Court sets aside order under Section 263 of Income-tax Act for failure to serve proper notice.

The court set aside the order passed under Section 263 of the Income-tax Act, 1961 for the assessment year 2008-09 due to the department's failure to serve proper notice on the petitioner at the correct address. The court held that attempts to serve notice at an old address, despite the petitioner informing the department of a new address, did not comply with the requirements of Section 263. Consequently, the authorities were allowed to proceed afresh against the petitioner from the notice stage, with the petitioner waiving the notice and agreeing to participate in the proceedings. The petition was disposed of with no costs awarded.

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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.

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