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

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 Post under the Income Tax Act, 1961. The Court held that service of notice on a staff member of the Assessee, who informed about the Assessee being in judicial custody, did not constitute valid service under Section 292BB of the Act. Emphasizing the importance of proper service of notice, especially when the Assessee is in judicial custody, the High Court upheld the ITAT's decision, as no substantial question of law arose in the case.

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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.

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