Income Tax Proceedings Quashed as Notices Sent to Incorrect Email Address

Vyavasaya Seva Sahakari Sangh Pvt. Ltd. Vs Assessment Unit (Karnataka High Court)

The Karnataka High Court considered a writ petition challenging multiple proceedings initiated by the Income Tax Department for the Assessment Year 2020–21. The petitioner sought quashing of the assessment order, computation sheets, demand notices, penalty orders, and penalty notices issued under various provisions of the Income Tax Act, 1961. These included orders under Sections 144 read with 144B, penalty proceedings under Sections 270A and 272A(1)(d), and related demand notices issued under Section 156.

The petitioner contended that penalty proceedings under Section 272A(1)(d) were initiated without proper service of notice. Specifically, the notices were sent to an incorrect email address, namely ankolataluk1515@gmail.com, which did not belong to the petitioner. The petitioner asserted that the correct email address was vssgokarna@gmail.com. Due to this error, the petitioner claimed to have been unaware of the proceedings and was consequently unable to submit a reply. It was argued that this lack of proper notice amounted to a violation of the principles of natural justice, as the petitioner was denied an opportunity to be heard.

On the other hand, the respondents argued that sufficient opportunities had been provided to the petitioner during the proceedings. They maintained that the petitioner failed to avail those opportunities and therefore the writ petition lacked merit and should be dismissed.

After considering the submissions of both parties and examining the material on record, the Court identified the central issue as whether proper service of notice had been effected. It noted that the notices were indeed sent to an email address that the petitioner claimed was incorrect, and this fact was not disputed. The Court observed that service of notice is a fundamental requirement in any adjudicatory process. If notices are not served properly, the affected party cannot be said to have been given a reasonable opportunity to participate in the proceedings.

The Court held that sending notices to an incorrect email address deprives the recipient of an effective opportunity to respond, thereby violating the principles of natural justice. It emphasized that proper service of notice is essential to ensure fairness in proceedings, and failure in this regard undermines the validity of the actions taken.

In light of these findings, the Court concluded that interference under Article 226 of the Constitution of India was warranted. Accordingly, the writ petition was allowed in part. The Court quashed the impugned proceedings, including the assessment order, penalty orders, computation sheets, and demand notices (Annexures A1 to A11).

The Court granted liberty to the petitioner to submit a reply to the notice issued under Section 143(2) of the Income Tax Act dated 29.06.2021. It directed that upon receipt of such a reply, the Income Tax Department should consider the same and pass appropriate orders in accordance with law. The Department was also directed to provide a reasonable opportunity of hearing to the petitioner before making any decision.

The Court clarified that all contentions of the parties were kept open and disposed of the writ petition accordingly.

FULL TEXT OF THE JUDGMENT/ORDER OF KARNATAKA HIGH COURT

Sri. S. Annamalai., counsel for the petitioner and Sri. M. Thirumalesh along with Smt. Roopa Anavekar., counsel for the respondents have appeared in person.

2. Though the petition is listed for preliminary hearing, with consent, it is heard.

3. The Writ Petition is filed seeking the following prayers:

“i) Issue a writ of Certiorari or direction in the nature of a writ of certiorari quashing the assessment order passed by the Respondent No.1 u/s 144 rws 144B dated 30/08/2022 bearing DIN and Notice No. ITBA/AST/S/144/2022-23/1045068226(1) for the AY 2020-21 herein marked as Annexure-Al.

ii) Issue a writ of Certiorari or direction in the nature of a writ of certiorari quashing the computation sheet issued by the Respondent No.1 dated 30.08.2022 bearing DIN and Document No. ITBA/AST/S/530/2022-23/1045068314(1) for the AY 2020-21 herein marked as Annexure-A2.

iii) Issue a writ of Certiorari or direction in the nature of a writ of certiorari quashing the demand notice issued u/s 156 by the Respondent No.1 dated 30.08.2022 bearing DIN and Notice No. ITBA/AST/S/156/2022-23/1045068262(1) for the AY 2020-21 herein marked as Annexure-A3.

iv) Issue a writ of Certiorari or direction in the nature of a writ of certiorari quashing the penalty order passed u/s 270A by the Respondent No.1 dated 16/03/2023 bearing DIN No. ITBA/PNL/F/270A/2022-23/1050863415(1) for AY 2020­21 herein marked as Annexure-A4.

v) Issue a writ of Certiorari or direction in the nature of a writ of certiorari quashing the computation sheet issued by the Respondent No.1 dated 16.03.2023 bearing DIN and Order No. ITBA/PNL/S/270A/2022-23/1045068718(1) for AY 2020-21 herein marked as Annexure-A5.

vi) Issue a writ of Certiorari or direction in the nature of a writ of certiorari quashing the demand notice issued u/s 156 by the Respondent No.1 dated 16/03/2023 bearing DIN and Notice No. ITBA/PNL/S/156/2022-23/1050859005(1) for the AY 2020-21 herein marked as Annexure-A6.

vii) Issue a writ of Certiorari or direction in the nature of a writ of certiorari quashing the penalty order passed u/s 272A(1)(d) by the Respondent No.2 dated 29/08/2022 bearing DIN No. ITBA/PNL/F/272A(1)(d)/2022- 23/1044999260(1) for the AY 2020-21 herein marked as Annexure A7.

ix) Issue a writ of Certiorari or direction in the nature of a writ of certiorari quashing the computation sheet issued by the Respondent No.2 dated 29/08/2023 bearing DIN and Order No. ITBA/PNL/S/272A(1)(d)_FL/2021- 22/1041757001(1) for the AY 2020-21 herein marked as Annexure-A8.

x) Issue a writ of Certiorari or direction in the nature of a writ of certiorari quashing the demand notice issued u/s 156 by the Respondent No.2 dated 29/08/2022 bearing DIN and Notice No. ITBA/PNL/S/156/2022-23/1044999197(1) for the AY 2020-21 herein marked as Annexure-A9.

ix) Issue a writ of Certiorari or direction in the nature of a writ of certiorari quashing the penalty notice u/s 270A vide dated 30/08/2022 issued by the Respondent No.1 bearing DIN:ITBA/PNL/S/270A/2022-23/1045068718(1), for the AY 2020-21 herein marked as Annexure A10.

x) Issue a writ of Certiorari or direction in the nature of a writ of certiorari quashing the penalty notice u/s 272A(1)(d) vide dated 27/03/2022 issued by the Respondent No.1 bearing DIN: ITBA/PNL/S/272A(1)(d)_FL/2021- 22/1041757001(1), for the AY 2020-21 herein marked as Annexure All.

xii) And pass such other orders as this Hon’ble Court deems fit and proper in the interest of justice and equity.”

4. Heard the counsel for the petitioner and the counsel for the respondents. Perused the material on record.

5. Counsel for the petitioner, Sri S. Annamalai, submits that in respect of penalty proceedings initiated under Section 272A(1)(d) of the Income Tax Act, 1961, the notices were issued to an incorrect email ID, namely ankolataluk1515@gmail.com, which does not belong to the petitioner. It is contended that the petitioner’s correct email ID is vssgokama@gmail.com. On account of the notices being sent to the wrong email address, the petitioner did not know of the proceedings and was thereby prevented from submitting a reply. It is further submitted that denial of an opportunity to respond amounts to a violation of principles of natural justice. Hence, the petitioner seeks an opportunity to submit a reply to the notice.

6. Per contra, counsel for the respondents, Sri M. Thirumalesh, justifies the action of the Department and submits that sufficient opportunity had been granted to the petitioner. However, the petitioner failed to avail the same. Therefore, it is contended that the writ petition is devoid of merit and liable to be dismissed.

7. Upon hearing the rival submissions and on careful perusal of the material available on record, this Court finds that the principal grievance of the petitioner is that notices pertaining to the penalty proceedings were not served to the correct email address.

It is not in dispute that the notices were sent to ankolataluk1515@gmail.corn, whereas the petitioner asserts that his correct email ID is vssgokarna@gmail.com. In the absence of proper service of notice, the petitioner was deprived of an effective opportunity to participate in the proceedings.

Service of notice is a foundational requirement in any adjudicatory process. When notices are sent to an incorrect email ID, it cannot be said that a reasonable opportunity has been afforded. Such action results in a violation of the principles of natural justice.

In view of the above, this Court is of the considered opinion that interference under Article 226 of the Constitution of India is warranted.

8. Accordingly, the writ petition is allowed in part. The impugned proceedings, namely Annexures-Al to All, are hereby quashed. The petitioner is granted liberty to submit a reply to the notice dated 29.06.2021 issued under Section 143(2) of the Income Tax Act, 1961. Upon receipt of such a reply, the respondent Department shall consider the same and pass appropriate orders in accordance with law, after affording a reasonable opportunity of hearing to the petitioner. All contentions of the parties are kept open.

9. The writ petition stands disposed of accordingly.