Defective service of reassessment notice to an unused email address renders the assessment unsustainable and penalty proceedings fall with it.

Reassessment proceedings founded on notice served only to an unused e-mail address were treated as defective because service was not effected through a functional communication mode, despite the existence of an active alternate address. The assessment order based on that defective service was therefore unsustainable and was set aside, with the matter remanded for fresh statutory action under the reopening procedure. Consequential penalty notices could not survive once the foundational assessment was quashed, so they were also nullified as dependent proceedings.

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Issues: (i) Whether the reassessment notice and the assessment order founded on service to an unused e-mail address were sustainable; (ii) Whether the consequential penalty notice could survive once the assessment order was set aside.

Issue (i): Whether the reassessment notice and the assessment order founded on service to an unused e-mail address were sustainable.

Analysis: The assessment proceedings were initiated by notice under Section 148 of the Income-tax Act, 1961, but the notice and later communications were sent to an e-mail address that was no longer in use. The recorded facts showed that the petitioner had an alternate active e-mail address, yet the reopening communications were not effectively served through a functional mode. The assessment order, being preceded by such defective service, could not be sustained.

Conclusion: The assessment order was unsustainable and was set aside, with remand for issuance of a proper notice under Section 148A(b) of the Income-tax Act, 1961 and fresh consideration under Section 148A(d) of the Income-tax Act, 1961.

Issue (ii): Whether the consequential penalty notice could survive once the assessment order was set aside.

Analysis: The penalty notices under Section 271(1)(c) of the Income-tax Act, 1961 were consequential to the impugned assessment proceedings. Once the foundation order was quashed, the consequential penalty action could not independently stand.

Conclusion: The penalty notice was quashed as consequential.

Final Conclusion: The writ petition succeeded to the extent that the impugned assessment was annulled, the matter was sent back for fresh statutory action, and the consequential penalty proceedings were also nullified.

Ratio Decidendi: A reopening or assessment founded on defective service of the jurisdictional notice to an inactive address cannot be sustained, and any consequential penalty action falls with the quashed foundation order.

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