2026 (3) TMI 1234 - HC - Income Tax

Natural justice in income-tax service of notice: portal upload alone was found inadequate, leading to remand for fresh hearing.

Service of income-tax notices uploaded only on the IT portal, without effective follow-up, was treated as insufficient where the assessee claimed lack of ... Right to personal hearing before confirming show cause proposals - service by uploading notices on IT portal - obligation to explore alternative modes of service under Section 282 of the IT Act Right to personal hearing before confirming show cause proposals - HELD THAT: - The Court found that notices were uploaded on the IT portal but the petitioner did not receive effective notice and no personal hearing was afforded before the assessment order was passed. The absence of any opportunity of personal hearing rendered the ex parte confirmation of the show cause proposals procedurally infirm. [Paras 8] Impugned assessment order set aside for want of opportunity of personal hearing; matter remanded for fresh consideration. Service by uploading on IT portal - obligation to explore alternative modes of service u/s 282 of the IT Act - Whether uploading notices on the portal alone suffices as effective service when there is no response from the taxpayer and what duty the Officer owes in such circumstances? - HELD THAT: - The Court held that although portal upload can constitute service, the Officer must apply mind where there is no response and explore other valid modes of service prescribed u/s 282, such as RPAD, to ensure effective service. Mere compliance with a single mode of communication without further effort where the taxpayer remains unresponsive would be formalistic and defeat the object of the Act. [Paras 9, 10] Officer directed to explore alternative prescribed modes of service and not rely solely on portal uploads where no effective communication has occurred. Right to personal hearing before confirming show cause proposals - Appropriate remedial directions to address the procedural defects found and the manner of fresh consideration on remand - HELD THAT: - The Court exercised its remedial powers to set aside the impugned orders and remanded the matter for fresh consideration on specified procedural conditions: payment by the petitioner, enabling portal access to file replies, issuance of a clear 14 day notice by RPAD fixing date of personal hearing, and fresh adjudication on merits after hearing. These directions were framed to secure effective service and an opportunity of hearing prior to reconsideration on merits. [Paras 11] Matter remanded to the AO subject to the specified conditions and procedure for filing reply, service by RPAD and personal hearing, with fresh orders to follow. Final Conclusion: The Court set aside the assessment order and consequential proceedings for failure to afford personal hearing and for ineffective service by portal alone; the matter is remanded for fresh consideration after the petitioner complies with the conditional payment and the respondent ensures effective service and a personal hearing before passing fresh orders. Issues: Whether the impugned assessment order dated 27.01.2025 and consequential order dated 04.07.2025 can be set aside and the matter remanded where notices were uploaded on the IT portal, no personal hearing was given, and the petitioner claims lack of effective service.Analysis: The Court examined whether service by uploading notices on the IT portal, without any effective follow-up, resulted in denial of opportunity of personal hearing and thereby breached the principles of natural justice. The Court considered the need for the Officer to explore alternative modes of service prescribed under Section 282 of the Income-tax Act, 1961 when there is no response to portal notices, including sending notices by RPAD, to ensure effective service and avoid mere formal compliance. The Court also took into account the petitioner's willingness to make an interim payment and sought to frame an appropriate remedial order to enable the petitioner to file replies and obtain a hearing.Conclusion: The impugned assessment order dated 27.01.2025 and the consequential order dated 04.07.2025 are set aside and the matter is remanded to the 1st respondent for fresh consideration subject to the condition that the petitioner pays Rs. 5,00,000 within four weeks, after which the portal shall be opened for filing reply, and the respondent shall issue a 14 days RPAD notice fixing personal hearing and thereafter pass orders on merits.