Wp/1983/2022 Of Lok Developers v. Deputy Commissioner Of Income Tax Circle 24 (1), Mumbai And 2 Ors

IN THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION WRIT PETITION NO. 1983 OF 2022 ALONG WITH WRIT PETITION NO. 3037 OF 2022 1/9 ALONG WITH WRIT PETITION NO.3042 OF 2022 2/9 Parel, Mumbai - 400012]2. The National Faceless Assessment Centre]E Ramp, Jawaharlal Nehru Stadium,]Delhi 110 003.]3. Union of India, through the]Secretary, Department of Revenue,]Ministry of Finance ]North Block, New Delhi – 1100 01] ..Respondents … Mr. Rahul K. Hakani i/by Ms. Niyati K. Hakani for the petitioner. Mr. Akhileshwar Sharma a/w. Ms. Shilpa Goel for the respondents.… CORAM : DHIRAJ SINGH THAKUR AND KAMAL KHATA, JJ. RESERVED ON : 18th JANUARY 2023.PRONOUNCED ON : 15th FEBRUARY 2023. JUDGMENT: (PER KAMAL R. KHATA, J.) 1.The above three petitions filed by the same petitioner for threedifferent assessment years can be disposed of with a common order. Thepetitioner a registered partnership firm which was carrying on realestate development business is challenging the reassessment noticedated 28th March 2021, for the Assessment Years (AY) 2015-16, 2016- 17 and 2017-18 issued under section (u/s) 148 of the Act, the showcause notice for proposed variation in the draft assessment order dated25th March 2022 and assessment order u/s 144B read with (r.w) s.144,notice of demand u/s 156. The petitioner further apprehends passing ofa Penalty Notice u/s 271(1)(c) of the Act. 2.The short question that arises in this Petition is: “Whether subsequent proceedings initiated by the revenueauthorities for non-compliance of notice u/s 148 under the Income TaxAct would be vitiated on account of notice u/s 148 of the Act beingserved on the secondary email id registered with PAN instead of theregistered primary email id or updated email id filed with the lastReturn of Income.” 3.Mr. Rahul Hakani learned counsel for the petitioner submittedthat the impugned notice was issued on the secondary email id as perPAN card i.e. on and not on theregistered primary email id i.e. at Exhibit P-1 of the affidavit in rejoinder at page no. 80. Hesubmitted that the respondents ought not to have issued Notice u/s. 148on the email-id mentioned in the Return of Income for AY 2013- 14 buton the last Return of Income filed by the petitioner. He pointed out that4/9 the last Return of Income filed by the petitioner was for AY 2020 - 21was on 7th January 2021 and the email id mentioned thereon evinced at Exhibit P-2 of the affidavit inrejoinder at page 81. He further submitted that the notice under section148 dated 28th March 2022 was in contravention of section 282 and282A of the Act r.w. Rules 127 and 127A of the Income Tax Rules, 1962r.w. notifications issued by the CBDT and consequently not inaccordance with law. He relied upon the following notifications: -(A)Notification no. 2/2016 [DGIT(S)/DIT(S)3/AST/PAPERLESS ASSESSMENT PROCEEDINGS/96/2015-16], dated 3-2-2016 Clause 2. Accordingly, Board vide Income-tax (18th Amendment)Rules, 2015 has notified rule 127 for Service of notice, summons,requisition, order and other communication on 2nd December2015. Sub-clause (b) of sub-rule (2) of rule 127 states that: Forcommunications delivered or transmitted electronically – (i) email address available in the income-tax return furnished bythe addressee to which the communication relates; orthe addressee to which the communication relates; or (ii) the email address available in the last income-tax returnfurnished by the addressee; orfurnished by the addressee; or (iii) in the case of addressee being a company, email address of the company as available on the website of Ministry of Corporate Affairs; orcompany as available on the website of Ministry of Corporate Affairs; or (i) email address available in the income-tax return furnished bythe addressee to which the communication relates; orthe addressee to which the communication relates; or (ii) the email address available in the last income-tax returnfurnished by the addressee; orfurnished by the addressee; or (iii) in the case of addressee being a company, email address of the company as available on the website of Ministry of Corporate Affairs; orcompany as available on the website of Ministry of Corporate Affairs; or (iv) any email address made available by the addressee to the income tax authority or any person authorized by such income taxauthority.income tax authority or any person authorized by such income taxauthority. Clause 6(i) In case of non-delivery of email on the primary emailaddress, the notices shall be sent to other email addresses of theaddress, the notices shall be sent to other email addresses of the assessee available with the department as mentioned in sub-rule (2)of rule 127. (B) Notification no.4/207 [DGIT(S)/DIT(S)-3/AST/PAPERLESSASSESSMENT PROCEEDINGS/96/2015-16], dated 3-4-2017 Clause 13.The procedure, formats and standards for ensuring secured transmissionof electronic communication using E Proceeding is specified as under:(a) All the notices/questionnaire/letter/Orders issued from ITBA modulesby any Income-tax Authority will be visible to Assessee after login under“E-Proceeding” Tab in the E-filing website of the Department inhttps://incometaxindiaefiling.gov.in, hereinafter called ‘E-filing website’andmay also be sent by the designated email address (e-mail addressbased on the designation of the income tax authority under ) to the registered e-email addressof the Assessee. (b) A text message alerting the Assessee may also be sent on themobile number registered on the E-filing website. 4.He further submitted that the respondent had not proved serviceon the petitioner which is a mandatory requirement and consequentlythe subsequent proceedings would be null and void. He submitted thatthe petitioner had refused to participate in proceedings that were abinitio null and void for want of valid service of notice. 5.Per contra, Mr. Akhileshwar Sharma learned counsel for therespondent submitted that the notice u/s 148 was issued in accordancewith law. In support of his submission, he relied upon the ITBAAssessment home page at Exhibit R-2 of the Affidavit in Reply at page75 which evinced the sent email stamp dated 28th March 2021 at 4.46.02p.m. and delivered time stamp both dated 28th March 2021 at4.46.03p.m. He submitted that the petitioner had not denied the emailid and that it was registered with the PAN database. He furthersubmitted that the assessee had not filed its return of income for AY2008-09, 2015-16 to 2018-19 and therefore the notice was issued onthe email address mentioned in the return filed for AY 2013-14. Hesubmitted that the respondent could not be held responsible for aninactive email id or the petitioner not updating the email id registeredwith PAN. He accordingly submitted that the petition be dismissed. 6.We heard both counsel and also perused the papers in theproceedings. In the present case on 7th January 2021 the petitioner hadfiled its Return of Income for AY 2020 -21 and the email id mentionedtherein was the AO ought to haveconsidered this email as provided u/r 127 (1) (b) (i) email addressavailable in the income tax return furnished by the addressee to whichthe communication relates which would be the primary email id or (ii)i.e. email address available in the last income tax return furnished by theaddressee. In our view the AO clearly erred in issuing a notice on thesecondary email address when there was a primary email address givenby the petitioner. It is common knowledge that a secondary email 7/9 6.We heard both counsel and also perused the papers in theproceedings. In the present case on 7th January 2021 the petitioner hadfiled its Return of Income for AY 2020 -21 and the email id mentionedtherein was the AO ought to haveconsidered this email as provided u/r 127 (1) (b) (i) email addressavailable in the income tax return furnished by the addressee to whichthe communication relates which would be the primary email id or (ii)i.e. email address available in the last income tax return furnished by theaddressee. In our view the AO clearly erred in issuing a notice on thesecondary email address when there was a primary email address givenby the petitioner. It is common knowledge that a secondary email 7/9 address has to be used as an alternative or in such circumstances whenthe authority is unable to effect service of any communication on theprimary address. There is no prudence in issuing an email on thesecondary email address. In our view the AO ought to have sent thenotice u/s 148 to both the primary address and the email addressmentioned in the last Return of Income filed to preempt a jurisdictionalerror on account of valid service; there was neither any cost to it or anyprejudice to any party for sending it on more than one email in a givencircumstance as in the present case. We see no wrong with thepetitioner’s refusal to participate in a proceeding vitiated by validservice of notice. This Court in the case of Mrs. Chitra Supekar vs ITO inWrit Petition No. 15580 of 2022 has held that it was imperative for theAO to have checked if there was a change of address before initiating aproceeding; and that a valid service of notice under section 148 is acondition precedent lest it would be a jurisdictional error. 7.We accordingly quash and set aside the notice dated 28th March2022, and all consequential proceedings including the show causenotice for proposed variation dated 25th March 2022 and assessmentorder u/s 144B r.w s.144. However, the respondent will be at liberty to proceed with the assessment after issuance of fresh notice in accordance with law. 8.Petitions allowed. No order as to costs. (KAMAL KHATA, J.) (DHIRAJ SINGH THAKUR, J.)