Case Note & Summary
The Supreme Court allowed the appeal filed by the Principal Commissioner of Income Tax, Mumbai, against the judgment of the Bombay High Court which had dismissed the Revenue's appeal and confirmed the orders of the CIT (Appeals) and ITAT setting aside the assessment order for Assessment Year 2006-07. The respondent-assessee, M/s IVen Interactive Limited, had filed its return of income on 28.11.2006 declaring total income of Rs.3,38,71,716/-, which was processed under Section 143(1) of the Income Tax Act, 1961. The Assessing Officer issued a notice under Section 143(2) on 05.10.2007 to the assessee's address as per the PAN database, which was within the limitation period prescribed under the proviso to Section 143(2). Subsequently, further notices under Section 142(1) were issued and served, and the assessee participated in the proceedings through its representative on 28.11.2008 and 04.12.2008. The Assessing Officer completed the assessment under Section 143(3) on 24.12.2008, making a disallowance of Rs.8,91,17,643/- under Section 14A read with Rule 8D of the Income Tax Rules. The assessee challenged the assessment on the ground that the initial notice under Section 143(2) was not served because the company had changed its address, and the subsequent service was beyond limitation. The CIT (Appeals) allowed the appeal, holding that the assessment was invalid due to lack of valid jurisdiction under Section 143(2), as the notice was not served within limitation. The ITAT and the High Court affirmed this decision. The Revenue appealed to the Supreme Court. The Supreme Court examined the facts and found that the assessee had failed to prove that it had intimated the change of address to the Assessing Officer. The alleged communication dated 06.12.2005 was not produced and was stated to be unavailable. The assessee had not updated its address in the PAN database, and filing Form 18 with the Registrar of Companies did not constitute intimation to the Assessing Officer. The Court held that the Assessing Officer was justified in sending the notice to the address in the PAN database, and since the notice was issued within the prescribed period, it was sufficient compliance of Section 143(2). The Court distinguished the case of Assistant Commissioner of Income Tax v. Hotel Blue Moon, noting that in that case the notice was not issued within limitation, whereas here it was issued within time. The Court also noted that the assessee had participated in the assessment proceedings. Consequently, the Supreme Court set aside the orders of the CIT (Appeals), ITAT, and the High Court, and restored the assessment order dated 24.12.2008. The appeal was allowed with no order as to costs.
Headnote
A) Income Tax - Notice under Section 143(2) - Limitation - Service of Notice - The Assessing Officer sent notice under Section 143(2) to the assessee's address in the PAN database within the prescribed period. The assessee claimed non-service due to change of address but failed to prove any intimation to the Assessing Officer. Filing Form 18 with ROC does not amount to intimation to the Assessing Officer. Held that the notice was validly issued and the assessment order was not bad in law (Paras 6.1-6.2). B) Income Tax - Change of Address - Intimation to Assessing Officer - The assessee alleged communication dated 06.12.2005 intimating new address, but the document was not produced and was stated to be unavailable. The assessee also did not update the PAN database. Held that in absence of intimation, the Assessing Officer was justified in sending notice to the PAN database address (Paras 6.1-6.2). C) Income Tax - Assessment Proceedings - Participation by Assessee - The assessee participated in assessment proceedings after receiving subsequent notices. However, the validity of the initial notice under Section 143(2) is determined by its issuance within limitation, not by subsequent participation. Held that the assessment order was valid (Para 6.2).
Issue of Consideration
Whether the assessment order under Section 143(3) of the Income Tax Act, 1961 is invalid because the notice under Section 143(2) was not served within the limitation period, when the Assessing Officer sent the notice to the address in the PAN database and the assessee failed to prove intimation of change of address.
Final Decision
The Supreme Court allowed the appeal, set aside the impugned judgment and order of the High Court dated 27.06.2018 and the orders of CIT (Appeals) dated 23.12.2010 and ITAT dated 19.01.2015, and restored the assessment order dated 24.12.2008 passed by the Assessing Officer under Section 143(3) of the Income Tax Act, 1961. No order as to costs.
Law Points
- Notice under Section 143(2) of the Income Tax Act
- 1961 must be issued within the prescribed period
- sending notice to the address in PAN database is sufficient compliance if no intimation of change of address is given to the Assessing Officer
- filing Form 18 with ROC does not constitute intimation to the Assessing Officer
- assessee's failure to prove communication of change of address renders subsequent service beyond limitation irrelevant.
