Assessment order quashed due to invalid notice under Section 142(1) and non-compliance with Section 144B(6)(ii)(a)

The ITAT RAIPUR held that the notice under section 142(1) was not validly issued or served to the assessee as it lacked essential details and was not transmitted in the prescribed mode under section 144B(6)(ii)(a). Consequently, the assessment order based on such defective notice was declared arbitrary, bad in law, and void ab initio. The assessment was quashed, rendering all subsequent proceedings non-est in the eyes of law. The assessee's appeal was allowed.

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ISSUES:

Whether service of notice under Section 142(1) of the Income Tax Act, 1961, by uploading on the E-filing portal without real-time alert or email constitutes valid service.Whether non-service or invalid service of notice under Section 142(1) vitiates the assessment order and renders it void ab initio.Whether the principles laid down in the judgment regarding electronic service of notices under Section 282 and Section 144B(6)(ii)(a) of the Income Tax Act apply to the present case.Whether an order passed under Section 263 of the Income Tax Act based on a notice not validly served is sustainable.

RULINGS / HOLDINGS:

Service of notice under Section 142(1) by merely uploading it on the E-filing portal without issuing a "real time alert" as mandated under Section 144B(6)(ii)(a) is not valid service of notice.Non-compliance with the prescribed mode of service under the Act makes the notice akin to "no due despatch of Notices," rendering the assessment order "arbitrary, bad in law and void ab initio."The principles laid down by the Hon'ble Delhi High Court in the case concerning category 'D' notices, which require a real-time alert accompanying electronic service, are applicable and binding in the instant case.An order passed under Section 263 based on a notice that was not validly served as per statutory requirements is unsustainable and liable to be quashed.

RATIONALE:

The Court applied statutory provisions under the Income Tax Act, 1961, particularly Section 142(1), Section 144B(6)(ii)(a), and Section 282, along with Rule 127 of the Income Tax Rules and CBDT Notification No. 4/2017.The Court relied heavily on the precedent set by the Hon'ble Delhi High Court, which clarified that electronic service of notices must be accompanied by a real-time alert to constitute valid service, and mere uploading on the E-filing portal without such alert is insufficient.The Court noted that the prescribed mode of service under Section 282 and Rule 127 mandates communication through email, which is not optional, and that the Department failed to provide evidence of valid service via email or real-time alert.The Court observed that failure to follow the statutory mode of service deprives the assessee of the opportunity of being heard, thereby invalidating the assessment and revisionary proceedings.There was no dissent or doctrinal shift; the Court followed established judicial principles emphasizing strict compliance with procedural requirements for service of notices.

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