ITAT quashes time-barred assessment as no effort was made to forward draft order to new address intimated to AO

Case Details: DSV Solutions (P.) Ltd. v. DCIT - [2022] 144 taxmann.com 181 (Mumbai-Trib.)

Judiciary and Counsel Details

• • Pramod Kumar, Vice-President & Pavan Kumar Gadale, Judicial Member
  • J.D. Mistry, Sr. Adv. Paras Savla & Harsh Shah for the Appellant.
  • Dr Yogesh Kamat & Soumendu Kumar Dash for the Respondent.

Facts of the Case

The assessee was a company engaged in the business of air and ocean freight forwarding, warehousing, and cleaning agent. It was involved in certain international transactions and was an eligible assessee under section 144C. Therefore, the Assessing Officer (AO) had the obligation to deliver the proposed assessment order to the assessee.

During the relevant assessment year, there was a change in the address of the assessee which was intimated by the assessee to the department through a letter that was updated on the PAN Database at a later date. The proposed assessment order was delivered by the department to the assessee at the previous address contending that the same was not updated in the PAN details.

Aggrieved by the order of AO, the assessee filed a petition to the DRP but with no success. The matter then reached the Mumbai Tribunal.

ITAT Held

The Tribunal held that the assessment order was not a system-generated order and the mere fact that the order cannot be generated on the updated address was not acceptable. The assessee had furnished a new address for communication to the AO through a letter. Also, the new address was furnished in the latest return of income filed by the assessee before AO forwarded the draft order to the assessee.

The justification for using the old address is devoid of legal sustainability. The lapse of the assessee, in the updating PAN database, would not validate the service of notice on the old address, as long as the requirements of the proviso to rule 127 are met by furnishing an address to the authority concerned a communication address.

Where any document is undelivered due to unavailability of address, the addresses as mentioned in the proviso to rule 127(2) must be used for the communication. The address mentioned in the PAN database is just one of them.

For complying with the requirements of “forwarding” the draft order, there was no forwarding, not even an effort by AO of forwarding the order to the correct address or at least the address furnished to the AO under proviso to Rule 127(2), within the permitted time. Thus, the assessment failed for this short reason alone and the order was barred by limitation.