The division bench of the Bombay High Court has recently ruled that, Notice for the reassessment under Section 148 of Income Tax Act invalid if issued but not served properly.
The petitioner is an individual, a widowed lady. She has been allotted a Permanent Account Number by the Income Tax Department. However, according to her, being a housewife, she had never filed return of income since she did not have any taxable income. After the death of her husband, she resides mostly with her sisters at Jabalpur.
The Assessing Officer issued a notice of reopening of the assessment of the petitioner for the Assessment Year 2011-2012. The said notice dated 15.3.2018 was despatched for delivery through post. It was returned by the postal authority on 23.3.2018 with a remark “left”. According to the Department, the address in the said postal communication was as stated by the assessee in her PAN which she never requested to be changed. On the basis of such notice and the postal despatch, the Assessing Officer carried on the assessment for the said Assessment Year. During the assessment, however, he attempted to serve notices on the petitioner at the address given by her in her bank account, the details of which were with the Department.
The Assessment Officer passed a reassessment order dated 28.12.2018. The Department thereafter issued a recovery notice dated 1.2.2019 seeking recovery of the petitioner’s tax dues pursuant to the said assessment order.
According to the petitioner, she was completely unaware and oblivion to such proceedings since she was no longer residing at the address indicated in her PAN card and the entire assessment thus proceeded ex-parte.
The division bench comprising of Justice Akil Kureshi and Justice S.J Kathawalla observed that, the notice of reassessment under section 148 of the Act had to be served on the assessee. In this context, we may examine the stand of the Department. We may recall, the notice dated 15.3.2018 was despatched to the petitioner’s address as contained in her PAN card. This notice was returned by the postal department on or around 22.3.2018 with the remark ‘left’. It is also an admitted positiion that the petitioner had not intimated to the Department about her change of address. After receiving the envelope containing the notice from the postal department, till 31.3.2018 which was the last date for service of such notice, the department took no further steps. In this background, the question is can the Department contend that there was due service of the notice.
The Court also said that, “As per the sub-section (1) of section 282 thus, the service of notice or summons, etc. may be made by delivering or transmitting a copy to the person named, inter alia as per clause (a) by post or by such courier service as may be approved by the Board or in such manner as provided under the Code of Civil Procedure for the purposes of service of summons. The Department has followed the procedure envisaged in clause (a) of sub-section (1) of section 282 of attempting to deliver the notice by post”.
“As per sub-rule (1) of Rule 127 for the purposes of subsection (1) of section 282, the addresses to which a notice or a summons, etc. may be delivered or transmitted, shall be as per the sub-rule (2). Clause (a) of sub-rule (2) of Rule 127 includes four sources of address for such transmission. First one being the address available in PAN database of the addressee. It was at this address that the notice in question was despatched. The first proviso to sub-rule (2) provides that the said communication shall not be delivered at any of the above mentioned addresses where the assessee has furnished any other address for such purpose, which is not in the present case. The further proviso to sub-rule (2) which is of considerable importance to us provides that where communication cannot be delivered or transmitted to the addresses mentioned in item Nos.(i) to (iv) or the address furnished by the assessee as per the first proviso, the communication shall be delivered or transmitted to the addresses given below the said further proviso. At item No.(i) is the address of the assessee as available with the Banking company or a cooperative bank to which Banking Regulations Act, 1949 applies”, the Court also said.
While allowing the petition, the Court also said that, “In absence of service of notice before the last date envisaged under section 149 of the Act for such purpose, the Assessing Officer could not have proceeded further with the reassessment proceedings. His consequential steps of attempting to serve the notices of scrutiny assessment were of no consequence. Reopening of assessment was invalid. No valid assessment thereon could have been framed”.
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