2024 (6) TMI 1498 - HC - Income Tax

Writ petition dismissed for failure to update email; non-receipt deemed inadvertence; 15 days to file appeal under Section 246A

Lakeshore Hospital And Research Centre Limited Versus The Additional/Joint/Deputy/Assistant Commissioner Of Income Tax/ Income Tax Officer, The Principal Chief Commissioner of Income Tax, New Delhi, The Deputy Commissioner Income Tax, Corporate Circle 1 (1), Kochi

Writ petition dismissed by HC: petitioner's failure to update the e-mail address provided to the Department meant show-cause notices were sent to the ... Maintainability of Writ petition - petitioner contends that there was lack of opportunity to respond to the show cause notices which is violative of the principles of natural justice - HELD THAT:- Admittedly, Exts.P5 and P6 show cause notices were sent to the e-mail address provided by the petitioner to the Department for official communication. The case of the petitioner is that due to inadvertent error on their part in not updating/changing the e-mail address with the Department, the show cause notices were unnoticed and unattended by them on time. The petitioner contends that there was lack of opportunity to respond to the show cause notices which is violative of the principles of natural justice and against the scheme of assessment u/s 143(3) r/w Section 144B of the Act for Faceless Assessment Scheme which provides for opportunity to the assessee to rebut the allegations in the show cause notices. This Court is to refrain from intervening with cases where there is an effective alternate remedy, unless there exists compelling reasons to do so. It is the case of the petitioner that, due to inadvertent error on their part in not updating/changing the e-mail address with the Department, the show cause notices were unnoticed and could not be responded to, on time. Therefore, when the petitioner is at fault, as they did not update/ change the e-mail address with the Department, they cannot legitimately complain that there is violation of the principles of natural justice. No reason to entertain this writ petition under Article 226 of the Constitution of India. Accordingly, without prejudice to the remedy available to the petitioner under the statute, this writ petition is dismissed. Since the petitioner was prosecuting the writ petition before this Court, think that is only just and proper to give some time to the petitioner to prefer the statutory appeal. If the petitioner files an appeal u/s 246A of the Act before the statutory appellate authority within a period of 15 days from the date of receipt of a copy of this judgment, the appeal shall be entertained by the said authority and appropriate orders shall be passed on merits. ISSUES PRESENTED AND CONSIDERED 1. Whether a writ petition under Article 226 is maintainable to challenge an assessment order and demand notice when an efficacious statutory appeal remedy under the Income Tax Act exists. 2. Whether service of show cause notices and other assessment communications to an e-mail address registered by the assessee, which later became inaccessible because the principal officer had resigned and the assessee did not update its contact details, amounts to a violation of the principles of natural justice and vitiates the assessment order. 3. Whether inadvertent or bona fide failure by an assessee to update its email/contact details with the tax authority can justify interference by the writ court despite procedural consequences arising from non-receipt of notices. 4. Whether the faceless assessment/Section 144B scheme and the requirement to provide opportunity to rebut show cause notices mandates setting aside an assessment where the assessee did not receive show cause notices due to its own failure to update contact details. 5. Appropriate relief/remedial direction if the writ petition is dismissed for want of exceptional circumstances. ISSUE-WISE DETAILED ANALYSIS Issue 1: Maintainability of writ petition versus existence of efficacious alternate remedy Legal framework: Article 226 permits writs for enforcement of fundamental rights and for other purposes, but courts conventionally refrain from intervening where an efficacious statutory remedy (here, appeal under Section 246A) exists, absent exceptional circumstances (breach of fundamental rights, violation of natural justice, excess of jurisdiction, or challenge to vires). Precedent treatment: The Court relied on settled principles that writ jurisdiction is ordinarily not invoked where adequate alternate remedies exist and cited authority enumerating the limited exceptions constituting 'exceptional circumstances.' Interpretation and reasoning: The Court held that the petitioner had an efficacious remedy by way of appeal under Section 246A. No compelling or exceptional circumstances were shown to justify bypassing the statutory remedy. The Court applied the standard that a writ petition may be entertained only on specified grounds (breach of fundamental rights, violation of natural justice, excess of jurisdiction, or vires challenge) and found none sufficiently made out. Ratio vs. Obiter: Ratio - writ relief is inappropriate where an adequate statutory appeal exists and no exceptional circumstance is shown. Conclusion: The writ petition is not maintainable on the ground of the availability of the statutory appeal; the petitioner must pursue the appeal under the statute. Issue 2: Whether service to registered e-mail address that became inaccessible violates principles of natural justice Legal framework: Principles of natural justice require that an assessee be given opportunity to be heard before adverse inference/assessment. Statutory scheme permits electronic service to the e-mail address furnished by the assessee and use of the e-filing portal for communications in faceless assessments. Precedent treatment: The Court examined and relied upon authority holding that notices sent to the address in departmental databases (PAN/e-filing) are valid where the assessee failed to notify change and maintain records in the departmental database. Interpretation and reasoning: The Court found that the contested notices were sent to the e-mail id provided by the assessee for official communication and that the petitioner admitted the error of not updating its e-mail/contact details. Given this admission and the departmental practice of relying on the registered e-mail and e-filing portal (accessible to the assessee's auditors), the Court concluded there was no breach of the principles of natural justice attributable to the department. The Court emphasised the assessee's duty to keep contact information current and that failure to do so cannot be converted into a ground for writ relief when the departmental records were followed. Ratio vs. Obiter: Ratio - absence of departmental fault where notices were sent to the registered e-mail; an assessee's failure to update official contact particulars does not, by itself, constitute a breach of natural justice warranting writ intervention. Conclusion: No violation of natural justice was made out; service to the registered e-mail address (and e-filing portal) was valid and the petitioner's non-receipt owed to its own omission. Issue 3: Effect of inadvertent/bona fide omission by assessee to update contact details Legal framework: Administrative and statutory processes require assessees to intimate changes of contact details (including in PAN database / e-filing portal) to ensure effective electronic communication. Precedent treatment: The Court followed authorities holding that mere filing of returns with new details, without specific intimation and change in departmental PAN database, is insufficient to discharge the duty to update contact particulars. Interpretation and reasoning: The Court treated the petitioner's failure to update the e-mail id as an omission for which the petitioner was responsible. The Court rejected the contention that inadvertence or bona fides would automatically vitiate proceedings where the department acted on the information provided in its records. The Court emphasised that the statutory/administrative scheme places the onus on the assessee to ensure up-to-date contact particulars for electronic communication. Ratio vs. Obiter: Ratio - inadvertence in failing to update departmental contact details does not per se invalidate notices sent to the registered contact information. Conclusion: The petitioner's inadvertent omission did not justify setting aside the assessment; reliance on registered contact details was proper. Issue 4: Application of faceless assessment scheme / Section 144B and requirement to provide opportunity to rebut Legal framework: Faceless Assessment Scheme and Section 144B contemplate issuance of show cause notices and an opportunity to the assessee to rebut allegations electronically. Precedent treatment: The Court acknowledged the scheme's requirement for opportunity to rebut but placed the practical effect on the correctness of departmental service to registered contact points. Interpretation and reasoning: The Court recognised that the scheme provides for opportunity to respond; however, where the scheme's communications were sent to the e-mail and e-filing portal details provided by the assessee, the statutory requirement for opportunity is satisfied unless it is shown that the department failed to use the registered communication channels. The petitioner did not establish departmental failure; rather, non-receipt resulted from the petitioner's lack of updating the e-mail address. Ratio vs. Obiter: Ratio - compliance with faceless assessment's opportunity mandate is met by sending communications to the assessee's registered e-mail and through the e-filing portal; failure to receive due to the assessee's outdated contact information does not amount to procedural deprivation by the department. Conclusion: No invalidation of assessment under the faceless scheme was warranted on the facts. Issue 5: Relief and directions where writ petition is dismissed Legal framework: Courts may dismiss writs for want of exceptional circumstances while preserving the statutory remedies available to the party and, in appropriate cases, grant limited directions to enable the party to pursue those remedies. Interpretation and reasoning: Although the writ petition was dismissed for want of exceptional circumstances, the Court exercised equitable discretion to permit the petitioner time to file the statutory appeal and to defer recovery pending disposal of any interim stay application accompanying the appeal. Ratio vs. Obiter: Ratio - dismissal of writ does not preclude the court from directing that the statutory appeal be entertained within a limited timeline and that recovery be deferred pending interim orders; such directions are permissible to secure substantive justice without bypassing statutory remedies. Conclusion: The writ petition dismissed; petitioner granted a limited indulgence to file the statutory appeal within a stipulated short period, and recovery steps were stayed until the stay petition, if any, is decided by the appellate authority.