[Section 283]: Service of Notice When Family is Disrupted or Firm is Dissolved

Section 283 of the Income Tax Act, 1961, provides special rules for serving notices when:

1. A Hindu Undivided Family (HUF)is partitioned,
2. A firm/LLP/companyis dissolved, or
3. A taxpayer dies, leaving legal heirs.

1. Notice to Disrupted HUF (After Partition)

• If an HUF is partitioned, the notice must be served to:
  • The last known Karta(if alive), or
  • All adult membersof the former HUF.
• Proof of Partition: Requires a partition deedor court decree.

Example:

• If an HUF splits in 2024, notices for pre-partition tax dues must go to all divided members.

2. Notice to Dissolved Firms/Companies

• If a partnership firm/LLP/companyis dissolved, notices must be served to:
  • All partners/directors(if dissolved voluntarily), or
  • The liquidator(if dissolved via court order).
• Exception: If the firm’s PAN is still active, notices can be sent to the registered address.

Judicial Precedent:

• CIT vs. Bharat Nidhi Ltd.– Notice to a dissolved company is invalid if not sent to the liquidator.

3. Notice in Case of Death (Legal Heirs)

• If a taxpayer dies, the Assessing Officer (AO) must serve notice to:
  • The legal heir(s)(if known), or
  • The executor/administratorof the will.
• If heirs are unknown, the AO may issue a public noticein newspapers.

Key Ruling:

• Estate of Late A.K. Menon vs. ITO– Tax recovery from heirs is valid only if they received proper notice.

4. Consequences of Invalid Service

• Assessment orders may be quashedif sent to the wrong person (ITO vs. Laxmi Prasad).
• Penalties are voidif legal heirs were not notified.

5. Practical Steps for Compliance

✅ For HUFs: File Form 49B (HUF partition declaration) with IT Dept.

✅ For Firms/Companies: Submit dissolution proof (ROC filings) to the AO.

✅ For Legal Heirs: Update IT records via Form 49A (PAN) or e-filing portal.

Note: If you receive a notice wrongly, challenge it within 30 days under Section 246A.

6. Practical Example of Section 283

Here’s a practical example illustrating Section 283 of the Income Tax Act, 1961, which governs the service of notices in cases of disrupted families or dissolved entities:

(A) Example Scenario: Hindu Undivided Family (HUF) Partition

Background:

• A HUF(managed by Karta  A) includes his wife and two sons.
• The family partitionsits assets on March 31, 2025, and the partition is recognized by the Assessing Officer under Section 171.
• The Income Tax Department later identifies unreported income for AY 2024-25(pre-partition period) and issues a notice for reassessment.

Application of Section 283:

1. Recipient of Notice:

• • The notice must be served to  A(last Karta) if he is alive .
  • If  Ais deceased, the notice must be sent to all adult members (sons/wife) of the erstwhile HUF .

2. Invalid Service Example:
   • If the department sends the notice only to one son(ignoring others), the reassessment order could be quashed in court due to improper service .

(B) Example Scenario: Dissolved Partnership Firm

Background:

• ABC Traders, a partnership firm (with partners X, Y, and Z), dissolves on January 1, 2025.
• The firm had undisclosed income for AY 2023-24, and the department issues a notice for penalty proceedings.

Application of Section 283:

1. Recipient of Notice:

• • The notice must be served to all former partners(X, Y, Z), provided they were adults at dissolution .
  • If Xis a minor, the notice is invalid if sent solely to X .

2. Valid Service:

• • Sending the notice to Y(any one adult partner) suffices, as it binds all partners for pre-dissolution liabilities