Reassessment proceedings complete only when order communicated to assessee, not when passed under section 153(2)

The HC held that reassessment proceedings are deemed complete only upon communication of the assessment order to the assessee, not when the order is passed. The reassessment order dated 28-12-2006 was communicated on 05-01-2007, falling beyond the limitation period under section 153(2) of the Income Tax Act, 1961. The court rejected the revenue's objection regarding maintainability of the writ petition despite availability of statutory appeal, citing established exceptions where writ jurisdiction can be exercised. The HC allowed the writ petition, quashing the assessment orders as illegal and violative of section 153(2) provisions.

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Issues Involved:
1. Validity of the reassessment order dated 28-12-2006.
2. Validity of the penalty order dated 29-06-2007.
3. Compliance with the provisions of section 153(2) of the Income Tax Act, 1961.
4. Maintainability of the writ petition in light of an alternative statutory remedy.

Issue-wise Detailed Analysis:

1. Validity of the Reassessment Order Dated 28-12-2006:
The writ petition challenged the reassessment order dated 28-12-2006 on the grounds that it was not communicated to the assessee within the prescribed period under section 153(2) of the Income Tax Act, 1961. The court noted that the first notice under section 148 was served on 06-12-2005 and the second notice on 03-03-2006. Consequently, the nine-month period for completing the reassessment started on 01-04-2006 and ended on 31-12-2006. Although the reassessment order was passed on 28-12-2006, it was communicated to the authorized representative of the assessee only on 05-01-2007. Citing various judgments, the court held that an order is deemed to be completed only when it is communicated to the affected party. Thus, the reassessment was not completed within the prescribed period, rendering the order invalid.

2. Validity of the Penalty Order Dated 29-06-2007:
The penalty order dated 29-06-2007 was also challenged as a consequential order to the reassessment order. Since the reassessment order was deemed invalid for not complying with section 153(2), the penalty order was also rendered invalid. The court quashed the penalty order on the same grounds.

3. Compliance with the Provisions of Section 153(2) of the Income Tax Act, 1961:
Section 153(2) stipulates that no order of assessment, reassessment, or re-computation shall be made after the expiry of nine months from the end of the financial year in which the notice under section 148 was served. The court emphasized that an order must be communicated to the affected party to be considered complete. Since the reassessment order was communicated after the nine-month period, it violated section 153(2) and was thus invalid.

4. Maintainability of the Writ Petition in Light of an Alternative Statutory Remedy:
The respondents argued that the writ petition was not maintainable due to the availability of an alternative statutory remedy under section 246 of the Income Tax Act. The court noted that while the general rule is to exhaust alternative remedies, exceptions exist, such as when the statutory authority does not act in accordance with the law or when the issue is purely a legal one. Given that the facts were undisputed and the issue was purely legal, the court decided to entertain the writ petition. Additionally, the case had been pending since 2007, making it impractical to redirect the petitioners to the departmental forum at this stage.

Conclusion:
The court allowed the writ petition, quashing and setting aside the reassessment order dated 28-12-2006 and the penalty order dated 29-06-2007 as illegal and violative of section 153(2) of the Income Tax Act, 1961. The parties were directed to bear their own costs.

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