Interesting case : Sending of notice to old address of assessee in a mechanical way would result in proceeding as null and void
Overview:
Section 148 notice was never served upon assessee as AO, instead of proceeding to comply with rule 127, i.e., examining the PAN database or subsequent year returns to ascertain the correct address, merely dug out the old address and proceeded to complete reassessment in a mechanical manner, therefore, order passed under section 147 was a nullity.
Assessee shifted her residence and during assessment year 2011-12 under the same PAN number, she filed income tax returns disclosing changed address. AO issued a series of notices under section 148 to the assessee at her old address. Since assessee did not respond to the notices. AO passed ex parte assessment order under section 144/147. Assessee urged that entire reassessment proceeding was a nullity.
It is aptly held that section 148 notice was never served upon assessee as AO, instead of proceeding to comply with rule 127, i.e., examining the PAN database or subsequent year returns to ascertain the correct address, merely dug out the old address and proceeded to complete reassessment in a mechanical manner, therefore, order passed under section 147 was a nullity.
Decision: In assessee’s favour.
IN THE DELHI HIGH COURT
S. RAVTNDRA BHAT & A.K. CHAWLA, JJ.
Veena Devi Karnani v. ITO
W.P. (C) No. 7540 of 2018
C.M.A. No. 28840 of 2018
AY 2010-11
14 September, 2018
Petitioner by: S. Krishnan, Advocate
Respondent by: Zoheb Hossain, Senior Standing Counsel with Deepak Anand, Junior Standing Counsel
JUDGMENT
The assessee herein questions an assessment Order, dt. 13-2-2015 for the assessment year 2010-11 and all consequent proceedings. This assessment was completed under section 144 of the Income Tax Act, 1961, upon reassessment notice issued in this regard on 24-12-2013. The brief facts are that the assessee was a resident of WZ 1110, Rani Bagh, Shakur Basti, Delhi-110034. Her PAN returns for the assessment year 2010-11 (PAN No. AAGPK 5730M) also disclosed an e-mail ID. The return was processed and intimation received by the assessee in this regard. Subsequently, it appears that the assessee shifted her residence for the assessment year 2011-12, under the same PAN number, she filed the returns in Form ITR-V disclosing the changed address to be Flat No. 68, First Floor, Sandesh Vihar, Pitampura, Delhi. The same e-mail ID was reflected in this return as well. The concerned assessing officer (ITO Ward 25(2)) also continued to be same as reflected in this return. This position continued in respect of the succeeding assessment years (assessment year 2012-13 dated 31-12-2012 and in assessment year 2013-14 dated 31-12-2013). The assessing officer claiming that material information was not disclosed and that reassessment was necessary, issued notice on 24-12-2013 at the old address in the following terms :–
Notice under section 148 of the Income Tax Act, 1961
PAN/GIR No.
Office of the
Income Tax Officer
Ward-25(2) New Delhi
Dated 24-12-2013
To
Veena Devi Kamani
WZ 1110, Rani Bagh, Delhi.
Sir/Madam,
Whereas I have reason to believe that your income in respect of which you are assessable/chargeable to income-tax for the assessment year 2010-11 has escaped assessment within the meaning of section 148 of the Income Tax Act, 1961.
I therefore, propose to assess/reassess the income/re-compute, loss/depreciation for the said assessment year and I hereby require you to deliver to me within 30 days from the date of services of this notice, a return in the prescribed form of your income in respect of which you are assessable.
(Sd.)
Raj Kumar)
Income Tax Officer,
Ward-25(2), New Delhi
Room No.1708, 17th Floor,
E-2 Block, Civic Center,
Minto Road, JLN Marg,
New Delhi.”
2. Apparently, the assessing officer addressed a series of notices, to the assessee in the old address under section 148(1) (i.e., on 23-2-2014, 23-4-2014, 19-8-2014 and 30-12-2014). Since the assessee did not and could not respond because the notices were sent to the old address and therefore, she was in the dark. A final notice was issued on January 15, 2015 proposing to pass an ex parte assessment order under section 144/147. Further, the assessment was completed on 13-2-2015. It was much later, i.e., upon issuance of an attachment order to satisfy the demand, raised by virtue of the reassessment under section 144/147 (by an Order, dt. 8-5-2018) that the assessee became aware of these findings. The assessee urges that the entire reassessment proceedings were a nullity because the notice was never served upon her and rather the assessing officer instead of proceeding to comply with the provisions in respect of the notice (i.e. rule 127 by examining the PAN database or the subsequent year returns to ascertain the correct address) merely dug out the old address and proceeded to complete the assessment.3.
3. Learned counsel for the Revenue (which has filed a counter-affidavit) relies upon section 292B. It is submitted besides that the annual information reports with respect to non-PAN transactions reported by the banks and other agencies, discloses list of account holders. It is stated that from that list the assessee’s name and particulars were extracted and notices issued and therefore, the assessing officer cannot be faulted for the same.
4. The record bears out the assessee’s submissions. The returns for the assessment year 2010-11 were no doubt filed, reflecting her old (Rani Bagh) address. Nevertheless, all successive year returns (the assessment years 2011-12, 2012-13, 2013-14, 2014-15, 2015-16 and 2016-17, all of which are on record) consistently reflect the changed Pitampura address. The assessing officer (AO) continued to be the same, i.e., Income Tax Officer Ward 25(2) till November, 2014. In these circumstances the asses-see complains that the assessing officer should have done most to exert himself in the course of the law i.e. to ascertain the correct address at which the reassessment notice (issued on December 13, 2013) to be served. Rule 127 of the Income Tax Rules, which prescribes mode of service of notices, summons, requisitions and other communications states as follows :–
“127. (1) For the purposes of sub-section (1) of section 282, the addresses (including the address for electronic mail or electronic mail message) to which a notice or summons or requisition or order or any other communication under the Act (hereafter in this rule referred to as ‘communication’) may be delivered or transmitted shall be as per sub-rule (2).
(2) The addresses referred to in sub-rule (1) shall be
(a) for communications delivered or transmitted in the manner provided in clause (a) or clause (b) of sub-section (1) of section 282
(i) the address available in the PAN database of the addressee; or
(ii) the address available in the income-tax return to which the communication relates ; or
(iii) the address available in the last income-tax return furnished by the addressee ; or
(iv) in the case of addressee being a company, address of registered office as available on the website of Ministry of Corporate Affairs :–
Provided that the communication shall not be delivered or transmitted to the address mentioned in items (i) to (iv) where the addressee furnishes in writing any other address for the purposes of communication to the income-tax authority or any person authorised by such authority issuing the communication :–
Provided further that where the communication cannot be delivered or transmitted to the address mentioned in items (i) to (iv) or any other address furnished by the addressee as referred to in first proviso, the communication shall be delivered or transmitted to the following address :–
(i) the address of the assessee as available with a banking company or a co-operative bank to which the Banking Regulation Act, 1949 (10 of 1949) applies (including any bank or banking institution referred to in section 51 of the said Act) ; or
(ii) the address of the assessee as available with the Post Master General as referred to in clause (j) of section 2 of the Indian Post Office Act 1898 (6 of 1898) ; or
(iii) the address of the assessee as available with the insurer as defined in clause (9) of section 2 of the Insurance Act, 1938 (4 of 1938) ; or
(iv) the address of the assessee as furnished in form No. 61 to the Director of Income Tax (Intelligence and Criminal Investigation) or to the Joint Director of Income Tax (Intelligence and Criminal Investigation) under sub-rule (1) of rule 114D ; or
(v) the address of the assessee as furnished in form No. 61A under sub-rule (1) of rule 114E to the Director of Income Tax (Intelligence and Criminal Investigation) or to the Joint Director of Income Tax (Intelligence and Criminal Investigation) ; or
(vi) the address of the assessee as available in the records of the Government; or
(vii) the address of the assessee as available in the records of a local authority as referred to in the Explanation below clause (20) of section 10 of the Act.
(b) for communications delivered or transmitted electronically
(i) e-mail address available in the income-tax return furnished by the addressee to which the communication relates ; or
(ii) the e-mail address available in the last income-tax return furnished by the addressee ; or
(iii) in the case of addressee being a company, e-mail address of the company as available on the website of Ministry of Corporate Affairs ; or
(iv) any e-mail address made available by the addressee to the income-tax authority or any person authorised by such income-tax authority.”
5. Rule 127(2) clearly states that the addresses to which a notice or summons or requisition or order or any other communication may be delivered or transmitted shall be either available in the PAN database of the assessee or the address available in the income-tax return to which the communication relates or the address available in the last income-tax return filed by the assessee–all these options have to be resorted to by the concerned authority–in this case the assessing officer. Therefore, in the facts of this case when the assessing officer issued the reassessment notice, as he did on 13-12-2013–he was under a duty to access the available PAN database of the addressee or the address available in the income-tax return to which the communication related or the address available in the last income return filed by the addressee. The returns for the assessment years 2011-12 and 2012-13 had already been filed on 22-2-2012 and December 13, 2012 respectively, reflecting the changed address but with the same PAN and before the same assessing officer. The assessing officer omitted to access the changed PAN database and going by the explanation of the Revenue, he merely mechanically sent notices at the old address. Even after issuing the reassessment notice, all succeeding notices under section 142(1), were sent to the old address. It was in these circumstances that the reassessment was completed on best judgment basis.
6. This court recollects the decision of the Privy Council in Nazir Ahmed v. King Emperor (1936) 38 Bom LR 987 (PC) which had been followed subsequently in several Supreme Court rulings that where the law mandates doing something in a particular manner, that is the only manner permissible in law and no other mode can be considered legal. Therefore, the assessing officer was circumscribed and bound by the express mandate of rule 127 which is clearly addressed to the authorities of the Revenue vis-a-vis the mode of communication. Given these compulsions, the Revenue’s argument is a desperate “fall back” of the last resort i.e. the notice which was never under section 292B of the Act is one of despair. It amounts to saying that a notice which was never sent or received is deemed to have been sent and all proceedings despite such lack of notice and despite the Revenue’s fragrant violation of law are deemed to be justified. In such circumstances, the argument, i.e., the Revenue’s invocation of section 292B only needs to be noticed in order to be rejected as countenancing it, would mean that all illegalities are deemed to be tapered over, in its favour. Section 292B in the opinion of the court would admit that no controversy with respect to the question of notice or proper service of summons, if at all were issued in the proper manner, known to law. Here clearly that is not the case.
7. The narrative of facts and the behaviour of the assessing officer in this case is disturbing to say the least. The assessing officer appears to have completely and mechanically proceeded on the information supplied to him by the bank without caring to address himself to the correct position in law and deduced to ensure that the reassessment notice (which is a matter of moment as far as the assessee is concerned) was issued properly and served at the correct address in the manner known to law. The assessee has relied upon a screenshot of the PAN database at the stage when the petition was filed to say that the Revenue always had the wherewithal to access the correct address, PAN number and all other relevant details including the e-mail ID as well as the bank account. The omissions of the assessing officer deserves, therefore, to be not only adversely noticed but appropriately reflected in his or her confidential reports and appropriate proceedings initiated by the Revenue authorities, which is so directed. The concerned Commissioner, Principal Commissioner or other superior authorities, as the case may be, are directed to file a report in this regard within eight weeks from today.
8. Subject to the above observations, the writ petition is allowed, the impugned reassessment notice as well as the order under section 144/147, and the consequential action, i.e., attachment of the assessee’s accounts are hereby quashed.
9. List on 30-11-2018 for compliance.
