Reopening of income-tax assessment: taxpayer given fresh opportunity to reply where service of notice was doubtful and reopening set aside

Reopening of assessment was challenged on the ground that service of the notice to show cause under section 148A(b) was doubtful, raising a procedural fairness concern; because service could not be confidently confirmed and the taxpayer may have been deprived of a fair opportunity to be heard before issuance of a reopening notice, the reopening notice and the related order under section 148A(d) were set aside, and the taxpayer was directed to be given a fresh opportunity to file a reply to the 148A(b) notice within two weeks so the Assessing Officer can reconsider whether reopening is justified.

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Issues: Whether the order passed under Section 148A(d) of the Income-tax Act, 1961 and the consequential notice under Section 148 of the Income-tax Act, 1961 initiating reopening for assessment year 2017-18 are valid where service of the notice to show cause under Section 148A(b) was effected by portal upload without confirmed real-time alert and where the assessee had changed its email ID which was within the knowledge of the Revenue.

Analysis: The Court examined the statutory and regulatory framework governing electronic service, including Rule 127 of the Income Tax Rules, 1962 and the CBDT notification of September 12, 2019, which permit portal uploading as a mode of service but require completion of service by sending real-time alerts to the assessee. The material indicates that the assessee had communicated a changed email ID to the Revenue authorities prior to issuance of notices and that the changed email ID appeared in later filings. It is not established on the record that the required real-time alert was sent following portal upload. Given the doubt as to effective service and the resulting deprivation of an opportunity to respond to the show cause notice, the principles of natural justice were engaged and the Assessing Officer ought to be given the opportunity to reconsider after the assessee is given a chance to present its reply.

Conclusion: The impugned order dated April 8, 2024 under Section 148A(d) and the notice dated April 8, 2024 under Section 148 are set aside. The assessee is granted an opportunity to file its reply to the Section 148A(b) notice within two weeks and the Assessing Officer shall consider the reply and pass an appropriate order in accordance with law. The decision is in favour of the assessee.

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