Facts of the Case

The Assessing Officer (AO) reopened the assessment of the assessee based on information received from the Investigation Wing. The reopening was initiated by issuing a notice under Section 148 of the Income Tax Act, 1961.

The AO noted that the notice under section 148 was served upon the assessee. However, according to the assessment order, the assessee neither filed the return of income nor attended the reassessment proceedings. Notices issued under Section 142(1) were also returned unserved. Consequently, the AO proceeded to complete the assessment based on the material available on record.

Subsequently, the assessee challenged the reassessment proceedings before the Commissioner of Income Tax (Appeals) [CIT(A)].

The CIT(A) observed that the notice under section 148 had been issued to the old address of the assessee, even though the assessee had already updated its address in subsequent income tax returns filed for later assessment years.

Issues Involved

  1. Whether reassessment proceedings are valid when the notice under Section 148 is issued to the old address of the assessee despite the new address being available in the income tax records.
  2. Whether the addition made under Section 68 of the Income Tax Act, 1961 can survive when the reassessment proceedings themselves are held to be invalid. 

Petitioner’s Arguments (Revenue)

The Revenue argued that the CIT(A) erred in holding that the reassessment proceedings were invalid merely because the notice under section 148 was issued to the old address.

It was contended that the assessee had appeared during the reassessment proceedings and therefore the reassessment should not be considered invalid. The Revenue relied on judicial precedents to submit that notice issued at the address available in the PAN database should be considered valid.

The Revenue also challenged the deletion of the addition of ₹3,21,44,750 made under Section 68, contending that the assessee had deliberately furnished the details of creditors at the last stage of the assessment proceedings to prevent proper inquiry by the Assessing Officer.

Further, it was argued that the CIT(A) possesses coterminous powers with the Assessing Officer and therefore should have conducted necessary inquiries or remanded the matter instead of deleting the addition.

Respondent’s Arguments (Assessee)

The assessee submitted that the notice issued under Section 148 dated 30.03.2017 was sent to an old address, whereas the assessee had already updated the address in its income tax returns filed for several subsequent assessment years.

The assessee produced copies of the income tax returns showing that the new address had been declared from Assessment Year 2011-12 onwards.

Therefore, it was contended that issuing notice under section 148 to the old address despite the availability of the updated address in the department’s records rendered the reassessment proceedings invalid.

Court Order / Findings

The ITAT examined the records and noted that the notice under Section 148 dated 30.03.2017 was sent to the old address of the assessee.

However, the Tribunal observed that the assessee had filed income tax returns for several assessment years after 2011 wherein the new address was clearly mentioned.

The Tribunal held that since the updated address was already available with the Income Tax Department through the income tax returns, issuing the notice to the old address could not be considered valid service of notice.

Accordingly, the Tribunal upheld the order of the CIT(A) which held that the reassessment proceedings were void ab initio.

As a result, the appeal filed by the Revenue was dismissed.

Important Clarification

The ITAT clarified that when the Income Tax Department already possesses updated address details through subsequently filed income tax returns, issuing notice under Section 148 to an outdated address cannot be treated as valid service of notice.

In such circumstances, the reassessment proceedings initiated on the basis of such defective notice are liable to be declared invalid.


Link to download the order -  https://itat.gov.in/public/files/upload/1703145021-30%20Vibyor%20IT%20Consultant.pdf

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