessment order was bad in law.
Against this, the Revenue preferred appeal before the Income Tax Appellate Tribunal, which came to be dismissed. The order passed the CIT (Appeals) as well as the Tribunal was confirmed by the High Court, by the impugned judgment and order.
The Hon’ble Supreme Court observed the notice under Section 143(2) of the Act was sent by the Assessing Officer to the assessee at the address as mentioned in the PAN database and the same was within the time limit prescribed in proviso to Section 143(2) of the Act. However, it was the case on behalf of the assessee that the said notice was not served upon the assessee as the assessee changed its name and address and shifted to new address prior thereto and therefore the said notice was not served upon the assessee and by the time when subsequently the notices were served upon the assessee, notice under Section 143(2) of the Act was barred by the period prescribed in proviso to Section 143(2) of the 1961 Act and therefore the assessment order was bad in law.
The Hon’ble Supreme Court observed that though the assessee had claimed that it had intimated the changed address to the AO but the assessee failed to prove the alleged communication made in this regard. The only document available was Form No.18 filed with the ROC. The Hon’ble Supreme Court opined that filing of Form18 with the ROC could not be said to be an intimation to the Assessing Officer with respect to intimation of change in address.
The Hon’ble Supreme Court opined that no application was made by the assessee to change the address in the PAN data base and in the PAN database the old address continued. Therefore, in absence of any intimation to the Assessing Officer with respect to change in address, the AO was justified in issuing the notice at the address available as per the PAN database.
In view of the above the Hon’ble Supreme Court held that the AO could not be said to have committed any error and was justified in sending the notice at the address as per the PAN database. Therefore, the notice could be said to be within the period prescribed in proviso to Section 143(2) of the Act. Thus, once the notice was issued within the period prescribed as per the proviso to Section 143(2) of the Act, the same can be said to be sufficient compliance of Section 143(2) of the Act.
If notice is sent within prescribed period actual service immaterial
The Hon’ble Supreme Court stated that Once the notice is sent within the period prescribed in the proviso to Section 143(2) of the Act, in that case, actual service of the notice upon the assessee thereafter would be immaterial. In a given case, it may happen that though the notice is sent within the period prescribed, the assessee may avoid actual service of the notice till the period prescribed expired.
Mere mentioning changed address in ITR not enough
With respect to observations made by the High Court while concurring with the view of the Tribunal that merely by filing of return of income with the new address, it shall be enough for the assessee to discharge its legal responsibility for observing proper procedural steps as per the Companies Act and the Income Tax Act concerned, the Hon’ble Supreme Court opined that mere mentioning of the new address in the return of income without specifically intimating the Assessing Officer with respect to change of address and without getting the PAN database changed, is not enough and sufficient.
AO justified in sending notice at address mentioned in PAN database
The Hon’ble Supreme Court stated that in absence of any specific intimation to the Assessing Officer with respect to change in address and/or change in the name of the assessee, the AO would be justified in sending the notice at the available address mentioned in the PAN database of the assessee, more particularly when the return had been filed electronically.
The Hon’ble Supreme Court pointed out that notices under Section 143(2) of the Act are issued on selection of case generated under automated system of the Department which picks up the address of the assessee from the database of the PAN. Therefore, the change of address in the database of PAN is must, in case of change in the name of the company and/or any change in the registered office or the corporate office.
Accordingly, the Hon’ble Supreme Court quashed and set aside the impugned judgment and order passed by the High Court as well as the orders passed by the CIT(A) and ITAT holding the assessment order bad in law.
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