Pr.
CIT v. M/s. I-Ven Interactive Limited
Civil
Appeal no. 8132 of 2019 (arising out of SLP(C) no. 3530/2019)
Order
dated 18/10/2019
Ratio
:
In a recent ruling, the
Supreme Court held that intimation of change of address by the assessee to the
AO is must before the assessee can claim non receipt of notice.
Facts of the case :
The assessee
filed its return of income for AY 2006-07 on 28/11/2006 under E-Module Scheme.
The return was processed u/s. 143(1) of the Act.
Subsequently, the
return was selected for scrutiny and notice u/s. 143(2) dated 05/10/2007 was
issued on the address available as per PAN database. Thereafter, another notice
u/s. 143(2) dated 25/07/2008 was issued followed by various notices u/s. 142(1)
were issued to the assessee.
In response, the
assessee appeared and participated before the AO. However, the assessee
challenged the notices issued u/s. 143(2) and 142(1) on the ground that the
said notices were not served upon the assessee and subsequent notices served
and received by the assessee were beyond the period of limitation prescribed
under proviso to section 143 of the Act.
The AO completed the assessment by passing of assessment order dated 24/12/2008 u/s. 143(3) of the Act.
CIT(A)’s verdict :
The CIT(A) held
that :
(i)
the subsequent service of notice u/s. 143(2) was beyond the period of
limitation under proviso to section 143 ; and
Therefore, the
assessment order was bad in law.
ITAT and High Court’s verdict :
The hon’ble ITAT and High
Court confirmed the order passed by CIT(A).
Question before Supreme Court :
Whether the notice issued u/s. 143(2) at the assessee’s address available as per the PAN database not
received by the assessee were beyond the period of limitation prescribed under
proviso to Section 143 of the 1961 Act?
Before Supreme Court :
AO’s contention :
(i) Notice u/s. 143(2) was sent to the assessee on the available address as per PAN database. This tantamount to sufficient compliance of the relevant provisions of the Act.
(ii) The assessee has failed to prove the intimation of new address to the AO.
Assessee’s
submission :
(i)
The change of address and change in name of the assessee was intimated
to ROC in Form 18.
(ii)
The AO was in knowledge of the new address as the assessment orders for
AY 2004-05 and AY 2005-06 were sent at the new address.
(iii)
Reliance was placed on the decision of ACIT v. Hotel Blue Moon (2010) 3 SCC 259
(SC) wherein it was
held that issuance of notice u/s. 143(2) of the Act within the time prescribed
in proviso to section 143(2) is must and mandatory.
Supreme Court’s verdict :
The Supreme Court
set aside the order of the lower authorities and allowed the appeal of the
Department on the following grounds :
(i)
Filing of Form 18 with ROC cannot be said to be an intimation to the AO
with respect to change in address ;
Mere mentioning of new
address in the return of income without specifically intimidating the AO with
respect to change of address and without getting the PAN database changes, is
not enough and sufficient ;
(ii) It is required to be noted that notices u/s. 143(2) are issued on selection of case generated under automated system of the Department which picks up the address from the database of the PAN. Therefore, the change of address in the database of PAN is must.
(iii) In a given case, it may happen that though the notice is sent within the period prescribed, the assessee may avoid actual service of notice till the period prescribed expired ;
Therefore, the AO cannot be said to be have committed any error and in fact the AO was justified in sending the notice at the address as per PAN database.
Acelegal analysis :
(1)
The Supreme Court seems to have lost sight of the fact that
assessment orders for AY 2004-05 and AY 2005-06 was sent at new address. This means
that department had sufficient notice of change in address in their record.
This aspect is not adverted to by the Apex Court.
(2)
With the introduction of e-assessment scheme for faceless
scrutiny of income tax returns, all the communication such as notice, direction
or order, shall take place through electronic communication which will be
served either in the electronic portal or e-mail id or mobile app and a real
time alert. In light of the said decision, the assessee will be required to
update the income tax portal with their valid email id and mobile no. from time
to time before it can claim non service.
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