2023 (8) TMI 1573 - HC - Income Tax

Tax Assessment Order Nullified for Improper Notice; Case Sent Back for New Notice, Penalty Notices Dropped.

The High Court set aside the Impugned Assessment Order due to improper notice delivery and remitted the case for reissuance of notice under Section ... Validity of notice issued under Section 148 of the Income-tax Act - service of statutory notice by electronic mail and requirement of effective communication - reopening of assessment and compliance with principles in GKN Driveshafts - requirement to issue fresh notice under Section 148A(b) and to complete proceedings under Section 148A(d) - quashing of consequential penalty under Section 271(1)(c)Validity of notice issued under Section 148 of the Income-tax Act - service of statutory notice by electronic mail and requirement of effective communication - Notice under Section 148 preceding the impugned assessment was unsustainable because it was sent to an E-mail ID which was no longer in use. - HELD THAT: - The Court found that the Section 148 notice dated 30.03.2021 and subsequent communications were transmitted to the petitioner's designated E-mail ID which had ceased to be operative after BSNL stopped providing service from April 2019. In these circumstances the electronic transmission did not constitute effective communication to the petitioner and the notice which preceded the impugned assessment order could not be treated as valid. The respondents' contention that notices were available on the web portal and therefore accessible to the petitioner was not accepted as displacing the requirement of valid service to the petitioner. [Paras 10]Notice under Section 148 was held invalid as sent to an E-mail ID no longer in use.Reopening of assessment and compliance with principles in GKN Driveshafts - quashing of consequential penalty under Section 271(1)(c) - The impugned assessment order dated 27.03.2022 was set aside and the consequential penalty notices under Section 271(1)(c) were quashed. - HELD THAT: - Because the foundational notice leading to reassessment was found unsustainable, the Court set aside the resultant assessment order. Consequential penalty notices issued under Section 271(1)(c) were also quashed as they arose from the unsustainable proceedings. Although the respondents relied on the assessee's obligations under established precedents to file returns and object to reopening, the Court's setting aside of the impugned order flowed from the defect in service of the notice. [Paras 11]Impugned assessment order set aside; penalty notices under Section 271(1)(c) quashed.Requirement to issue fresh notice under Section 148A(b) and to complete proceedings under Section 148A(d) - Proceedings remitted to respondents to issue a proper Section 148A(b) notice and to pass an order under Section 148A(d) within twelve months. - HELD THAT: - The Court directed that the matter be remitted for fresh statutory compliance: respondents are to issue a proper notice under Section 148A(b) of the Act and thereafter complete the process by passing an order under Section 148A(d). A time-limit of twelve months from receipt of the order's copy was imposed for completion of the Section 148A(d) proceedings. The remand thereby requires fresh consideration consistent with statutory procedure. [Paras 11]Matter remitted for issuance of fresh Section 148A(b) notice and completion of proceedings under Section 148A(d) within twelve months.Final Conclusion: Writ petition allowed: impugned assessment order of 27.03.2022 set aside for defective service of Section 148 notice; consequential penalty notices under Section 271(1)(c) quashed; respondents directed to issue a fresh notice under Section 148A(b) and to complete proceedings under Section 148A(d) within twelve months. The petitioner challenged an Assessment Order due to notices being sent to an inactive email ID. The High Court set aside the Impugned Order and remitted the case back to issue proper notice under Section 148A(b) of the Income Tax Act, 1961. Penalty notices were quashed, and a new order must be passed within twelve months. The writ petition was allowed with no costs.