Summary of the Opinion

Factual and Procedural Background

This appeal under Section 260-A of the Income Tax Act, 1961 challenges the Income Tax Appellate Tribunal's order dated 19 January 2015 in respect of Assessment Year 2006-07. The dispute arises from an assessment order dated 24 December 2012 framed under Section 143(3) of the Act. The respondent-assessee had filed its return for AY 2006-07 indicating a new address and had earlier by letter dated 6 December 2005 intimated the change of address to the Assessing Officer and requested a fresh PAN. The Assessing Officer issued a notice under Section 143(2) within the statutory period but served it at the address shown in the PAN database, not at the new address provided in the return. That notice sent within the prescribed time was not received because it was no longer the respondent's address. Subsequently, and beyond the time prescribed by Section 143(2), a notice was served on the respondent. During assessment proceedings the respondent raised objections about jurisdiction/non-service; the Assessing Officer proceeded to pass the assessment order dated 24 December 2012 under Section 143(3). The Tribunal set aside/cancelled that assessment order on the ground that the notice under Section 143(2) was not served within the period specified by the proviso to sub-section (2) of Section 143, rendering the assessment invalid. The Revenue challenged the Tribunal's order before this court under Section 260-A.

Legal Issues Presented

1. Whether, on the facts and in the circumstances of the case and in law, the Tribunal was right in cancelling the assessment order by holding that the notices under Section 143(2), even when duly accepted by the associate of the assessee on the address available as per PAN database, could not validate an assessment framed under Section 143(3) if the notice was not served within the period specified under the proviso to sub-section (2) of Section 143?

Arguments of the Parties

Revenue's Arguments

• The Revenue contended that the notice dated 5 October 2007 was served at the address available in the PAN records and therefore the service at the PAN address was correct.
• The Revenue further argued that the respondent's participation in the assessment proceedings meant that their conduct was protected by Section 292BB of the Income Tax Act (i.e., reliance on deemed service where the assessee participated).

Respondent-Assessee's Arguments

• The respondent pointed out that its return of income for AY 2006-07 gave a new address and that it had earlier intimated the change of address by letter dated 6 December 2005 and requested a fresh PAN.
• The respondent argued that the notice sent to the PAN address within the statutory period was not received because it had ceased to be the respondent's address, and thus the statutory notice was not properly served within the time required under Section 143(2).
• During assessment proceedings the respondent raised objections as to the jurisdiction to assess under Section 143(3) on the ground of non-service of notice within time.

Table of Precedents Cited

No precedents were cited in the provided opinion.

Court's Reasoning and Analysis

The court's reasoning, based on the text of the opinion, proceeded as follows:

1. The court noted the factual finding recorded by the Commissioner of Income-Tax (Appeals) that the assessee had indicated a new address in the return and had earlier written (6 December 2005) to the Assessing Officer intimating the change and seeking a fresh PAN.
2. The court observed that the Assessing Officer had previously served an assessment order for AY 2004-05 at the new address on 30 November 2006, which was prior to the statutory notices dated 5 October 2007 and 25 July 2008 sent to the PAN address.
3. The court accepted the Tribunal's conclusion that the notice under Section 143(2) which was sent to the PAN address was not received by the respondent because it was no longer the respondent's address, and that a later service (beyond the statutory period) did not cure the defect.
4. In view of the proviso to Section 292BB (as referred to in the opinion) the court agreed with the Tribunal that a notice not served within time cannot be deemed valid merely because of subsequent participation, where the statutory time-limit for service was not met.
5. Having found that the statutory requirements for service of notice under Section 143(2) were not complied with, the court concluded that the assessment order dated 24 December 2012 was bad in law and that the Tribunal was justified in cancelling it.

Holding and Implications

Holding: Appeal dismissed.

Implications:

• The Tribunal's order cancelling the assessment dated 24 December 2012 (framed under Section 143(3)) stands upheld on the ground that the statutory notice under Section 143(2) was not served within the period specified by the proviso to sub-section (2) of Section 143 and therefore was invalid.
• The court noted that the proposed question of law did not give rise to any substantial question of law and declined to entertain it.
• No broader precedent or legal principle beyond the application of the relevant statutory provisions to these facts was announced; the direct effect is that the assessment in question was set aside and the appeal was dismissed. The opinion records "No order as to costs."