Bombay High Court Quashes Income Tax Proceedings On The Ground That S. 148 Notice Was Served On Secondary Email Id Provided In PAN

While holding that the Assessing Officer had clearly erred in issuing a notice on the secondary email address when there was a primary email address given by the assessee, the bench of Justices Dhiraj Singh Thakur and Kamal Khata held that the proceedings were vitiated due to lack of a valid service of notice on the assessee.

The petitioner/ assessee, Lok Developers, challenged the reassessment notice issued under Section 148 of the Income Tax Act, the subsequent assessment proceedings and the notice of demand issued against it by the revenue authorities, by filing a writ petition before the Bombay High Court.

The petitioner, Lok Developers, argued that the notice under Section 148 was served on the secondary email id provided in its PAN card instead of the registered primary email id.

The petitioner pleaded that the Income Tax Authorities ought to have issued the Section 148 notice on its registered primary email id or the updated email id mentioned in its last Return of Income.

The revenue department averred that the petitioner had not denied the email id on which it was served the reassessment notice and that the same was registered with the PAN database. It added that it cannot be held responsible for an inactive email id or for the petitioner not updating the email id registered with the PAN database.

The Court took note that as per Rule 127(2)(b) of the Income Tax Rules, 1962, all communications must be delivered or transmitted electronically to the e-mail address available in the income tax return furnished by the addressee/ assessee to which the communication relates, i.e., the primary email id, or the email address available in the last income tax return furnished by the addressee/ assessee.

The bench thus concluded, “In our view the AO clearly erred in issuing a notice on the secondary email address when there was a primary email address given by the petitioner. It is common knowledge that a secondary email address has to be used as an alternative or in such circumstances when the authority is unable to effect service of any communication on the primary address.”

While saying that there is no prudence in issuing an email on the secondary email address, the Court added, “In our view the AO ought to have sent the notice u/s 148 to both the primary address and the email address mentioned in the last Return of Income filed to preempt a jurisdictional error on account of valid service.”

Holding that there was nothing wrong with the petitioner’s refusal to participate in the proceedings since the same was vitiated by an invalid service of notice, the bench said, “This Court in the case of Mrs. Chitra Supekar vs ITO in Writ Petition No. 15580 of 2022 has held that it was imperative for the AO to have checked if there was a change of address before initiating a proceeding; and that a valid service of notice under section 148 is a condition precedent lest it would be a jurisdictional error.”

Allowing the petition, the Court quashed and set aside the reassessment notice and the subsequent proceedings initiated by the revenue authorities for non-compliance of the notice.

Case Title: Lok Developers versus Deputy Commissioner of Income tax

Dated: 15.02.2023

Citation: 2023 LiveLaw (Bom) 127

Counsel for the Petitioner: Mr. Rahul K. Hakani i/by Ms. Niyati K. Hakani

Counsel for the Respondent: Mr. Akhileshwar Sharma a/w. Ms. Shilpa Goel

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