2016 (12) TMI 614 - HC - Income Tax

Revision u/s 263 - non proper service of notice - Held that - Section 263 requires a notice to be issued by the department in respect of such proceedings. In the instant case the department has not served notice on the petitioner. Two attempts to serve the petitioner where at an address which was not the prevailing address of the petitioner at the material point of time. Two attempts to serve on the old address therefore cannot be counted as a notice under Section 263. Although the impugned order records that, not finding the petitioner at the old address a notice was affixed on such address. For the affixture of notice to take effect it must be shown that, an attempt was made to serve the notice at the last known address of the assessee. In the present case the petitioner had informed the department as to its address before the initiation of proceeding. Therefore it was obligatory on the part of the department to attempt to serve notice at the new address. Not having done so the attempts of the department to serve at the old address and claim good service on the basis of affixture of notice at the old address, in view, cannot be upheld as a good service. Thus the department did not comply with the provisions of Section 263 of the Income-tax Act, 1961 by serving proper notice thereunder on the petitioner. - Decided in favour of assessee

Summary

Issues:
1. Validity of order under Section 263 of the Income-tax Act, 1961 due to non-receipt of notice of the hearing of the proceedings.

Analysis:
The petitioner challenged an order passed under Section 263 of the Income-tax Act, 1961 for the assessment year 2008-09, citing non-receipt of notice of the hearing of the proceedings as the ground for the challenge. The order in question, dated March 6, 2013, mentioned that two attempts were made to serve the notice under Section 263 to the petitioner. The petitioner contended that the department was informed of a change in address before the initiation of the proceedings, and therefore, the notice should have been sent to the new address. The advocate for the department failed to prove that the petitioner did not inform them of the address change or that the notice was sent to the new address. The court noted that the department did not serve the notice on the petitioner as required by Section 263 and that attempts were made at an old address, which was not the prevailing address at the time of the proceedings.

The court emphasized that the attempts to serve notice at the old address could not be considered valid, especially since the petitioner had informed the department of the new address before the proceedings began. Affixing a notice at the old address without attempting to serve it at the new address did not fulfill the requirements of Section 263. Consequently, the court held that the department did not comply with the provisions of Section 263 by not serving proper notice on the petitioner. As a result, the impugned order was set aside, and all consequential steps were required to be set aside as well. The authorities were permitted to proceed afresh against the petitioner for the assessment year 2008-09 from the notice stage. The petitioner waived the notice under Section 263 and agreed to participate in the proceedings, allowing the authorities to commence the proceedings with the notice being treated as served.

By mutual agreement, the date for the hearing was fixed, and the authorities were requested to expedite the proceedings, preferably within four weeks. The writ petition was disposed of with no order as to costs.