Notice Served By Affixing Old Address Despite Being Aware Of Change Of Address: Calcutta HC Sets Aside Penalty U/S 148 Income Tax Act

Despite the Income Tax Department (Department) being aware of the change of address of the assessee, the Bench observed that they served a notice under Section 148 of the Act by affixing it to the old address.

A Division Bench of Chief Justice T.S. Sivagnanam and Justice Hiranmay Bhattacharyya observed, “Thus, it is evident that despite the department being aware of the change of address, the notice under Section 148 of the Act has been served by affixing in the old address. This is sufficient to hold that the proceeding, which was taken ex parte is not sustainable in law.”

Advocate Soumitra Chowdhury represented the appellant, while Advocate Vipul Kundalia appeared for the Income Tax Authority.

The assessee, having filed an income tax return declaring a certain amount of loss, contended that no notices under Section 147 or Section 148 were received. Additionally, the assessee asserted that neither an assessment order nor notices under Section 143(2) and 143(1) of the Act were served. Lastly, the assessee argued that the absence of a notice under Section 271(1)(c) invalidated the imposition of penalty under Section 271(i)(c), citing the non-service of the assessment order.

The assessee had challenged the assessment and subsequent penalty imposed under Section 271(i)(c) of the Act, arguing that they had not received proper notice regarding the assessment.

Although the Department had argued that the penalty demand notice was served through an e-mail as well, the Court held, “The fact remains that the department is aware of the change of the address, which has been clearly noted in paragraph 9 (e) of the affidavit-in-opposition.”

“The assessing officer is directed to serve a copy of the notice issued under Section 148 dated 31st March, 2016 in the new address of the appellant within 15 days from the date of receipt of server copy of this order. On receipt of the said notice, the assessee is directed to submit their reply within 30 days therefrom and thereafter, after affording an opportunity to the assessee, the ITO is directed to pass a fresh order on merits and in accordance with law,” the Court ordered.

Consequently, the Court held that the assessee did not have the adequate opportunity to put forth its case and set aside the order passed under Section 148 of the Act.

Accordingly, the High Court allowed the appeal.

Cause Title: M/s. Poddar Real Estates Pvt. Ltd. v. Income Tax Officer, Kolkata & Ors.

Appearance:

Appellant: Advocates Soumitra Chowdhury, Pranabesh Sarkar, Kausheyo Roy, Samrat Das and Elina Dey

Income Tax Authority: Advocates Vipul Kundalia, Amit Sharma, Bhaskar Prosad Banerjee and A. Maity

Click here to read/download the Judgment