M/S Poddar Real Estates PVT LTD vs. Income Tax Officer And Others

Facts

The appellant, M/s. Poddar Real Estates Pvt. Ltd., challenged an assessment order passed under Section 148 of the Income Tax Act, 1961, and a consequential penalty under Section 271(1)(c) of the Act. The appellant contended that no notice under Section 148 or Section 143(2)/143(1) was served, nor was the assessment order or penalty notice served. The Income Tax Department's affidavit-in-opposition revealed that while the appellant's correct address was known, a notice under Section 148 dated March 31, 2016, was served by affixation at an old address on March 31, 2016. The department also admitted to a change in jurisdiction and merger of wards. The appellant's appeal before the Commissioner of Income Tax (Appeals) was pending.

Held

The Court held that the notice under Section 148 of the Income Tax Act, 1961, was not validly served on the appellant. The Court found that the department was aware of the change in the appellant's address, as evidenced by paragraph 9(e) of the affidavit-in-opposition, yet the notice under Section 148 was served by affixation at an old address. This failure to serve the notice at the correct address, despite knowledge of the change, meant the appellant did not have an adequate opportunity to present their case. Consequently, the ex-parte proceedings were deemed unsustainable in law. The Court allowed the appeal, set aside the order passed under Section 148 and consequential proceedings, and restored the matter to the assessing officer. The assessing officer was directed to serve the notice under Section 148 dated March 31, 2016, at the appellant's new address within 15 days, after which the appellant was to reply within 30 days, and the assessing officer was to pass a fresh order on merits after affording an opportunity. The Court also noted that the law prevailing at the time of initiation of proceedings under Section 148 (pre-amended stage) would apply.

Key Issues

1. Whether the notice issued under Section 148 of the Income Tax Act, 1961, was validly served on the appellant, considering the department was aware of the change in the appellant's address? The appellant argued that the notice under Section 148 was not served on them, and neither was the assessment order or penalty notice. They contended that the service by affixation at an old address, despite the department knowing the new address, rendered the ex-parte proceedings unsustainable. The revenue argued that a notice under Section 148 was issued and served by affixation. They also submitted that a penalty demand notice was served via email on June 23, 2017. However, the judgment notes the department's admission of awareness of the address change.