Reassessment notice to a disrupted HUF needs statutory machinery and valid service before reopening can proceed

Section 171 operates as a machinery provision for a Hindu undivided family previously assessed as undivided and linked to a recorded partition; where no workable statutory mechanism exists to assess a disrupted HUF that was never earlier assessed as such, a reassessment notice under section 148 is without jurisdiction. Proper service of the section 148 notice is also a condition precedent to reopening, and service by affixation requires reasonable prior to serve the assessee or proof of refusal; absent adequate attempt and reliable compliance with service requirements, the reassessment cannot be sustained.

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Issues: (i) Whether reassessment notice under section 148 could validly be issued to a Hindu undivided family which had already been partitioned and had never previously been assessed as an undivided family; (ii) Whether the notice under section 148 was properly served so as to sustain the reassessment proceedings.

Issue (i): Whether reassessment notice under section 148 could validly be issued to a Hindu undivided family which had already been partitioned and had never previously been assessed as an undivided family.

Analysis: The statutory scheme treated section 171 as a machinery provision meant for a Hindu family hitherto assessed as undivided, and its operation was linked to prior assessment and a recorded finding of partition. The reassessment machinery under the Income-tax Act, 1961, and the corresponding provisions of the repealed Act did not provide a workable method for assessing, after disruption, a Hindu undivided family that had never earlier been assessed. In such circumstances, the notice was issued against an entity for which the statutory machinery did not authorise the proposed proceeding.

Conclusion: The notice under section 148 on the disrupted Hindu undivided family was without jurisdiction and could not be sustained.

Issue (ii): Whether the notice under section 148 was properly served so as to sustain the reassessment proceedings.

Analysis: Service of notice under section 148 was a condition precedent to reopening. Service by affixation was valid only after reasonable attempts had been made to serve the assessee or if service had been refused. On the materials placed, the process-server's report did not disclose any adequate attempt to locate the assessee, and the purported service was also vitiated by obvious factual infirmities. The statutory requirement of proper service was therefore not satisfied.

Conclusion: The notice under section 148 was not properly served and the reassessment proceedings failed on that ground as well.

Final Conclusion: The reassessment initiation could not stand either on jurisdiction or on service, and the impugned notices and consequential proceedings were set aside.

Ratio Decidendi: Where the Income-tax Act supplies no machinery to assess, after partition, a Hindu undivided family that was never previously assessed as undivided, and the notice initiating reassessment is also not duly served, the reassessment proceedings are void.

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