2024 (8) TMI 351 - AT - Income Tax

Validity of revision order passed u/s 263 ex-parte - order passed qua the assessee without even service of show cause notice - denial of Principles of natural justice - HELD THAT - SCN or other notices alleged to be issued by the Id. PCIT through the online portal, were neither served on the registered email-id nor on any other address given in the ITR or in personal profile of the appellant assessee in ITBA portal as per the provisions of section 282 of the Act. Decision relied by the Ld. PCIT, do not apply to the peculiar facts of the present case, as the appellant was not served any notice, message or email for initiating the revisionary proceeding and thereafter and even show cause notice (SCN) was not served upon the appellant assessee. Meaning thereby that the Ld. PCIT has passed the 263 order ex-parte qua the appellant assessee in gross violation of principles of natural justice without even service of the SCN. In the present case, there was no service of SCN as it was not sent on the petitioner's email as evident from the downloaded copy of SCN as the email of the appellant was not reflected on photo print of the SCN copy generated from the e-portal/ITBA portal of the Department, although the appellant has mentioned updated email addresses in its ITRs and personal profile on the ITBA portal of the respective Assessment Years as above. PCIT before any action is taken, a communication of the SCN notice and other notices shall be ensured in terms of the provisions as enumerated under the provisions of law as per the rule 17 and section 282 of the income tax act 1961. The provisions do not mention that communication to be presumed by placing notice on the e-portal. Thus, in the absence of the assessee being aware of the show cause notice issued by the Ld. PCI T, the assessee cannot be faulted for not responding to the queries raised by the Ld. CIT (E) as in absence of service, because it is considered that it was never conveyed to the assessee. Therefore, the revisionary action-initiated u/s 263 of the Act by the Ld. PCIT is bad in law and it would be liable to be quashed. PCIT has committed a gross error in not providing effective/reasonable opportunity of being heard to the assessee before passing the impugned order. Assessee appeal allowed.

Summary

Issues Involved:
1. Validity of the ex-parte order dated 25.03.2023 passed under section 263 of the Income-tax Act, 1961.
2. Non-service of notice dated 10.03.2023 issued under section 263 of the Act.
3. Compliance with mandatory provisions under section 282 of the Act regarding service of notices/orders.
4. Assessment order's alleged erroneous nature and its prejudicial impact on the interest of the revenue.
5. Principles of natural justice and their application in the proceedings.

Issue-wise Detailed Analysis:

1. Validity of the Ex-parte Order:
The appellant contended that the Principal Commissioner of Income Tax (PCIT) grossly erred in passing an ex-parte order dated 25.03.2023 under section 263 of the Income-tax Act, 1961, without affording an opportunity of being heard, thus violating the principles of natural justice. The PCIT's order was deemed bad-in-law and deserving of being set aside and quashed.

2. Non-service of Notice:
The appellant argued that the notice dated 10.03.2023 and the subsequent order dated 25.03.2023 were not served by post, hand, email, or SMS but were directly uploaded on the income tax portal. This non-service of notice was claimed to vitiate the entire proceedings, rendering them bad-in-law and deserving of being quashed. The appellant supported this claim with evidence showing no email ID was mentioned on the notice.

3. Compliance with Section 282:
The appellant emphasized that the impugned notice and order grossly suffered from non-compliance with the mandatory provisions under section 282 of the Act and relevant notifications regarding the service of notices/orders. This non-compliance was argued to invalidate the entire proceedings.

4. Alleged Erroneous Nature of Assessment Order:
The PCIT held that the assessment made by the Assessing Officer, National Faceless Assessment Centre, was erroneous and prejudicial to the interest of the revenue. The PCIT stated that the assessment order was passed in a routine and casual manner without verification of the issue. The appellant contested this, arguing that the assessment order was passed after thorough examination of facts and was neither erroneous nor prejudicial to the interest of the revenue.

5. Principles of Natural Justice:
The appellant contended that the ex-parte order violated the principles of natural justice, specifically the principle of "audi alteram partem" (no one should be condemned unheard). The Tribunal emphasized that natural justice principles are firmly rooted under Articles 14 and 21 of the Constitution, ensuring that judgments are just, fair, and reasonable. The Tribunal cited various case laws reinforcing the necessity of providing an opportunity to be heard before passing any order.

Tribunal's Findings:
The Tribunal found that the revisionary proceedings were initiated by the PCIT without proper service of the show cause notice (SCN) dated 10.03.2023. The SCN was not served through post, email, or SMS, and the PCIT proceeded to pass an ex-parte order on 25.03.2023 without ensuring proper communication. This failure to serve the notice violated the principles of natural justice and section 282 of the Act.

The Tribunal cited several case laws supporting the appellant's contention that orders passed without affording an opportunity of being heard are bad in law. It was emphasized that merely uploading the notice on the income tax portal does not constitute effective service as per section 282.

Conclusion:
The Tribunal concluded that the PCIT committed a gross error by not providing an effective/reasonable opportunity of being heard before passing the impugned order. Consequently, the revisional order dated 25.03.2023 was declared void ab initio and quashed. The other grounds of appeal were rendered academic and dismissed as infructuous.

Order:
The appeal filed by the assessee was allowed, and the order was pronounced in accordance with Rule 34(4) of the Income Tax (Appellate Tribunal) Rules on 05.07.2024.