Procedural fairness: lack of effective service and no hearing can lead to quashing and remand for fresh tax adjudication.
Where an assessment order proceeded without effective service of antecedent statutory notices and without affording the affected person an opportunity to be heard, the appropriate remedy is quashing of the order and remittance for fresh adjudication; territorial objections do not bar relief where lack of notice and non-jurisdictional issuance undermine procedural fairness, and the writ remedy under Article 226 may be exercised for limited relief directing transmission of records to the jurisdictional Income Tax Officer for fresh consideration within a prescribed period.
Issues: (i) Whether the impugned assessment order passed under Sections 147/144/144B of the Income-tax Act, 1961 is valid where the petitioner was not served with antecedent notices and the order was passed from New Delhi; (ii) Whether the writ petition is maintainable in the Madras High Court despite objections on territorial jurisdiction and relocation of the petitioner.
Issue (i): Validity of the impugned assessment order in view of non-service of antecedent notices and the order being passed from a non-jurisdictional location.
Analysis: The assessment order was preceded by notices and actions which the petitioner was not served with, and the impugned order was issued by the first respondent from New Delhi despite the petitioner's connection with Bellary/Hospet and his status as a non-resident since 2012. Although notices were issued in accordance with Rule 127(2) of the Income Tax Rules, 1962, the lack of effective service of the antecedent notices and the fact that the order was passed without the petitioner having an opportunity to be heard undermines the procedural fairness required under the statutory scheme.
Conclusion: The impugned assessment order is quashed on account of defective service and procedural infirmity; the matter is remitted to the first respondent for fresh consideration on merits within six weeks.
Issue (ii): Maintainability of the writ petition in the Madras High Court despite objections as to territorial jurisdiction.
Analysis: The petitioner was a non-resident and had limited past connection with Karnataka; objections were raised that the jurisdictional Assessing Officer was in Hospet, Karnataka and remedies lay before Karnataka authorities. Notwithstanding these objections, the impugned order was passed from New Delhi and the petitioner lacked notice of antecedent proceedings; in these circumstances it was appropriate to exercise discretion under Article 226 of the Constitution of India to grant relief.
Conclusion: The writ petition in the Madras High Court is maintainable for the limited purpose of quashing the impugned order and remitting the matter for fresh adjudication; directions are given to transmit papers to the jurisdictional Income Tax Officer in Bellary District, Karnataka.
Final Conclusion: The impugned assessment order is quashed and the matter is remitted for fresh consideration; the writ petition is allowed and the papers are to be transferred to the jurisdictional authority for adjudication within the prescribed time.
Ratio Decidendi: Where an assessment order is passed without effective service of antecedent statutory notices and without affording the affected person opportunity to be heard, the order can be quashed and remitted for fresh adjudication even if territorial jurisdiction objections exist, provided the High Court in exercise of Article 226 finds it appropriate to do so.
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