Wp(C)/22840/2021 Of Four Star Granite Private Limited v. Deputy Commissioner Of Income Tax

IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT THE HONOURABLE MR.JUSTICE MURALI PURUSHOTHAMAN TUESDAY, THE 29 DAY OF MARCH 2022 / 8TH CHAITHRA, 1944WP(C) NO. 22840 OF 2021 PETITIONER: FOUR STAR GRANITE PRIVATE LIMITEDMANGALATH, KOOTTALA, PAANCHERY, THRISSUR-680 652, REPRESENTED BY ITS MANAGING DIRECTOR, ANIYAN MATHEW. BY ADVS. ANIL D. NAIRTELMA RAJUSANGEETH JOSEPH JACOBCHRISTINA ANNA PAULEDATHARA VINEETA KRISHNANARAVIND SREEKUMAR RESPONDENT: 1DEPUTY COMMISSIONER OF INCOME TAX CIRCLE 1 (1) & TPS, THRISSUR, PIN-680 001. CIRCLE 1 (1) & TPS, THRISSUR, PIN-680 001. 2THE ASSISTANT COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE, THRISSUR, PIN-680 001. BY JOSE JOSEPH, SC, FOR INCOME TAX THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON29.03.2022, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: JUDGMENT The petitioner-Company, which is engaged in the businessof mining and production of quarry items, is an assessee underthe Income Tax Act, 1961 (hereinafter referred to as 'Act', forshort). A survey u/s. 133A of the Act was conducted by theIncome Tax Department at the business premises of thepetitioner and certain materials suspecting suppression ofincome were impounded. The petitioner contends that, Ext. P3notice under section 148 dated 23.03.2020 issued by the 1[st]respondent, the Deputy Commissioner of Income Tax, Circle I(1),Thrissur, was not received by the petitioner. The previousauditors of the petitioner received Ext.P4 notice u/s 142 (1)dated 20.09.2021 of the 2[nd]respondent, the AssistantCommissioner of Income Tax, Central Circle, and made over thesame to the petitioner. On perusal of Ext.P4 notice, thepetitioner noticed that there is change in jurisdiction of theofficer. Though the petitioner met and apprised the 2[nd]respondent that the notices were served on the previous auditorand not at the e-mail id mentioned in the web portal, the 2[nd]respondent issued Ext.P5 assessment order dated 30.09.2021 confirming the proposal on the premise that section 143(3)notice has not been replied. 2.The petitioner contends that notices under sections 148, 142 (1), 143 (3) r/w 147 and the assessment order were servedon wrong e-mail id/e-mail id of the erstwhile auditors of thepetitioner and not in the e-mail id of the petitioner available inthe Income Tax Portal. The petitioner has produced Ext. P1Jurisdiction Details in the portal which shows the jurisdictionalofficer as the 1[st] respondent and the petitioner contends that nonotice was served on the petitioner before the case wastransferred to the 2[nd] respondent. 3.The personal details of the petitioner available in the portal are produced as Ext.P2 which shows primary andsecondary e-mail ids. However, the communications wereaddressed to a different e-mail id, which is the e-mail id of theerstwhile auditors. The petitioner contends that, the 2[nd]respondent did not note the changes in the personal details ofthe petitioner in the web portal, which were intimated to theDepartment and issued notices and assessment order in wronge-mail id which is in violation of principles of natural justice andseeks to quash Ext. P5. 4. A statement has been filed on behalf of the respondentswherein it is stated that since the petitioner has not filed returnof income in response to notice u/s 148, the system has takenthe communication e-mail id shown in the return for theassessment year 2016-17 and that the petitioner had notintimated the assessing officer about change of id or updatedthe profile regarding change of e-mail address. 5. The petitioner has filed a reply affidavit to the statement filed by the respondents wherein the petitioner contends thatthere is non-compliance of Rule 127 of the Income Tax Rules,1962 ('Rules', for short) in serving the notices and theassessment order. 4. A statement has been filed on behalf of the respondentswherein it is stated that since the petitioner has not filed returnof income in response to notice u/s 148, the system has takenthe communication e-mail id shown in the return for theassessment year 2016-17 and that the petitioner had notintimated the assessing officer about change of id or updatedthe profile regarding change of e-mail address. 5. The petitioner has filed a reply affidavit to the statement filed by the respondents wherein the petitioner contends thatthere is non-compliance of Rule 127 of the Income Tax Rules,1962 ('Rules', for short) in serving the notices and theassessment order. 6. Heard Sri. Anil D. Nair, the learned counsel for thepetitioner and Sri. Jose Joseph, the learned standing counsel forthe respondents. 7. Sri. Anil D. Nair refers to section 282 of the Act and Rule127 of the Rules. Rule 127 enables service of notice, summons,requisition, order and other communication (referred to as'communication' in section 282) under the Act by electronicmeans (e-mail) and sub rule (2) (b) of Rule 127 provides thatsuch communication shall be delivered or transmitted at the: “(i) e-mail address available in the income-tax return furnished bythe addressee to which the communication relates; or (ii) the e-mail address available in the last income-tax return furnished by the addressee; or (iii) in the case of addressee being a company, e-mail address of the company as available on the website of Ministry of CorporateAffairs; or (iv) any e-mail address made available by the addressee to theincome-tax authority or any person authorised by such income-taxauthority.” The learned counsel contends that the communications were not delivered or transmitted in terms of Rule 127. It is contended that, inExt.P2, which is a copy of the personal details of thepetitioner, available in the Income Tax Portal, the e-mail id of the petitioner is not the one to which Exts. P3, P4, P5 and P6 weresent and the service of communication is not as mandated underthe Rules. Sri. Anil D. Nair also relies on the decision of this Court reported in Bhima Jewels v. Principal Commissioner of Income Tax, Ekm, and another [2022 (1) KHC 217] tocontend that in similar circumstances, this Court has interferedwith the order of assessment. 8. Per contra, Sri. Jose Joseph would contend that thepetitioner had not intimated the assessing officer with regard to change in e-mail id. Sri. Jose Joseph also relies on the decision ofthe Hon'ble Supreme Court in Principal Commissioner ofIncome Tax v. I-ven Interactive Limited [(2019) 418 ITR 662(SC)], wherein the Court has held that, in the absence of anyintimation to the assessing officer with respect to change inaddress, the assessing officer was justified in issuing notice atthe address available as per the PAN database. 9.According to the petitioner, Ext.P2 is the copy of thepersonal details of the petitioner available in the Income TaxPortal. It contains primary and secondary e-mail ids with requestthat the communication to be addressed to both primary andsecondary e-mail ids. However, the communications weredelivered by the 2[nd] respondent at another e-mail id, which is thee-mail id of the erstwhile auditors. Therefore, the petitioner wasnot in receipt of the notices and assessment order. Since thepetitioner did not receive the notices, the petitioner could notreply to the same. Since the notices were issued in wrong e-mailid, the petitioner contends that there was no proper service ofnotice and therefore, Ext.P5 assessment order is bad beingpassed in violation of the principles of natural justice. 10. Updated jurisdictional details as well personal details in 10. Updated jurisdictional details as well personal details in the Income Tax Web Portal are vital for the communication ofnotice, summons, requisition, order and other communication bythe Department, particularly in case of system generatedcommunications. While the respondents contend that thepetitioner did not update the profile and therebycommunications were sent through the e-mail id mentioned asdefault, Ext.P2 personal details in the Income Tax Portal showsprimary and secondary e-mail ids and fact remains that thenotices and assessment order were not served on these e-mailids. It is not evident as to when the changes in the personaldetails were made in the web portal. Since the petitioner did notreceive notices, the petitioner did not get opportunity to putforth its response to the notices. Thus, there is violation ofprinciples of natural justice while issuing Ext. P5 assessmentorder. This Court, in Bhima Jewels (supra), in somewhat similarcircumstances, observed as under: “18. Viewed in the entire conspectus of the circumstances thatsurround the order of assessment, this Court is of the opinionthat, though the assessing officer cannot be faulted, petitionerdid not get an effective opportunity to put forth his response forthe year 2017-18. Since the assessment order is the platformfrom which the rights and obligations of not only the assesseebut also of the department arise, it is essential that such asurround the order of assessment, this Court is of the opinionthat, though the assessing officer cannot be faulted, petitionerdid not get an effective opportunity to put forth his response forthe year 2017-18. Since the assessment order is the platformfrom which the rights and obligations of not only the assesseebut also of the department arise, it is essential that such a platform is built upon strong foundations, especially when theamount involved is large. The burden of an assessment orderissued without hearing the assessee will fall, not only upon thepetitioner alone but even upon the system itself and may createfurther waste of resources.” Without venturing into the question as to who is to befaulted for the non-service of communications, in the facts andcircumstances, particularly, the fact that the petitioner did notget opportunity to put forth its responses to the notices leadingto the issuance of Ext. P5 assessment order, to meet the ends ofjustice, I set aside Ext.P5 order of assessment and direct thepetitioner to submit its response to Ext.P3 and subsequentnotices within two weeks from the date of receipt of a copy ofthis judgment and the assessing officer shall consider theresponse of the petitioner to the notices and pass freshassessment order within one month thereafter, after hearing thepetitioner. The writ petition is allowed as above. There will be no orderas to costs. Sd/- MURALI PURUSHOTHAMANJUDGE APPENDIX OF WP(C) 22840/2021 PETITIONER EXHIBITS Exhibit P1 Exhibit P2 Exhibit P3 Exhibit P4 Exhibit P5 Exhibit P6 Exhibit P7 Exhibit P7(A) TRUE COPY OF JURISDICTIONAL DETAILSAVAILABLE IN THE PORTAL TRUE COPY OF PERSONAL DETAILS AVAILABLE INTHE INCOME TAX PORTAL TRUE COPY OF NOTICE DATED 23.3.2020 ISSUEDBY THE 1ST RESPONDENT TRUE COPY OF THE NOTICE DATED 20.9.2021ISSUED BY THE 2ND RESPONDENT TO THEPETITIONER TRUE COPY OF THE ASSESSMENT ORDER DATED30.9.2021 ISSUED BY THE 2ND RESPONDENT TRUE COPY OF NOTICE DATED 28.9.2021 ISSUEDBY THE 2ND RESPONDENT TO THE PETITIONER TRUE COPY OF SCREEN SHOT DEMONSTRATINGNOTICE U/S 142(1) BEING SERVED AT THE WRONGE-MAIL ID TRUE COPY OF SCREEN SHOT DEMONSTRATINGNOTICE U/S 147 BEING SERVED AT THE WRONG-EMAIL ID RESPONDENTS’ EXHIBITS: R2(A) R2(B) R2© COPY OF THE NOTICE DATED 28.01.2021.COPY OF THE NOTICE U/S 142(1) DATED28.01.2021. COPY OF THE ORDER SHEET DULY SIGNED BY THEAUTHORIZEDREPRESENTATIVESHRI.C.A.VARGHESE, C.A ATTENDED FOR HEARINGON 8.2.2021. spc/