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2025 (3) TMI 1225 - HC - Income TaxOrder passed u/s 264 - Whether the notice u/s 148 was validly served upon the late husband of the petitioner? - HELD THAT - As on perusal of the impugned order passed under section 264 of the Act as well as the orders u/s 7 (1) of the RTI Act it is not in dispute that notice under section 148 was never served upon late husband of the petitioner. Even notices under section 142 (1) of the Act was also not served and the petitioner came to know about the passing of the assessment order only when the bank accounts were put under lien for recovery proceedings. In view of above undisputed facts when the notice under section 148 of the Act was never served upon the petitioner the Assessing Officer could not have assumed the jurisdiction. On bare perusal of section 264 of the Act the respondent Commissioner of Income Tax has wide powers of considering the assessment order under revision as he may think fit or may make any such inquiry or cause such inquiry to be made subject to the provisions of the Act and pass such order thereon not being an order prejudicial to the assessee as he thinks fit meaning thereby that Commissioner while exercising the jurisdiction under section 264 of the Act can look into the entire matter and after calling for record of the assessment proceedings under the Act can make an inquiry or cause such inquiry to be made and thereafter subject to the provisions of the Act pass an order which is not prejudicial to the assessee as he thinks fit. The interpretation of section 264 of the Act by the respondent is contrary to the provision itself and the impugned order could not have been passed by resorting to such truncated interpretation of section 264 to limit the powers of the Commissioner to revise the order only on the ground of mistake or correction if any in the assessment order. Petition succeeds and is accordingly allowed. The impugned order passed u/s 264 of the Act is hereby quashed and set aside and the matter is remanded to the respondent to pass a fresh denovo order under section 264 of the Act.
1. ISSUES PRESENTED and CONSIDERED
The core legal questions considered in this judgment include:
2. ISSUE-WISE DETAILED ANALYSIS Issue 1: Validity of Service of Notice under Section 148 - Relevant Legal Framework and Precedents: The service of notice under section 148 is a jurisdictional prerequisite for reassessment proceedings under sections 144 and 147. The General Clauses Act, 1897, particularly section 27, prescribes the procedure for valid service by post. - Court's Interpretation and Reasoning: The Court found that the notice under section 148 was never served upon the late husband of the petitioner, as confirmed by the respondent's admission under the Right to Information Act. The Court emphasized that without valid service, the Assessing Officer could not assume jurisdiction. - Key Evidence and Findings: The RTI response confirmed that the notice was returned unserved, and there was no record of service via affixture or email. - Application of Law to Facts: The Court applied the principles of valid service under section 27 of the General Clauses Act and found that the lack of service rendered the reassessment proceedings void. - Treatment of Competing Arguments: The respondents argued that the notice was sent to the registered address, and the petitioner failed to update the address. The Court rejected this, noting the lack of evidence of actual service. - Conclusions: The Court concluded that the reassessment proceedings were without jurisdiction due to the failure to serve the notice under section 148. Issue 2: Scope of Powers under Section 264 - Relevant Legal Framework and Precedents: Section 264 of the Income Tax Act grants the Commissioner the power to revise orders, with the stipulation that such orders should not be prejudicial to the assessee. - Court's Interpretation and Reasoning: The Court found that the Commissioner misinterpreted section 264 by limiting its scope to mere correction or amendment, rather than considering the broader powers to annul or quash orders. - Key Evidence and Findings: The Court noted that the Commissioner failed to consider the jurisdictional error due to non-service of notice and instead focused on the merits of the cash deposit. - Application of Law to Facts: The Court emphasized that the Commissioner should have exercised the power to annul the assessment order due to the jurisdictional defect. - Treatment of Competing Arguments: The respondents argued that the petitioner should have filed an appeal rather than a revision. The Court dismissed this, highlighting the Commissioner's broad powers under section 264. - Conclusions: The Court concluded that the Commissioner erred in interpreting section 264 and should have considered the jurisdictional issue. 3. SIGNIFICANT HOLDINGS - Preserve Verbatim Quotes of Crucial Legal Reasoning: "In view of above undisputed facts when the notice under section 148 of the Act was never served upon the petitioner, the Assessing Officer could not have assumed the jurisdiction." - Core Principles Established: The necessity of valid service of notice under section 148 for reassessment jurisdiction, and the broad scope of powers under section 264 to address jurisdictional errors. - Final Determinations on Each Issue: The Court quashed the impugned order under section 264 and remanded the matter for a fresh decision, emphasizing the need to address the jurisdictional defect due to non-service of notice.
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