By TIOL News Service

MUMBAI, FEB 14, 2017: THE issue is - Whether assessment order passed u/s 143(3) without considering the objections of assessee is void ab initio, if the objection to assessment proceeding on basis of no service of notice, was taken much before the Assessment proceedings were completed. YES is the verdict.

Facts of the case:

The assessee filed its return declaring its income as Nil wherein its address was mentioned as "81/83A, Mittal Court, 8th Floor, "A" Wing, Nariman Point, Mumbai-400021." Subsequently, the assessee filed a communication to the AO intimating him that the address of assessee had now changed. Thereafter, notice u/s 143(2) was issued by the AO to the assessee at its original address of Nariman Point. The Income Tax Inspector filed a report stating that he had visited the office premises of Nariman Point, Mumbai to serve the notice u/s 143(2) but no such company was found in occupation of the address as communicated in the return. Thereafter, the AO handed over the notice u/s 143(2) to the Post Office for service of the same to assessee. However, the communication was addressed to the erstwhile office of Nariman Point. Once again the AO sent a notice to the assessee, however, to the new address. Immediately on receipt of the above notice, the assessee objected to the assessment proceedings on the ground that no notice u/s 143(2) was served within the statutory period of 12 months. Notwithstanding the above, the AO consequent to the directions of the DRP, passed an Assessment Order u/s 143(3) r/w/s 144C(13). On appeal, the ITAT held that it was mandatory for the AO to serve notice u/s 143(2) before the expiry of 12 months from the end of the month in which the return was furnished. Thus, taking into account the fact that the assessee had objected at the very first instance to the assessment being taken up for completion, in the absence of the mandatory requirement of Section 143(2) being satisfied, the assessment order was declared null and void.

On appeal, the HC held that,

++ it is undisputed position that notice u/s 143(2) which was handed over to the post office was incorrectly addressed to the assessee's old office at Nariman Point, Mumbai. In terms of Section 282 of the Act as existing in 2007 a notice may be served on the person named therein either by post or as if it were a summons issued by the Court under the Code of Civil Procedure. Section 27 of the General Clauses Act provides that where any Central Act requires a document to be served by post where the expression "serve" or "given" or "sent" shall be deemed to have been effected by properly addressing, prepaying and posting. In such cases, unless the contrary is proved which would be deemed to have been served at the time when the letter would be delivered in the ordinary course of post to the addressee. In this case admittedly the envelope containing the notice was wrongly addressed. Thus the presumption u/s 27 of the General Clauses Act cannot be invoked. It is very pertinent to note that subsequently the AO served the notice upon the correct address of the assessee. This posting to the correct address was on the basis of the record which was already available with the AO by virtue of letter addressed by the assessee to the AO. Admittedly there was no fresh intimation/knowledge received by AO giving the new address of the assessee. Moreover, as the objection to the Assessment proceeding was taken much before the Assessment proceedings were completed on the basis of no service of notice before the expiry of the period, the Assessment Order will not be saved by Section 292BB of the Act. In the above view, the impugned order of the Tribunal renders a finding of fact that the notice u/s 143(2) has not been served at the correct address. It follows that Assessment proceedings concluded on the basis of such invalid notice is void.

(See 2017-TIOL-311-HC-MUM-IT)