Invalid service of statutory tax notices vitiates assessment and penalty proceedings when the assessee is denied an effective opportunity to respond.

Statutory notices under Section 142(1) sent to an email address not registered by the assessee on the departmental portal were held to be ineffective because they denied a proper opportunity to respond. The High Court found that the assessment had proceeded on the basis of non-response to those defective notices, and that the failure of service went to the root of the assessment process. The assessment order, computation sheet, demand notice and penalty notices were therefore set aside, and the matter was remitted to the revenue authorities to proceed afresh from the stage of reply to the Section 142(1) notice.

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Issues: Whether the assessment order, demand notice and penalty notices were liable to be set aside on the ground that notices under Section 142(1) of the Income-tax Act, 1961 were sent to an email address not registered by the assessee, resulting in denial of an effective opportunity to reply.

Analysis: The notices were not issued to the email IDs furnished by the assessee on the departmental portal. As the impugned assessment proceeded on the basis of non-response to those notices, the failure to serve notice on the registered email address deprived the assessee of a proper opportunity to respond. This defect went to the root of the assessment process and justified interference.

Conclusion: The assessment order, computation sheet, demand notice and penalty notices were set aside, and the matter was remitted to the revenue authorities to proceed from the stage of reply to the Section 142(1) notice.

Ratio Decidendi: Where statutory notices are not served on the email address registered by the assessee, resulting in denial of an opportunity to respond, the consequential assessment and allied notices are liable to be set aside and the matter remanded for fresh consideration from the stage of notice reply.

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