Notice Issuance Alone Insufficient Without Proof of Effective Service: ITAT Jaipur

Atida Agrawal Vs The ITO (ITAT Jaipur)

Mere Issuance of E-Notices Is Not Enough—Service Must Be Established: ITAT Condones 449-Day Delay Caused by Matrimonial Litigation

Summary: The Jaipur Bench of the Income Tax Appellate Tribunal has held that merely generating or issuing hearing notices electronically is not sufficient to establish that an assessee was granted a reasonable opportunity of hearing. Where the assessee did not respond to repeated electronic notices, the appellate authority ought to have verified whether the notices were actually served and, in the facts of the case, attempted service through an alternative or physical mode.

The Tribunal also accepted matrimonial litigation and non-awareness of the appellate order as sufficient cause and condoned a substantial delay of 449 days in filing the appeal.

Facts of the case

The Income-tax Department received information from the Sub-Registrar that an immovable property had been sold for ₹18 lakh under a sale deed dated 30 March 2012. The property’s stamp-duty value was ₹23,27,386.

Since no corresponding capital gain was found in the original return filed on 28 March 2013, the assessment was reopened by issuing notice under Section 148.

The assessee did not appear or furnish the required explanation during the reassessment proceedings. The Assessing Officer consequently completed the assessment ex parte and made the following additions:

• ₹23,27,387 as short-term capital gain;
• ₹11,608 by disallowing expenses claimed against LIC commission income; and
• ₹1 lakh by disallowing Chapter VI-A deductions.

The total income was assessed at ₹27,25,970.