2025 (3) TMI 529 - AT - Income Tax

Reassessment proceedings invalid due to improper service of section 148 notice to wrong email address

Nitin Jain Versus ACIT Circle-3 (1) Gurgaon

ITAT Delhi held that reassessment proceedings were invalid due to improper service of notice under section 148. The notice was sent to an incorrect email ... Validity of Reopening of assessment - no valid service of notice purportedly issued u/s 148 - HELD THAT:- The notice has been sent to some other e-mail ID which has no relation with the assessee. The fact of service of notice at the wrong e-mail ID has been demonstrated to be supported by the screenshot of e-filing portal and ITBA system portal and further reinforced by the copy provided by the Department in response to RTI application. These evidences clearly show that notice u/s 148 cannot be deemed to have been validly served on the assessee. Noticeably the e-mail ID of the assessee is a part of the record of the Department as evident from the screenshot which is the communication of processing intimation under s.143(1) sent at the correct e-mail address as demonstrated in the submissions of the assessee recorded in the preceding paras. The assessee also claims that no communication of notice has been made to the assessee either physically or through post or other modes of communication adopted by the Department. The electronic communication appears to be made but delivered at the wrong e-mail ID. We may usefully refer to the judgement of Suman Jeet Agarwal [2022 (9) TMI 1384 - DELHI HIGH COURT] wherein held that when the notices were sent to unrelated e-mail address, the date on which such notice was first viewed by the assessee on e-filing portal should be construed as the date of issuance of notice. There is no rebuttal on facts from the Revenue that notice was served on the correct e-mail ID or communicated physically or through the modes prescribed under s. 282 of the Act. Thus, we find merit in the plea of the assessee that impugned re-assessment order framed in consequence of notice issued under s. 148 which was never served, to be regarded as nonest and bad in law. Decided in favour of assessee. ISSUES PRESENTED and CONSIDEREDThe Tribunal considered several issues related to the validity of the reassessment proceedings under the Income Tax Act, 1961. The primary issues were:1. Whether the reassessment proceedings were invalid due to the non-service of the notice under Section 148 of the Act to the correct email address of the appellant.2. Whether the reassessment proceedings were initiated beyond the limitation period specified under the first proviso to Section 147 of the Act, thus rendering them invalid.3. Whether the reassessment proceedings were invalid due to being initiated during the pendency of rectification proceedings under Section 154 of the Act.4. Whether the reassessment proceedings were initiated without proper jurisdiction and application of mind, making them void ab initio.5. Whether the best judgment assessment under Section 144 of the Act was justified given the appellant's compliance with queries and submission of returns.6. The validity of the reassessment order under Sections 147, 144, and 144B of the Act.7. The correctness of the addition of Rs. 43,39,290/- on account of discrepancies between income as per Form 26AS and the income declared in audited financials.ISSUE-WISE DETAILED ANALYSIS1. Invalidity of Reassessment Order for Non-Service of Notice under Section 148The legal framework requires that a notice under Section 148 be served to the assessee as a prerequisite for valid reassessment proceedings. The Tribunal found that the notice dated 30.03.2021 was sent to an incorrect email address, not associated with the appellant, which was confirmed by evidence from the e-filing portal and ITBA system. The appellant's correct email address was on record, as evidenced by prior communications from the department. The Tribunal cited the Delhi High Court's decision in Suman Jeet Agarwal, which held that a notice sent to an unrelated email address should be considered issued on the date it was first viewed by the assessee on the e-filing portal. The Tribunal concluded that the reassessment order was invalid as the notice was not properly served.2. Non-Compliance with the First Proviso to Section 147The Tribunal examined whether the reassessment proceedings were initiated beyond the permissible time frame. The first proviso to Section 147 requires that reassessment cannot be initiated after four years unless there is a failure by the assessee to disclose material facts. The Tribunal found that the Assessing Officer (AO) did not identify any specific failure by the appellant to disclose material facts. The Tribunal referenced several precedents, including BPTP Limited and Anand Developers, which emphasize the need for specific identification of nondisclosure by the assessee. The Tribunal concluded that the reassessment was invalid due to non-compliance with the proviso.3. Reassessment During Pendency of Rectification ProceedingsThe appellant argued that the reassessment proceedings were invalid as they were initiated during the pendency of rectification proceedings under Section 154. The Tribunal did not specifically address this issue, as the reassessment was already deemed invalid on other grounds.4. Jurisdiction and Application of MindThe Tribunal considered whether the reassessment was initiated without proper jurisdiction and application of mind. The appellant argued that the AO did not apply their mind as required under Sections 147/148/151. The Tribunal found that the reassessment order was invalid due to the improper service of notice, rendering further consideration of jurisdiction unnecessary.5. Best Judgment Assessment under Section 144The appellant contended that the best judgment assessment was unjustified, given their compliance with queries and submission of returns. The Tribunal did not address this issue directly, as the reassessment order was already invalidated.6. Merits of Addition of Rs. 43,39,290/-The Tribunal did not delve into the merits of the addition due to the invalidity of the reassessment proceedings. However, the appellant argued that the additions were made without proper verification and contrary to Section 145 of the Act, which requires assessment based on the books of account unless they are rejected under Section 145(3).SIGNIFICANT HOLDINGSThe Tribunal held that the reassessment proceedings were invalid due to the improper service of the notice under Section 148. The Tribunal emphasized that:'Having regard to the demonstration of factual matrix on behalf of the assessee and in the light of judicial view available in this regard, we find merit in the plea of the assessee that impugned re-assessment order framed in consequence of notice issued under s. 148 which was never served, to be regarded as nonest and bad in law.'The Tribunal did not find it necessary to address other legal aspects or the merits of the additions due to the invalidity of the reassessment order.The appeal of the assessee was allowed, and the reassessment order was quashed.