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Issues: Whether the assessment order and notices were validly served pursuant to the procedure under Section 282 of the Income-tax Act, 1961 and Rule 127 of the Income Tax Rules, and whether failure to follow the prescribed service procedure vitiates the assessment proceedings such that the assessment and consequent demand must be quashed.
Analysis: The Tribunal examined the record and the factual report filed by the Revenue which admitted that the assessment order could not be served through the e-filing/ITBA portal due to technical/system error and that the Department claimed service by speed post but failed to produce tracking proof of delivery. The Tribunal applied the principle laid down by the Jurisdictional High Court in Suman Jeet Agarwal regarding notices uploaded on the e-filing portal and notices sent to unrelated e-mail addresses, which requires verification of the date on which the assessee viewed the notice on the e-filing portal and recognition of that date as the date of issuance; further, compliance with the statutory procedure for service under Section 282 and Rule 127 is mandatory. In the absence of proof of service by alternative permitted modes and given the admitted failure to properly serve the assessment order as per the prescribed procedure, the Tribunal found that the assessment proceedings suffered a procedural defect causing miscarriage of justice. The Tribunal considered that restoration to the Assessing Officer would not cure the fundamental defect of invalid service and that the assessment and consequential proceedings were thereby unlawful.
Conclusion: The assessment order and consequential proceedings were not validly served in accordance with Section 282 of the Income-tax Act, 1961 and Rule 127 of the Income Tax Rules; the assessment and related demand proceedings are quashed. The appeal is allowed in favour of the assessee.
Ratio Decidendi: Failure to comply with the mandatory service procedure under Section 282 of the Income-tax Act and applicable rules (including where e-filing upload without verifiable notice or proof of alternative service occurs) renders the assessment proceedings invalid and liable to be quashed for causing a miscarriage of justice.
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