2022 (4) TMI 294 - HC - Income Tax

Violation of principles of natural justice - notices under sections 148, 142 (1) and 143 (3) r/w 147 not served to assessee - petitioner contends notice u/s 148 issued by the 1st respondent, the Income Tax Officer, Ward I 1), Thrissur, was not received by the petitioner - petitioner contends notices under sections 148, 142 (1) and 143 (3) r/w 147 were served on wrong e-mail id/email id of the previous auditors of the petitioner and not in the email id of the petitioner available in the Income Tax Portal - HELD THAT - Updated jurisdictional details as well personal details in the Income Tax Web Portal are vital for the communication of notice, summons, requisition, order and other communication by the Department, particularly in case of system generated communications. While the respondents contend that the petitioner did not update the profile and thereby communications were sent through the e-mail id mentioned as default, Ext. P2 personal details in the Income Tax Portal shows primary and secondary e-mail ids and fact remains that the notices and assessment order were not served on these e-mail ids. It is not evident as to when the changes in the personal details were made in the web portal. Since the petitioner did not receive notices, the petitioner did not get opportunity to put forth its response to the same. Thus, there is violation of principles of natural justice while issuing Ext.P6 assessment order. Without venturing into the question as to who is to be faulted for the non-service of communications, in the facts and circumstances, particularly, the fact that the petitioner did not get opportunity to put forth its responses to the notices leading to the issuance of Ext.P6 assessment order, to meet the ends of justice, I set aside Ext.P6 order of assessment and direct the petitioner to submit its response to Ext.P3 and subsequent notices within two weeks from the date of receipt of a copy of this judgment and the assessing officer shall consider the response of the petitioner to the notices and pass fresh assessment order within one month thereafter, after hearing the petitioner.

Issues:
1. Service of notices under sections 148, 142 (1), and 143 (3) r/w 147 on the wrong email address.
2. Violation of principles of natural justice due to incorrect service of notices.
3. Interpretation of Rule 127 of the Income Tax Rules regarding electronic communication.
4. Assessment order passed without proper service of notice.

Analysis:

Issue 1: Service of notices on the wrong email address
The petitioner, a company engaged in the production of spice extracts, challenged the notices served under sections 148, 142 (1), and 143 (3) r/w 147, claiming they were sent to the wrong email address. The petitioner argued that the communications were addressed to the previous auditors' email instead of the petitioner's email listed in the Income Tax Portal. The petitioner contended that the incorrect service of notices violated the principles of natural justice.

Issue 2: Violation of principles of natural justice
The petitioner highlighted that despite updating personal details in the Income Tax Portal, the notices and assessment order were not served on the primary and secondary email addresses provided by the petitioner. The petitioner emphasized that as a result of not receiving the notices, they were deprived of the opportunity to respond, leading to a violation of principles of natural justice. Citing a previous court decision, the petitioner argued that an assessment order issued without giving the assessee an effective opportunity to respond could have adverse consequences on both parties and the system itself.

Issue 3: Interpretation of Rule 127 of the Income Tax Rules
The petitioner's counsel referred to Rule 127 of the Income Tax Rules, which allows for service of communication by electronic means. The counsel argued that the communications were not delivered or transmitted as mandated by the rules. By pointing out discrepancies between the email addresses used for communication and those listed in the Income Tax Portal, the petitioner sought to invalidate the assessment order based on the incorrect service of notices.

Issue 4: Assessment order passed without proper service of notice
In response, the respondents contended that the petitioner failed to inform the assessing officer of the change in email address. They relied on a Supreme Court decision to support their argument that in the absence of such intimation, the assessing officer was justified in issuing notices to the address available in the PAN database. However, the petitioner maintained that the incorrect service of notices deprived them of the opportunity to respond, rendering the assessment order invalid due to a breach of natural justice.

In conclusion, the court set aside the assessment order and directed the petitioner to submit responses to the notices within a specified timeframe. The assessing officer was instructed to consider the petitioner's responses and pass a fresh assessment order after hearing the petitioner. The court's decision aimed to uphold the principles of natural justice and ensure a fair opportunity for the petitioner to present their case.

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