Facts of the Case

The present appeal arose from Assessment Year 2010–11 wherein the Revenue challenged the order of the Income Tax Appellate Tribunal (ITAT).

The assessee, M/s Dart Infrabuild Pvt. Ltd., had changed its registered office address and duly informed the Income Tax Department as well as updated records with the Registrar of Companies. Despite such intimation, the Assessing Officer (AO) issued a notice under Section 148 of the Income-tax Act, 1961 at the old address.

Subsequently, reassessment proceedings were initiated and the AO passed an order under Sections 147/144 making additions under Section 68 (₹25.07 crore towards share capital/premium) and disallowance under Section 14A.

However, no notice under Section 143(2) was issued before completing the reassessment.

Issues Involved

  1. Whether notice issued under Section 148 at the old address is valid when the department had knowledge of the new address.
  2. Whether issuance of notice under Section 143(2) is mandatory before passing reassessment order under Sections 147/144.
  3. Whether Section 292BB can cure defects in service or non-issuance of notice.

Petitioner’s (Revenue’s) Arguments

  • The notice under Section 148 was sent to the address available in records; hence service was valid.
  • Service was also effected through affixation at the old address.
  • The assessee failed to object during assessment proceedings; thus Section 292BB applies.
  • Since return was filed beyond 30 days of notice u/s 148, issuance of notice under Section 143(2) was not mandatory.
  • AO was justified in proceeding under Section 144 due to non-compliance by the assessee.

Respondent’s (Assessee’s) Arguments

  • The department was already informed about the change of address, hence service at old address is invalid.
  • No proper service of notice under Section 148 was effected; affixation was unjustified.
  • Objection regarding improper service was raised before completion of assessment; hence Section 292BB does not apply.
  • Return of income was filed and considered by AO; therefore issuance of notice under Section 143(2) was mandatory.
  • Failure to issue notice under Section 143(2) renders reassessment proceedings void ab initio.

Court’s Findings / Order

1. Invalid Service of Notice u/s 148

  • The AO had prior knowledge of the new address, yet issued notice at the old address.
  • Service of notice was therefore invalid in law.

2. Section 292BB Not Applicable

  • The assessee had raised objection regarding improper service before completion of assessment.
  • Hence, deeming fiction under Section 292BB does not apply.

3. Mandatory Nature of Notice u/s 143(2)

  • Once the return was filed and considered, issuance of notice under Section 143(2) becomes mandatory.
  • Non-issuance is a jurisdictional defect, not a procedural irregularity.

4. Reassessment Order Invalid

  • Failure to issue notice under Section 143(2) vitiates the entire reassessment proceedings.

Final Order

  • Appeal of the Revenue dismissed.
  • No substantial question of law arises 

Important Clarifications

  • Service at wrong address = invalid reassessment initiation.
  • Section 292BB applies only to defects in service, not absence of notice.
  • Notice u/s 143(2) is mandatory even in reassessment proceedings once return is filed.
  • Belated return, if considered by AO, still requires compliance with Section 143(2) 

Sections Involved

  • Section 147 – Income escaping assessment
  • Section 148 – Issue of notice for reassessment
  • Section 143(2) – Mandatory scrutiny notice
  • Section 144 – Best judgment assessment
  • Section 292BB – Deemed service of notice
  • Section 68 – Unexplained cash credits
  • Section 14A – Disallowance of expenditure

Link to download the order -https://delhihighcourt.nic.in/app/showFileJudgment/RAS17112023ITA102022_173951.pdf

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