Mandatory service of notice under tax law is crucial to validate assessment; failure vitiates proceedings and necessitates fresh assessment.

JUDGMENT :

MURAHARI SRI RAMAN, J.

Challenge is laid in the instant writ petition against Assessment framed under Section 147 read with Section 144 of the Income Tax Act, 1961, vide Order dated 14.11.2017 of the Deputy Commissioner of Income Tax, Circle 1(2), Bhubaneswar with respect to assessment year 2012-13 (Financial Year 2011-12) purported to have been passed in pursuance of Notice under Section 148 and subsequent Notices dated 14.06.2017 and 23.10.2017 under Section 142, and the petitioner craves indulgence of this Court exercising power under Articles 226 and 227 of the Constitution of India for grant of following relief(s):

“In the context aforesaid it is most humbly prayed that Your Lordships may after hearing the counsel for the petitioner be pleased to:

(i) Call for the records;

(ii) And further Your Lordships may be pleased to issue rule nisi calling upon the opposite party to show cause as to why the order of reassessment passed under Section 147/144 of Income Tax Act for the assessment year 2012-13 passed by opposite party No.1 under Annexure-5 & the Demand Notice Under Annexure-5/A to the Writ Petition shall not be quashed;

(iii) And further Your Lordships may be pleased to issue rule nisi calling upon the opposite parties to show cause as to why the order of attachment dated 21.05.2025 issued by the opposite party No.3 under Annexure-4 shall not be quashed, (iv) And if the opposite parties fail to show cause or show insufficient cause then the rule may be made absolute;

(v) And further Your Lordships may be pleased to pass such other order or orders as your Lordships may deem fit and proper;

And for this act of kindness, the petitioners as in duty bound shall ever pray.”

Case of the petitioner:

2. The petitioner filed return of income for the assessment year 2012-13 on 05.04.2013 under the Income Tax Act, 1961 (for brevity, "IT Act") declaring total income at Rs.22,26,000/-. After filing of return for the said assessment year, no communication was made in respect of assessment under Section 143(1).

2.1. The Deputy Commissioner of Income Tax, Circle 1(2), Bhubaneswar without causing any independent inquiry with respect to information received vide Letter dated 29.03.2017 from the Deputy Director of Income Tax (Investigation), Unit–2(2), Bhubaneswar reopened the Assessment for the assessment year 2012-13. Subsequent thereto, a penalty proceeding was initiated by issue of show cause notice in obedience to which the petitioner having appeared in the said proceeding, the Assessing Authority imposed penalty under Section 271C of the IT Act on 13.04.2018.

2.2. Neither the Notice under Section 147 nor was the Assessment Order served on the petitioner. The petitioner came to know about the Assessment Order and the Demand Notice passed under Section 147/144 of the IT Act, on 21.05.2025 when a Tax Recovery Proceeding was initiated. The Tax Recovery Officer, has issued the order of attachment of the immovable property. On getting the information about such attachment order, the petitioner having applied for the certified copy of the relevant Orders which was supplied to him on 24.07.2025.

2.3. Hence this application has been filed questioning jurisdiction of the Assessing Officer to pass Assessment Order dated 14.11.2017 under Section 147 read with Section 144 (Annexure-5) and as a consequence thereof raise demand under Section 156 of the IT Act vide Annexure-5A without ensuring service of Notice under Section 148.

Hearing:

3. Though copy of the writ petition was served on the Senior Standing Counsel for the Income Tax Department on 18.08.2025, no counter affidavit has been filed by the Department.

3.1. On 12.03.2