Case Law Details
Brief of the Case: ITAT Delhi held In the case of ITO vs. Hepta Developers Pvt. Limited that notice u/s 148 is foundation of the reassessment proceeding. The notice was sent on wrong address while the correct address was available in the return filed by the assessee. As the notice not served upon the assessee, this makes the whole proceedings as void – ab- initio. Under the circumstances, the action of the AO of making Best Judgement assessment u/s 144, in respect of which evidently no material was gathered by the AO, is not sustainable.
Facts of the Case: The assessee filed return of income, which was processed u/s. 143(1). Subsequently, the AO received information from the DIT Investigation Wing that the assessee’s company name is in the list of certain persons, who have alleged to have received bogus accommodation entries. The information specifically mentioned that the assessee had received an amount of Rs. 12 lakhs. The AO thereafter, recorded the reasons to believe that the income had escaped assessment on account of failure on the part of the assessee in making true and full disclosure of all material facts. Notice u/s. 148 was issued by Speed Post. The same was returned with the remarks “no such office”.
Finally, final show causes notice dated was issued and a notice u/s. 142(1) was affixed on the premises of assessee company at the same address. No evidence in support of identity, genuineness and creditworthiness of the person who has given credit to the assessee has been given to the AO and AO held that Rs.12 lacs is unexplained cash credit made u/s. 68.
Contention of the Assessee: Nobody appeared on behalf of the assessee nor any adjournment application filed.
Contention of the Revenue: The ld DR submitted that the CIT (A) has erred on facts and in law in holding the initiation of proceedings u/s. 148 as void ab initio as the notice u/s. 148 was not served upon the assessee and to hold that the action of the AO of making best judgment assessment u/s. 144, in respect of which no material was gathered by the AO is not sustainable.
Held by CIT (A): CIT (A) held that the issue of notice u/s 148 was good in law and the AO has followed the guidelines prescribed by the Hon’ble Supreme Court in the case of GKN Driveshafts (India) Ltd. vs. Income Tax Officer (2003) 259 ITR 19 by making note of satisfaction on cogent grounds before issuing the notice u/s 148. But as the notice not served on the assessee, CIT (A) has statistically allowed the appeal of the assessee.
Held by ITAT: There is no dispute that notice u/s 148 and any other notices issued subsequently by the AO, could not have been served upon the assessee as all of them were sent at an address, which was neither shown in the return of income for the current year or subsequent years, but were all sent to an address, which pertained to earlier years.
Under the circumstances, it is evident that the notice u/s 148 and subsequent notices, were issued at a wrong address, due to the mistake attributable to the Assessing Officer, in making due diligence of issuing the notice at the correct address given in the return of income itself. The latest address of the assessee was also available with the AO as return of income for assessment year 2010-11 and 2011-2012 also show the latest address.
As the notice u/s 148 which is foundation of the reassessment proceeding, was not served upon the assessee, the whole proceedings are held as void- ab -initio. Under the circumstances, the action of the AO of making Best Judgment assessment u/s 144, in respect of which evidently no material was gathered by the AO, is not sustainable. In view of this, the additions made by the AO are not sustainable.
Accordingly, appeal of the revenue dismissed.
