Pre-Assessment Notice To Wrong Address of Assessee Will Not Render A Valid Notice

Pre-Assessment notice

In CIT v. Abacus Distribution Systems (India) Pvt. Ltd, the Bombay High Court held that the issue of a notice under section 143(2) of the Income Tax Act bearing the wrong (old) address of the assessee does not amount to a valid service of the notice u/s 282 r.w.s. 27 of the General Clauses Act.

Quashing the assessment proceedings, the bench noted that the non-service of a notice under section 143(2) before the expiry of 12 months from the end of the month in which the return was filed renders the assessment void.

A notice under section 143(2) of the Income Tax Act was issued to the wrong address of the assessee. The AO further handed over the same to the post office and the notice was subsequently forwarded to the new office of the assessee after the expiry of 12 months. The assessee objected to the notice mainly on ground that it was time-barred. The Appellate Tribunal held in favour of the assessee by observing that the notice was not served in the correct address before the due date.

The division bench comprising of Justice M.S Sanklecha and Justice A.K Menon noted that the notice under Section 143(2) of the Act which was handed over to the post office on 30th November, 2007 was incorrectly addressed i.e. it was addressed to the respondent-assessee’ sold office at Nariman Point, Mumbai. “In terms of Section 282 of the Income Tax Act Act as existing in 2007 a notice may be served on the person named therein either by post or as if it were a summons issued by the Court under the Code of Civil Procedure. Section 27 of the General Clauses Act provides that where any Central Act requires a document to be served by post where the expression “serve” or “given” or “sent” shall be deemed to have been effected by properly addressing, prepaying and posting. In such cases, unless the contrary is proved which would be deemed to have been served at the time when the letter would be delivered in the ordinary course of post to the addressee.”

It was also noted that the envelope containing the notice was wrongly addressed and therefore, the presumption under Section 27 of the General Clauses Act cannot be invoked. “It is very pertinent to note that subsequently i.e. on 11th December, 2007 the Assessing Officer served the notice upon the correct address of the respondent-assessee. This posting to the correct address was on the basis of the record which was already available with the Assessing Officer by virtue of letter dated 23rd November, 2006 addressed by the respondent to the Assessing Officer. Admittedly there was no fresh intimation/knowledge received by the Assessing Officer after 23rd November, 2006 and before 11th December, 2007 giving the new address of the respondent-assessee. Moreover, as the objection to the Assessment proceeding was taken much before the Assessment proceedings were completed on the basis of no service of notice before the expiry of the period, the Assessment Order will not be saved by Section 292BB of the Income Tax Act.”

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