PRINCIPAL COMMISSIONER OF INCOME TAX, MUMBAI versus M/S I-VEN INTERACTIVE LIMITED, MUMBAI on 18 October 2019

[2019] 13 S.C.R. 509

PRINCIPAL COMMISSIONER OF INCOME TAX, MUMBAI

v.

M/S I-VEN INTERACTIVE LIMITED, MUMBAI

(Civil Appeal No. 8132 of 2019)

OCTOBER 18, 2019

[UDAY UMESH LALIT, INDIRA BANERJEE AND

M. R. SHAH, JJ.]

Income Tax Act, 1961 – s.142(1), Proviso to s.143(2) –Respondent-assessee company filed return of income for 2006-07,declaring total income of Rs.3,38,71,716/-, under E-Module Scheme– Notice u/s.143(2) issued to the assessee on 05.10.07 at the addressavailable as per the PAN database –Another notice issued u/s.143(2)– Further notices u/s.142(1) issued to the assessee – Duly served –Notices challenged on the ground that they were not served uponthe assessee as it never received them and the subsequent noticesserved and received were beyond the period of limitation prescribedunder proviso to s.143– Assessing Officer made disallowance ofRs.8,91,17,643/- and computed total income at Rs.5,52,45,930/- –Assessment order confirmed by the CIT (Appeals), Income TaxAppellate Tribunal (ITAT) and the High Court – Held: Merementioning of the new address in the return of income withoutspecifically intimating the Assessing Officer with respect to changeof address and without getting the PAN database changed, is notsufficient – In absence of such specific intimation, Assessing Officerwould be justified in sending the notice at the available addressmentioned in the PAN database, more particularly when the returnhas been filed under E-Module scheme– Notices u/s.143(2) areissued on selection of case generated under automated system ofthe Department which picks up the address of the assessee from thedatabase of the PAN – Therefore, change of address in the databaseof PAN is must, in case of change in the name of the company and/or any change in the registered office or the corporate office andthe same has to be intimated to the Registrar of Companies in theprescribed format –Thereafter the assessee is required to approachthe Department with the copy of the said document and make an

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Aapplication for change of address in the departmental database ofPAN, which in the present case the assessee failed to do – AssessingOfficer cannot be said to have committed any error and was justifiedin sending the notice at the address as per the PAN database –Thus, the notice dtd. 05.10.07 can be said to be within the periodprescribed in proviso to s.143(2) – Once the notice is sent withinBthe period prescribed in the proviso to s.143(2), in that case, actualservice of the notice upon the assessee thereafter would beimmaterial – Judgment of the High Court, CIT (Appeals) and theITAT holding the assessment order bad in law, quashed – Matterremanded to the CIT (Appeals) to consider the appeal on merits, inCaccordance with law.

Allowing the appeal, the Court

Conclusion

Allowing the appeal, the Court

HELD: 1.1 Notice under Section 143(2) of the Income TaxAct, 1961 was sent by the Assessing Officer to the assessee atthe address as mentioned in the PAN database on 05.10.2007Dand the same was within the time limit prescribed in proviso toSection 143(2) of the 1961 Act. It was the case on behalf of theassessee that vide communication dated 06.12.2005 the assesseeintimated to the Assessing Officer about the new address anddespite the same the Assessing Officer sent the notice at the oldEaddress. The assessee has failed to prove the allegedcommunication dated 06.12.2005. The only document availableis Form No.18 filed with the ROC. Filing of Form-18 with theROC cannot be said to be an intimation to the Assessing Officerwith respect to intimation of change in address. No applicationwas made by the assessee to change the address in the PAN dataFbase and in the PAN database the old address continued.Therefore, in absence of any intimation to the Assessing Officerwith respect to change in address, the Assessing Officer wasjustified in issuing the notice at the address available as per thePAN database. Therefore, the Assessing Officer cannot be saidGto have committed any error and in fact the Assessing Officerwas justified in sending the notice at the address as per the PANdatabase. If that is so, the notice dated 05.10.2007 can be said tobe within the period prescribed in proviso to Section 143(2) ofthe 1961 Act. Once the notice is issued within the period H

prescribed as per the proviso to Section 143(2) of the Act, thesame can be said to be sufficient compliance of Section 143(2) ofthe 1961 Act. Once the notice is sent within the period prescribedin the proviso to Section 143(2) of the 1961 Act, in that case,actual service of the notice upon the assessee thereafter wouldbe immaterial. In a given case, it may happen that though thenotice is sent within the period prescribed, the assessee mayavoid actual service of the notice till the period prescribedexpired. [Para 6.1] [516-F-H; 517-A-E]

1.2 Mere mentioning of the new address in the return ofincome without specifically intimating the Assessing Officer withrespect to change of address and without getting the PANdatabase changed, is not enough and sufficient. In absence of anyspecific intimation to the Assessing Officer with respect to changein address and/or change in the name of the assessee, theAssessing Officer would be justified in sending the notice at theavailable address mentioned in the PAN database of the assessee,more particularly when the return has been filed under E-Modulescheme. Notices under Section 143(2) of the 1961 Act are issuedon selection of case generated under automated system of theDepartment which picks up the address of the assessee from thedatabase of the PAN. Therefore, the change of address in thedatabase of PAN is must, in case of change in the name of thecompany and/or any change in the registered office or thecorporate office and the same has to be intimated to the Registrarof Companies in the prescribed format (Form 18) and aftercompleting with the said requirement, the assessee is requiredto approach the Department with the copy of the said documentand the assessee is also required to make an application forchange of address in the departmental database of PAN, which inthe present case the assessee has failed to do so. The impugnedjudgment and order passed by the High Court as well as the orderspassed by the learned C.I.T (Appeals) and the I.T.A.T holdingthe assessment order bad in law on the aforesaid ground cannotbe sustained and the same deserve to be quashed and set aside.As the learned C.I.T (Appeals) has not considered the othergrounds on merits and has not considered the appeal on merits, A

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Athe matter is required to be remanded to the learned C.I.T(Appeals) to consider the appeal on merits, in accordance withlaw. [Paras 7 & 9] [518-A-D; F-G]

Assistant Commissioner of Income Tax v. Hotel BlueMoon reported in (2010) 3 SCC 259 : [2010] 2 SCRB282 – referred to.

Case Law Reference

[2010] 2 SCR 282

referred to

Para 5.3

CIVIL APPELLATE JURISDICTION : Civil Appeal No. 8132of 2019.C

From the Judgment and Order 27.06.2018 of the High Court ofJudicature at Bombay in Income Tax Appeal No. 94 of 2016.

H. Raghavendra Rao, Rupesh Kumar, Mrs. Anil Katiyar, Advs.for the Appellant.

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S. K. Bagaria, Sr. Adv., K. R. Sasiprabhu, Vishnu Sharma, Advs.for the Respondent.

The Judgment of the Court was delivered by

M. R. SHAH, J. 1. Leave granted.

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2. Feeling aggrieved and dissatisfied with the judgment and orderdated 27.06.2018 passed by the High Court of Judicature at Bombay inIncome Tax Appeal No.94 of 2016, by which the High Court hasdismissed the said appeal preferred by the Revenue and has confirmedthe orders passed by the learned C.I.T (Appeals) as well as I.T.A.TFquashing and setting aside the assessment order for A.Y. 2006-07, therevenue has preferred the present appeal.

3. That the respondent – assessee filed return of income for theAssessment Year 2006-07 on 28.11.2006 declaring total income ofRs.3,38,71,716/-. The said return was filed under E-Module SchemeGand thereafter a hard copy of the same was filed on 05.12.2006. Thereturn of income was accompanied with balance sheet and profit andloss account. The return was processed under Section 143(1) of theIncome Tax Act, 1961 (hereinafter referred to as the ‘1961 Act’). Thata notice under Section 143(2) of the 1961 Act was issued to the H

respondent-assessee on 05.10.2007. The notice was sent at theassessee’s address available as per the PAN database. That a furtheropportunity was provided to the assessee vide notice under Section 143(2)of the 1961 Act on 25.07.2008. The said notice was also issued to theassessee at the available address as per the PAN database. Thatthereafter, further notices under Section 142(1) of the 1961 Act wereissued to the assessee on 23.01.2008, 25.07.2008 and 05.10.2008 alongwith questionnaires calling for various details and were duly served onthe respondent-assessee company. In response to the said notice, therepresentative of the company appeared on 28.11.2008 and 04.12.2008.The assessee participated in the proceedings before the AssessingOfficer. However, the assessee challenged the notice under Sections143(2) and 142(1) of the 1961 Act on the ground that the said noticeswere not served upon the assessee as the assessee-company neverreceived those notices and the subsequent notices served and receivedby the assessee-company were beyond the period of limitation prescribedunder proviso to Section 143 of the 1961 Act.

3.1 That the Assessing Officer vide assessment order dated24.12.2008 completed the assessment under Section 143(3) of the 1961Act by making disallowance of Rs. 8,91,17,643/- under Section 14A ofthe 1961 Act, read with Rule 8 of the Income Tax Rules and computedtotal income at Rs.5,52,45,930/-.

3.2 Being aggrieved by the assessment order dated 24.12.2008,the assessee preferred appeal before the learned C.I.T (Appeals). Thelearned C.I.T (Appeals) allowed the appeal vide order dated 23.12.2010holding, inter alia, that the Assessing Officer completed the assessmentunder Section 143(3) of the 1961 Act, without assuming valid jurisdictionunder Section 143(2) of the 1961 Act, and therefore, the assessmentframed under Section 143(3) of the 1961 Act was invalid. The learnedC.I.T (Appeals) observed that as the subsequent service of notice underSection 143(2) of the 1961 Act was beyond the period of limitationprescribed under the proviso to Section 143 of the 1961 Act and earlierno notices were served upon the assessee and/or received by theassessee as the same were sent at the old address and in the meantimecompany-assessee changed its address and therefore the assessmentorder was bad in law. The Revenue preferred appeal before the IncomeTax Appellate Tribunal, which came to be dismissed by the learned A

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AI.T.A.T. vide order dated 19.01.2015. The order passed the learnedC.I.T (Appeals) as well as I.T.A.T. have been confirmed by the HighCourt, by the impugned judgment and order. Hence, the Revenue haspreferred the present appeal.

4. Shri H. Raghavendra Rao, learned Advocate appearing onBbehalf of the Revenue has vehemently submitted that the impugnedjudgment and order passed by the High Court dismissing the appeal andthereby confirming the orders passed by the learned C.I.T (Appeals)and I.T.A.T holding that the assessment order was bad in law, is contraryto the provisions of Section 143(2) of the 1961 Act.

C4.1 It is further submitted that the Assessing Officer sent thenotice under Section 143(2) of the 1961 Act to the assessee at theavailable address as per the PAN database. It is submitted that as suchthere was no intimation by the assessee to the Assessing Officer withrespect to change of address. It is submitted therefore that notice underSection 143(2) of the 1961 Act was sent to the assessee on the availableDaddress as per the PAN database. It is submitted therefore that oncenotice under Section 143(2) of the 1961 Act was issued and sent to theassessee on the available address as per the PAN database, it can besaid to be a sufficient compliance of the relevant provisions of the 1961Act, more particularly Section 143(2) of the 1961 Act.

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4.2 It is further submitted that as such the High Court has notproperly appreciated the fact that the alleged communication dated06.12.2005 from the respondent-assessee to the Assessing Officerintimating new address of the assessee was never received by theAssessing Officer. It is submitted that even today also the assessee isFnot in a position to produce the said communication. It is submittedtherefore the respondent-assessee has failed to prove that the allegedcommunication dated 06.12.2005 was, in fact, sent to the AssessingOfficer, intimating about new address.

4.3 It is further submitted by the learned Advocate appearing onGbehalf of the Revenue that, as such, the learned C.I.T (Appeals) hasheavily relied upon the alleged communication dated 06.12.2005 intimatingthe change of address to the Assessing Officer by the assessee, however,the communication dated 06.12.2005 is not forthcoming and has not beenproduced. It is submitted therefore that in the facts and circumstances H

of the case the Assessing Officer was justified in sending the noticesunder Section 143(2) of the 1961 Act at the available address as per thePAN database. It is submitted therefore that the learned C.I.T (Appeals),I.T.A.T and the High Court have committed a grave error in holding thatthe assessment order is bad in law as the notice under Section 143(2) ofthe 1961 Act was beyond the period of limitation.

4.4 It is further submitted that as such thereafter the assesseedid participate in the assessment proceedings and therefore the learnedC.I.T (Appeals) ought to have considered the appeal on merits and oughtnot to have set aside the assessment order solely on the ground that theassessment order is bad in law.

4.5 Making the above submissions, it is prayed to allow the presentappeal.

5. Shri S.K. Bagaria, learned Senior Advocate appearing on behalfof the respondent-assessee has made strenuous efforts to support theorders passed by the learned C.I.T (Appeals) and confirmed by theI.T.A.T. and the High Court. It is submitted that as such the AssessingOfficer was aware of the new address of the assessee and thereforethe Assessing Officer was required to send the notices on the newaddress. It is submitted that instead the Assessing Officer sent thenotice at the old address and therefore the same was never served uponthe assessee. It is submitted that by the time the subsequent notice wasserved upon the assessee, the notice under Section 143(2) of the 1961Act was barred by limitation as provided under Section 143(2) of the1961 Act. Therefore, the learned C.I.T (Appeals), I.T.A.T and theHigh Court are right in holding that the assessment order was bad inlaw.

5.1 Learned Senior Advocate appearing on behalf of the assesseehas further submitted that as such the change of address and change inthe name of the assessee-company was intimated to the Registrar ofCompanies in Form-18. It is submitted therefore in fact the name of thecompany was changed and the change in the address has been establishedand proved.

5.2 Shri Bagaria, learned Senior Advocate has further submittedthat the Assessing Officer was in the knowledge of the new address,which is evident from the fact that the Assessment Orders for A.Y2004-05 and A.Y. 2005-06 were sent at the new address.

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A5.3 Relying upon the decision of this Court in the case of AssistantCommissioner of Income Tax v. Hotel Blue Moon reported in (2010)3 SCC 259, it is submitted by the learned Senior Advocate for theassessee that as held by this Court the issuance of the notice underSection 143(2) of the 1961 Act within the time prescribed in the provisoto Section 143(2) of the 1961 Act is must and mandatory. It is submittedBthat therefore when it was found that notice under Section 143(2) of the1961 Act was not served upon the assessee within the time prescribedin the proviso to Section 143(2) of the Act, the assessment order wasbad in law and the same was rightly set aside by the learned C.I.T(Appeals), confirmed up to High Court.

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C5.4 Making the above submissions and relying upon the aforesaiddecision of this Court, it is prayed to dismiss the present appeal.

6. We have heard the learned counsel for the respective partiesat length.

D6.1 At the outset, it is required to be noted that notice under Section143(2) of the 1961 Act was sent by the Assessing Officer to the assesseeat the address as mentioned in the PAN database on 05.10.2007 and thesame was within the time limit prescribed in proviso to Section 143(2) ofthe 1961 Act. However, it was the case on behalf of the assessee thatthe said notice was not served upon the assessee as the assessee changedEits name and address and shifted to new address prior thereto andtherefore the said notice was not served upon the assessee and by thetime when subsequently the notices were served upon the assessee,notice under Section 143(2) of the 1961 Act was barred by the periodprescribed in proviso to Section 143(2) of the 1961 Act and thereforethe assessment order is bad in law. It was the case on behalf of theFassessee that vide communication dated 06.12.2005 the assessee intimatedto the Assessing Officer about the new address and despite the samethe Assessing Officer sent the notice at the old address. However, it isrequired to be noted that the alleged communication dated 06.12.2005 isnot forthcoming. Neither the same was produced before the AssessingGOfficer nor even the same has been produced before this Court. In theaffidavit also, filed in compliance with order dated 21.08.2019, theassessee has stated that the alleged communication dated 06.12.2005 isnot available. Thus, the assessee has failed to prove the alleged PRINCIPAL COMMISSIONER. OF INCOME TAX, MUMBAI v.M/S I-VEN INTERACTIVE LTD., MUMBAI [M. R. SHAH, J.]

communication dated 06.12.2005. The only document available is FormNo.18 filed with the ROC. Filing of Form-18 with the ROC cannot besaid to be an intimation to the Assessing Officer with respect to intimationof change in address. It appears that no application was made by theassessee to change the address in the PAN data base and in the PANdatabase the old address continued. Therefore, in absence of anyintimation to the Assessing Officer with respect to change in address,the Assessing Officer was justified in issuing the notice at the addressavailable as per the PAN database. Therefore, the Assessing Officercannot be said to have committed any error and in fact the AssessingOfficer was justified in sending the notice at the address as per the PANdatabase. If that is so, the notice dated 05.10.2007 can be said to bewithin the period prescribed in proviso to Section 143(2) of the 1961Act. Once the notice is issued within the period prescribed as per theproviso to Section 143(2) of the Act, the same can be said to be sufficientcompliance of Section 143(2) of the 1961 Act. Once the notice is sentwithin the period prescribed in the proviso to Section 143(2) of the 1961Act, in that case, actual service of the notice upon the assessee thereafterwould be immaterial. In a given case, it may happen that though thenotice is sent within the period prescribed, the assessee may avoid actualservice of the notice till the period prescribed expired. Even in the reliedupon case by the learned Senior Advocate for the assessee in the caseof Hotel Blue Moon (supra), it is observed that the Assessing Officermust necessarily issue notice under Section 143(2) of the 1961 Actwithin the time prescribed in the proviso to Section 143(2) of the 1961Act. Therefore, in the facts and circumstances of the case, the HighCourt is not justified in dismissing the appeal and confirming the orderspassed by the learned C.I.T (Appeals) and the I.T.A.T. setting aside theassessment order solely on the ground that the assessment order is badin law on the ground that subsequent service of notice upon the assesseeunder Section 143(2) of the 1961 Act was beyond the time prescribed inthe proviso to Section 143(2) of the 1961 Act.

7. Now so far as the observations made by the High Court whileconcurring with the view of the learned Tribunal that merely by filing ofreturn of income with the new address, it shall be enough for the assesseeto discharge its legal responsibility for observing proper procedural stepsas per the Companies Act and the Income Tax Act is concerned, we are A

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Aof the opinion that mere mentioning of the new address in the return ofincome without specifically intimating the Assessing Officer with respectto change of address and without getting the PAN database changed, isnot enough and sufficient. In absence of any specific intimation to theAssessing Officer with respect to change in address and/or change inthe name of the assessee, the Assessing Officer would be justified inBsending the notice at the available address mentioned in the PAN databaseof the assessee, more particularly when the return has been filed underE-Module scheme. It is required to be noted that notices under Section143(2) of the 1961 Act are issued on selection of case generated underautomated system of the Department which picks up the address of theCassessee from the database of the PAN. Therefore, the change ofaddress in the database of PAN is must, in case of change in the nameof the company and/or any change in the registered office or thecorporate office and the same has to be intimated to the Registrar ofCompanies in the prescribed format (Form 18) and after completingwith the said requirement, the assessee is required to approach theDDepartment with the copy of the said document and the assessee is alsorequired to make an application for change of address in the departmentaldatabase of PAN, which in the present case the assessee has failed todo so.

8. Now so far as the submission on behalf of the assessee thatEwith respect to the Assessment Years 2004-05 and 2005-06,communications and the assessment orders were sent at the new addressand therefore the Assessing Officer was in the knowledge of the newaddress is concerned, the same has been sufficiently explained by theRevenue.

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9. In view of our findings, recorded hereinabove, the impugnedjudgment and order passed by the High Court as well as the orderspassed by the learned C.I.T (Appeals) and the I.T.A.T holding theassessment order bad in law on the aforesaid ground cannot be sustainedand the same deserve to be quashed and set aside. As the learned C.I.TG(Appeals) has not considered the other grounds on merits and has notconsidered the appeal on merits, the matter is required to be remandedto the learned C.I.T (Appeals) to consider the appeal on merits, inaccordance with law.

PRINCIPAL COMMISSIONER. OF INCOME TAX, MUMBAI v.M/S I-VEN INTERACTIVE LTD., MUMBAI [M. R. SHAH, J.]

10. Accordingly, the present Appeal is Allowed. The ImpugnedJudgment and Order passed by the High Court as well as the orderspassed by the C.I.T (Appeals) and the I.T.A.T are hereby quashed andset aside. The matter is remanded to the learned C.I.T (Appeals) toconsider the Appeal on merits on other grounds, in accordance with law.No costs.

Divya Pandey

Appeal allowed.

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