Reassessment Notice Severed At Old Address Despite Knowing Assessee’s New Address: Delhi High Court Quashes Assessment Order

The Delhi High Court has quashed the assessment order as the notice under Section 148 was improperly served as it was sent to the old address, despite the fact that the department was aware of the new address.

The bench of Justice Rajiv Shakdher and Justice Girish Kathpalia has observed that no notice, under Section 143(2) of the Income Tax Act, was issued to the respondent or assessee before framing the assessment order. Thus, the assessment order, which has been framed without a notice being issued to the respondent or assessee under Section 143(2), is unsustainable in law.

The respondent/assessee had not filed its Return of Income (ROI) for the AY in issue, i.e., AY 2010-11, up until 04.12.2015. However, insofar as ROI for AY 2013–14 was concerned, it was filed on August 1, 2013, bearing the old address. The ROI for AY 2013–14 was processed under Section 143(1), and an intimation in this behalf, dated March 7, 2014, was directed to the new address.

The Assessing Officer's record, admittedly, included the Ministry of Corporate Affairs (MCA) website screenshot that contained the new address of the assessee. The record also revealed that the assessee had informed the Income Tax Officer (ITO) that its registered office had been relocated. The assessee indicated that its new email ID was sagarpnp@hotmail.com. For ease of reference, the communication was accompanied by Form 18, filed with the Registrar of Companies, National Capital Territory of Delhi and Haryana, as per the provisions of Section 146 of the Companies Act, 1956.

Despite the appellant/revenue being given intimation about the new address, it issued a notice to the assessee under Section 142(1) concerning the AY in issue, i.e., AY 2010-11, at the old address. However, a course correction was made when the Section 142(1) notice dated June 12, 2015, was issued to the assessee at the new address.

The department contended that since the ROI for the AY in issue, i.e., AY 2010-11, was filed beyond the 30 days provided in the notice issued under Section 148, it was not obliged to issue a notice under Section 143(2) before passing the assessment order.

The assessee contended that since the belated ROI filed by the assessee was considered, it could not be treated as an invalid return and was erroneous. An invalid return forms part of the 'material available on record'. Hence, the AO was entitled by law to frame the assessment order under Section 144. 'Invalid' return falls within the ambit of the expression "all relevant material” referred to in Section 144. The notice issued under Section 148 was directed towards the old address, although the AO had been informed about the new address. The order sheets on record do not reveal that service had been affected for the assessee concerning the notice issued under Section 148 by affixation.

The court held that the absence of a notice under Section 143(2) imparts a jurisdictional defect, rendering the assessment order invalid. The appellant contended that since the return was filed beyond the timeframe specified in the Section 148 notice, no Section 143(2) notice was required. However, the court held that the AO should have issued the notice, considering the belated return was on record and had been considered during the assessment.

Counsel For Petitioner: Sanjay Kumar

Counsel For Respondent: Salil Aggarwal

Case Title: PCIT Versus M/S Dart Infrabuild (P) Ltd.

Citation: 2023 LiveLaw (Del) 1145

Click Here To Read The Order