2026 (2) TMI 1230 - AT - Income Tax

Service under Section 282 and Rule 127 found invalid for lack of verifiable notice, assessment and demand quashed.

Validity of service under Section 282 and Rule 127 was the central issue: the prescribed service procedure is mandatory and upload to the e filing portal ... Service of assessment order - procedure under Section 282 and Rule 127 - issuance and date of notice via e filing portal and real time alert - miscarriage of justice - HELD THAT:- As examined the reply of the Revenue in pursuance to the direction issued by the Bench wherein it is admitted that the assessment order was uploaded on e-filing portal, however, due to some technical error and system error, the assessment order was showing in the “Notices” section. Assessment order along with computation sheet and demand notice was duly served by assessee through speed post. It is pertinent to mention that no proof of tracking record showing service of the assessment order through speed post has been filed. It is to be noted that in the written argument submitted on previous date by DR which are marked as Annexure 1, it is categorically stated that “on perusal of the database available on the e- filing portal, it is found that the computation of income and the demand notice have been served through e-filing portal and the assessment order could not be served through e-filing due to some technical/system error. In the subsequent report / written submissions filed by the DR on 28.01.2026 in Annexure B, it is again admitted that the assessment order was not uploaded through e-filing portal but it was claimed that the assessment order was served through speed post. As observed by us in the preceding para, no proof of service of speed post by filing the tracking report has been submitted. In the absence of report of service through tracking report, there is nothing to believe that the assessment order and other computation sheet and demand notice were duly served through speed post sent on 31.12.2019. Therefore, in view of the finding of Suman Jeet Agarwal [2022 (9) TMI 1384 - DELHI HIGH COURT] and in view of the provision of Section 282 of the Act and rule 127 of the Rules, we are of the considered opinion that the assessment order and the requisite notice has not been served upon the assessee as per rule and procedure laid down in that regard which has resulted into miscarriage of justice. Appeal of the assessee is allowed. 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.