Failure Of Assessee To Update E-Mail Address With Dept.; Kerala High Court Dismisses Writ Petition Challenging Demand Notice

The Kerala High Court has dismissed the writ petition challenging the assessment order and notice of demand on the grounds that they were issued in violation of the principles of natural justice.

The bench of Justice Murali Purushothaman has observed that when the petitioner-assessee is at fault, as they did not update or change the email address with the Department, they cannot legitimately complain that there is a violation of the principles of natural justice.

The petitioner/assessee company is running a hospital by the name 'Lakeshore Hospital'. The e-mail address of the Chief Financial Officer (CFO), the Principal Officer, was provided to the Income Tax Department by the petitioner for official communication.

The petitioner's assessment for the assessment year (AY) 2022–2023 was processed under Section 143(1) and selected under the Computer-Assisted Scrutiny Selection category (CASS category) for complete scrutiny. The petitioner was issued notice under Section 143(2) of the Income Tax Act. The petitioner submitted a reply. The petitioner was issued notice under Section 142(1) along with a questionnaire to which the petitioner submitted a reply providing necessary details.

The petitioner submitted that, before a reply was filed, the CFO of the company had resigned with effect from November 15, 2023. The department had issued two notices under Section 142(1) of the Act to the email address of the CFO, which was not accessible to the company and therefore could not be responded to. A show cause notice under Section 144 of the Act was issued to the petitioner by the respondent, which was followed by a show cause notice proposing to add 10% of the amount claimed in the returns as 'other expenses'. These notices were also sent to the e-mail address of the former CFO, which was not accessible to the company, and therefore, the petitioner was not aware and could not respond. The opportunity to file submissions online was closed.

The petitioner contended that since the petitioner did not receive any notice pursuant to reply, they were under the impression that the matter was no longer being proceeded with. While doing so, the department has completed the assessment under Section 143(3). It was only on receipt of the assessment order that the petitioner realized that the earlier notices had been received at the e-mail address of the former CFO, who is now defunct.

The department contended that the e-mail ID provided by the assessee in the e-filing portal is cfo@lakeshorehospital.org, which is the organizational e-mail ID of the petitioner, and all correspondences were made to the same, including the final show cause notice. The reply of the petitioner after the resignation of the company's CFO was also filed through the email ID. Since it is admitted that the error was committed by the assessee, the petitioner cannot contend that there is a violation of the principles of natural justice.

The court held that due to an error on their part in not updating or changing the e-mail address with the department, the show cause notices were unnoticed and could not be responded to on time. Therefore, when the petitioner is at fault, as they did not update or change the e-mail address with the Department, they cannot legitimately complain that there is a violation of the principles of natural justice.

The court dismissed the writ petition and stated that if the petitioner files an appeal under Section 246A of the Act before the statutory appellate authority within a period of 15 days from the date of receipt of a copy of this judgement, the appeal shall be entertained by the authority and appropriate orders shall be passed on merits.

Counsel For Petitioner: Abraham Joseph Markos

Counsel For Respondent: Jose Joseph

Citation: 2024 LiveLaw (Ker) 363

Case Title: Lakeshore Hospital And Research Centre Limited Versus The Additional/Joint/Deputy/Assistant Commissioner Of Income Tax/ Income Tax Officer, National Faceless Assessment Centre

Case No.: WP(C) NO. 15949 OF 2024

Click Here To Read The Order