CIT is Required to Serve Notice via Jail Superintendent if Assessee is in Judicial Custody: HC

Case Details: PCIT (Central) v. Narayan Kumar Khaitan - [2023] 149 taxmann.com 243 (Orissa)

Judiciary and Counsel Details

• • Dr. S. Muralidhar, CJ. & M.S. Raman, J.
  • Radheyshyam Chimanka, Sr. Standing Counsel & A. Kedia, Jr. Standing Counsel for the Appellant.

Facts of the Case

A search and seizure operation under section 132 was conducted on SM and group wherein certain incriminating documents were found. Subsequently, assessment in case of assessee was completed under section 153C, read with section 143(3).

The Principal Commissioner invoked revisionary jurisdiction under section 263 against said assessment order and subsequently issued a notice for being served upon assessee at his last known address. In reply, a staff member of assessee appeared and informed that assessee was in judicial custody. The Principal Commissioner treated the staff member’s appearance as sufficient in terms of section 292BB and passed the order under section 263.
On appeal, the ITAT granted relief to the assessee. Aggrieved-CIT filed the instant appeal before the Orissa High Court.

High Court Held

The High 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, 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 Notice/Assessee himself.

Accordingly, service of notice to staff member could not be assumed to be valid and thus, the impugned order passed under section 263 was liable to be quashed.

List of Cases Reviewed

• • Narayan Kumar Khaitan [IT Appeal Nos. 170 to 175 (CTK) of 2019, dated 15-6-2022] (para 11) affirmed.
  • CIT v. Privilege Investment (P.) Ltd. [2017] 88 taxmann.com 559/395 ITR 147 (All.) (para 11)
  • CIT v. Madhsy Films (P.) Ltd. [2008] 175 Taxman 347/301 ITR 69 (Delhi) (para 10) followed.

List of Cases Referred to

• • CIT v. Madhsy Films (P.) Ltd. [2008] 175 Taxman 347/301 ITR 69 (Delhi) (para 10)
  • CIT v. Privilege Investment (P.) Ltd. [2017] 88 taxmann.com 559/395 ITR 147 (All.) (para 11).