2018 (10) TMI 935 - HC - Income Tax

Revision u/s 263 - non service of proper notice - sufficient cause - change in name of Sadabahar to CVPL - petitioner says an attempt of service on Sadabahar in 2013 cannot be said to be a due or proper service as Sadabahar had ceased to exist by then and has come to be known as CVPL, with its registered office at a different premise - Held that - Respondents were aware that Sadabahar is now known as CVPL with its registered office at 12-B Cossipore Road, Kolkata-700002 and not with its address at P-41 Princep Street, Kolkata-700072. Any affixation of notice at premises no. P-41 Princep Street, Kolkata-700072 cannot, therefore, be said to be a notice upon CVPL in the year 2012-2013. CVPL has, therefore, not been served though entitled to before the Commissioner passed his order dated 14th January, 2013 and, as such, there is violation of principles of natural justice. Moreover, when the statute is very clear that the Commissioner should afford an opportunity to the assessee of being heard, CVPL should have been heard when Sadabahar much prior to 2012-13 has become CVPL and is the assessee or representing the interest of Sadabahar, the assessee. The word may used in Section 263 should be presumed to be shall or otherwise interpreting the word may as not mandatory, orders can be passed even without affording an opportunity to the assessee of being heard while the Commissioner exercises his jurisdiction under Section 263 of the Income tax Act, 1961 thereby violating the principles of natural justice. As the order and the two notices under challenge are set aside, all consequential steps taken subsequent to the order dated 14th January, 2013 or in pursuance thereof are also set aside. The department should not also emphasise or rely upon the letter written by CVPL on 12th March, 2014. This will, however, not prevent the respondent no. 2 from proceeding under Section 263 of the Income Tax Act, 1961 afresh against the petitioner no. 1 for the Assessment Year 2007-2008. The Department shall serve a fresh notice upon the petitioner no. 1 and proceed to fix a hearing date in exercise of his jurisdiction under Section 263. - decided in favour of assessee

Summary

Issues:
Challenging order under Section 263 of the Income Tax Act, 1961 for lack of notice and opportunity to be heard.

Analysis:
1. The petitioners contested an order passed by the Commissioner of Income Tax under Section 263 of the Income Tax Act, 1961, alleging lack of notice and opportunity to be heard. They argued that the order was based on incomplete information regarding the change in name from Sadabahar to CVPL, affecting proper service and hearing.

2. The petitioners emphasized that the Commissioner is empowered to reassess orders but must provide the assessee with a chance to present their case. They pointed out that attempting to serve Sadabahar after its transformation into CVPL was not valid, requesting a rehearing after due notice to CVPL.

3. Referring to the Certificate of Incorporation and previous court judgments, the petitioners highlighted instances where similar orders were set aside in comparable situations, strengthening their plea for a fair hearing.

4. The respondents argued that they attempted to serve notice to Sadabahar at its last known address, which was later affixed at the premises. However, the petitioners contended that such service attempts on Sadabahar post its name change to CVPL were improper.

5. The court examined the procedures followed for serving notices under Section 282 of the Income Tax Act, 1961, and noted that the department should have been aware of Sadabahar's transition to CVPL. The court found a violation of natural justice principles due to the absence of proper notice and hearing for CVPL.

6. The court concluded that the petitioners promptly approached the court upon learning of the order, and criticized the respondent for continuing to address notices to Sadabahar despite being informed of the name change to CVPL.

7. Consequently, the court set aside the order dated 14th January, 2013, along with subsequent notices. It directed the department to initiate fresh proceedings under Section 263 against CVPL for the Assessment Year 2007-2008, ensuring a fair hearing within three months without unnecessary delays.

In summary, the court upheld the petitioners' claim of inadequate notice and hearing, leading to the order's annulment and the directive for a fresh proceeding with proper adherence to natural justice principles.