2024 (5) TMI 300 - HC - Income Tax

Validity of Reassessment proceedings - notice issued in the course of the reassessment proceedings not served on the assessee - reassessment notice has been issued in the name of the partnership firm, though business of the erstwhile partnership firm had been taken over by sole proprietor - HELD THAT - Remarkably, all the notices seen to have been dispatched to the assessee were returned back to the sender i.e. assessing officer. Yet, the assessing officer has made a recital as to notices duly served. AO has not proceeded on deemed service of notice basis rather he has treated the same to have been actually served on the assessee. In view of the above fact, it loses relevance that the impugned assessment order was received by the petitioner when dispatched at the same address at which he had been earlier issued notices in the course of the reassessment proceedings. The fact that the assessment order may have been served may not be read with as evidence of due service of preceding jurisdictional and procedural notices. That essential compliance may not be inferred considering subsequent service on the assessment order. Rather, that survived to be established, independently. Unless the jurisdictional notice was served and unless the procedural notice were duly served, the assessee may have been effectively prevented from participating in the assessment proceedings and obtaining consideration on its say. Seen in that light, no useful purpose would be served in keeping the present petition or calling for counter affidavit, at this stage. Also, we are unable to sustain the objection raised by learned counsel for the revenue that the petitioner may avail statutory alternative remedy of appeal. At present, that remedy may only allow this appeal authority to either annull or confirm or modify the assessment order but may not allow the appeal authority to set aside the same and remit the matter to the assessing authority in view of the amended powers of the appeal authority u/s 251(1)(a) of the Act.

Summary

Issues involved: Challenge to assessment order u/s 147 read with 148 of Income Tax Act, 1961 for AY 2019-20 based on lack of jurisdiction and notice service.

Jurisdictional Notice and Service: The petitioner contested the re-assessment proceedings claiming notices were not served. The partnership firm mentioned in the notice no longer existed, having been dissolved in 2006. Despite informing the assessing authority of this, a reassessment notice was issued in the name of the defunct firm, while the business had been taken over by a sole proprietor. The court ordered verification of the issuance and service of notices before the reassessment order, as it was ex-parte. The revenue counsel provided copies of notices dispatched but returned, indicating lack of actual service. The court emphasized the importance of establishing due service of jurisdictional and procedural notices for the petitioner to participate effectively in the assessment proceedings.

Statutory Remedy and Appeal Authority: The court noted that the petitioner's inability to participate due to lack of proper notice service rendered the assessment order invalid. It rejected the suggestion to pursue statutory alternative remedy of appeal, citing limitations on the appeal authority's powers under Section 251(1)(a) of the Act. The court decided to set aside the impugned order and directed the petitioner to file detailed objections within three weeks, allowing the assessing authority to address the objections after providing a personal hearing opportunity.

Non-Existent Entity Issue: The objection regarding the reassessment notice being issued to a non-existent entity was left for the assessing authority to consider independently. The court disposed of the writ petition, setting aside the impugned order and directing the petitioner to submit objections within three weeks for further assessment by the authority. Failure to comply would allow the assessing authority to proceed in accordance with the law.