2023 (2) TMI 1022 - HC - Income Tax

High Court upholds ITAT decision on notice service validity under Income Tax Act, 1961

Principal Commissioner of Income Tax (Central) Versus Narayan Kumar Khaitan

The High Court dismissed the appeal regarding the validity of service of notice by the Revenue Department on the Assessee's last-known address via Speed ... Revision u/s 263 - non service of notice to assessee who was in jail - appearance of a staff of such person in judicial custody before the PCIT - staff of the Assessee appeared and informed the PCIT that the Assessee was in judicial custody and instead of directing notice to be issued to the Assessee through the Superintendent of Jail, the PCIT treated the appearance staff person as sufficient service of notice on the Assessee in terms of Section 292BB - HELD THAT:- Staff person Shri Uttam Kumar was not an authorized representative of the Assessee. He was simply the staff who appeared to inform the PCIT where the Assessee could be located. This was the jail. Despite being informed that the Assessee was in judicial custody, the PCIT did not make the effort of having the notice served upon the Assessee through the Superintendent of the concerned jail. This Court concurs with the observation of the ITAT in the impugned order that a person in judicial custody is deprived of many of the constitutional rights which he could otherwise exercise. Any officer of the Government including a PCIT should be conscious that once information was received that a person to whom notice has to be served is in judicial custody, then an appropriate order should be passed requiring service of notice on such person through the Superintendent of the concerned jail. This is the bare minimum requirement in law. With the PCIT having failed to do so, it was not open to the Department to contend the mere appearance of a staff of such person in judicial custody before the PCIT should be taken to be the appearance by the Noticee/Assessee himself. Decided against revenue. Issues:1. Validity of service of notice by Speed Post on the last-known address under the Income Tax Act, 1961.Analysis:The appeal before the High Court concerned the validity of the service of notice by the Revenue Department on the Assessee's last-known address via Speed Post, as per the provisions of the Income Tax Act, 1961. The background of the case involved a search and seizure proceeding under Section 132 of the Act for M/s. Shivom Minerals Ltd and group, leading to scrutiny of the Respondent/Assessee's case for Assessment Year (AY) 2010-11. Subsequently, under Section 263 of the Act, it was concluded that the original assessment order was erroneous, and a notice was issued on 6th March, 2019 for service on the Assessee at their last known address.The Principal Commissioner of Income Tax (PCIT) considered the appearance of a staff member of the Assessee, who informed about the Assessee being in judicial custody, as sufficient service of notice under Section 292BB of the Act. The PCIT then revised the assessment proceedings for AY 2011-12, adding a significant sum without hearing the Assessee. The Department contended that the appearance of the staff member should be deemed as the Assessee's appearance, precluding any objection regarding the notice.However, the High Court disagreed with the Department's submissions, emphasizing the strict interpretation of Section 292BB. The provision deems notice served only when the Assessee has appeared, not an authorized representative. The Court noted that the staff member was not an authorized representative but merely provided information about the Assessee's location in judicial custody. The Court concurred with the ITAT's observation that service of notice on a person in judicial custody should be through the Superintendent of the concerned jail, a basic legal requirement.The Court dismissed the appeal, highlighting that the decisions cited by the Department did not apply to the present case, as they did not involve an Assessee in judicial custody. Since no substantial question of law arose, the High Court upheld the ITAT's decision, emphasizing the importance of proper service of notice, especially when the Assessee is in judicial custody.