Major relief in case of individual assessee/ expatriates where assessment re-opened without serving notice

Facts of the Case:

1. Assessee was an individual, who had never filed return of her income since she did not have any taxable income.
2. Assessing officer has of view that the assessee had entered into various high value transactions during the year under assessment, but assessee did not disclose the same under her taxable income.
3. Assessing officer had issued a reopening notice to the assessee, at the address mentioned of PAN database. But the notice had not been delivered to assessee and the same had been returned by the postal authority, as the assessee had changed its address mentioned in the PAN database.
4. Assessing officer had ignored fact that noticed had not been served to assessee and initiated the proceedings of reopening the assessment, having of view that it was the only address with them (as per PAN database) where he could issue the notice.
5. Department had issued recovery notice to assessee seeking recovery of assesee’s tax pursuant to the said assessment order.

Held by the Hon’ble High Court of Bombay:

1. As per the provision of section 148(1), before making reassessment under section 147, the Assessing Officer had to serve on the assessee the notice requiring him to furnish a return.
2. Further mere issuance of notice shall not allow the assessing officer to initiate any proceedings of assessment, as the notice for the same had not been served to assessee as per section 149.
3. The court has also clarified the proviso to sub-rule (2) of rule 127 of the Act, which clearly states that in the case where the notice can’t be served at the address of assessee as per PAN database then the same shall be served at address of the assessee as available with the Banking company or a cooperative bank to which Banking Regulations Act, 1949 applies.

Conclusion:

The aid judgement will provide a huge relief to the several assessee to whom the proceedings of assessments/ reassessments has been initiated by AO, merely on the ground of issuance of notice, as now the assessing officers shall also served the notice at the various addresses (including address as per proviso of sub-rule (2) of rule 127) of assessee for initiation of assessment proceedings.

 Harjeet Surajprakash Girotra v/s Union of India || [2019] 108 taxmann.com 491 (Bombay)