2024 (12) TMI 713 - HC - Income Tax

Assessment u/s 144 and 144B - assessment order cannot be completed without issuance of a notice u/s 143 (2) - HELD THAT - The respondent s reliance on the petitioner s PAN database or an alternate email address cannot substitute for statutory compliance. Procedural irregularities in issuing and serving notices undermine the jurisdiction and legality of the entire assessment process. The assessment order cannot be completed without issuance of a notice u/s 143 (2). As such the assessment order passed by the respondent authorities without issuing proper notice u/s 143(2) the assessment proceedings as well as the assessment order passed by the AO is bad in law and is set aside. Writ petition is allowed and the impugned assessment order demand notice and penalty notices are hereby quashed. The respondent authorities are directed to issue fresh notices if deemed necessary strictly adhering to the statutory provisions and ensuring proper service to the petitioner.

Issues:
Challenge to assessment order under Sections 144 and 144B of the Income Tax Act, 1961 along with related demand and penalty notices based on procedural irregularities and lack of jurisdiction.

Analysis:
The petitioner, engaged in trading materials, challenged the assessment order for the assessment year 2022-2023, alleging that notices were sent to an unregistered email address instead of the registered one, depriving her of the opportunity to respond. The petitioner contended that the assessment order was passed unlawfully under Sections 144 and 144B without granting her a fair hearing, violating principles of natural justice. The petitioner argued that the consistent practice of sending communications to her registered email address created a legitimate expectation, which was not met in this instance. The petitioner sought to quash the assessment order, demand notice, and penalty notices as arbitrary, unlawful, and in breach of natural justice.

The respondent, on the other hand, asserted that all notices and orders were validly issued within statutory timelines and communicated to the petitioner's registered and alternate email addresses. The respondent contended that the proceedings were conducted in strict compliance with the Income Tax Act, granting the petitioner ample opportunities to respond. The respondent argued that allegations of bias or procedural irregularities were unfounded, as all actions were system-driven and lawful. The respondent emphasized that the notices and orders issued were legal, valid, and sustainable in law.

The Court, after considering submissions from both parties, found that the assessment order and related notices were vitiated due to procedural lapses and non-compliance with statutory provisions. It noted that statutory notices under Sections 143(2) and 142(1) were not served to the petitioner at her registered email address, violating Section 282 of the Act and principles of natural justice. The Court highlighted the importance of proper service of notices and the petitioner's legitimate expectation based on past practices. Citing relevant case law, the Court emphasized that procedural irregularities in issuing and serving notices undermined the jurisdiction and legality of the assessment process. Consequently, the Court allowed the writ petition, quashed the assessment order, demand notice, and penalty notices, directing the authorities to issue fresh notices adhering to statutory provisions and ensuring proper service to the petitioner.

In conclusion, the Court set aside the assessment order due to procedural irregularities and lack of proper notice issuance, emphasizing the importance of statutory compliance and fair opportunity for the petitioner to respond. The judgment underscores the significance of adhering to legal procedures in assessment proceedings to maintain the integrity and legality of the process.

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