Ex Parte Assessment Quashed Due to Old CA Email ID: Karnataka HC

Srinivasa Puttagunta Vs Assessment Unit (Karnataka High Court)

Notices Missed Due to Former CA’s Email ID: Karnataka HC Quashes Ex Parte Assessment and Penalties

Introduction

The Karnataka High Court set aside an ex parte assessment order and connected penalty proceedings after finding bona fides in the taxpayer’s explanation for failing to participate in the assessment.

The petitioner explained that his former Chartered Accountant’s email address continued as the primary contact on the income tax portal, although their professional association had ended years earlier. Consequently, he remained unaware of the notices uploaded on the portal.

Accepting the circumstances as warranting another opportunity, the Court permitted the petitioner to respond to the assessment show cause notice. The ruling provides procedural relief, leaving the substantive assessment issues for examination by the Department.

Background of the Case

Srinivasa Puttagunta approached the High Court challenging an assessment order dated 28 February 2026, passed under Section 144 read with Section 144B of the Income Tax Act, 1961, for AY 2024-25.

The petition also challenged two penalty show cause notices dated 28 February 2026, a penalty order dated 27 August 2026 under Section 272A(1)(d), and another penalty order dated 3 September 2026 under Section 270A.

The penalty notices concerned Section 272A(1)(d) and Section 274 read with Section 270A. The Court recorded that the scrutiny assessment had admittedly been completed ex parte.

The central question was whether the petitioner’s explanation for non-participation justified interference and restoration of an opportunity to present his case.

Petitioner’s Business Circumstances

The petitioner submitted that he had carried on business as a subcontractor during financial year 2023-24. According to him, the contractor engaging him failed to make payments, leading him to discontinue the subcontract business.

His counsel further explained that the present proceedings were triggered by tax deducted at source by the contractor, who was allegedly in default regarding certain payments due to the petitioner.

These circumstances formed part of the request for an opportunity to explain the proposed disallowance.

The High Court did not determine the tax treatment of the contract receipts, unpaid amounts or TDS. Those matters remained open for consideration in the assessment proceedings.

Former Chartered Accountant’s Email Remained Registered

The petitioner stated that a Chartered Accountant had previously represented him and that the professional’s email address had been entered as the primary contact.

Although the association had ended many years earlier, the petitioner had inadvertently failed to update the registered contact details. He therefore claimed that he did not know about the notices uploaded on the income tax portal.

He also maintained that he had not received a communication dated 21 November 2025, which was stated to have been sent by speed post.

The explanation was presented as a bona fide reason for the failure to participate, rather than a deliberate decision to disregard the assessment proceedings.

How the Assessment Came to Light

The petitioner explained that he subsequently accessed the portal in connection with a notice under Section 148A for another assessment year.

It was only then, according to his submissions, that he discovered the impugned scrutiny assessment order. He immediately updated his primary email address.

His counsel relied on this sequence to support the request for another opportunity. The petitioner sought permission to respond to the proposed disallowance and place his explanation before the assessing authority.

The Revenue’s standing counsel was heard before the Court decided the petition.

High Court’s Findings

The High Court expressly found bona fides in the petitioner’s failure to participate in the proceedings.

It considered interference appropriate to secure a complete adjudication without protraction. Accordingly, the Court decided that the assessment should be reopened for the limited procedural purpose of enabling a response to the show cause notice dated 24 January 2026.

The decision turned on the explanation and circumstances placed before the Court. It did not declare that portal notices were generally invalid where an outdated email address remained registered.

Nor did it adjudicate the correctness of the proposed disallowance or finally determine the petitioner’s taxable income.

Assessment and Penalty Proceedings Quashed

The writ petition was allowed in part. The Court quashed the assessment order dated 28 February 2026, both penalty show cause notices of that date, and the penalty orders dated 27 August 2026 and 3 September 2026.

The respondents were directed to enable the petitioner to file a response to the show cause notice dated 24 January 2026, upon receipt of a certified copy of the Court’s order.

Thus, the relief restored the opportunity to contest the assessment proposal while removing the impugned assessment and penalty proceedings.

Key Takeaway

The ruling illustrates that a credible explanation for non-participation can justify a fresh opportunity in an ex parte assessment. Here, the outdated contact details, subsequent discovery and immediate email correction supported the finding of bona fides. The taxpayer must now present his substantive explanation before the Department.

FULL TEXT OF THE ORDER OF KARNATAKA HIGH COURT

The petitioner’s grievance is with the following.

Mr. Hemant Venkatray Pai, the learned counsel for the petitioner, while inviting this Court’s attention to the indisputable fact that the Scrutiny Assessment order is an ex parte order, submits the following to support the petitioner’s case for interference by this Court:

[a] The petitioner was in business as a subcontractor in the financial year 2023-24, and because of the failure of the employer [the Contractor] to make payments, the petitioner has discontinued the subcontract business.

[b] The petitioner was represented by a Chartered Accountant whose e-mail ID was given as the primary contact, but that association is severed many years back.

[c] The petitioner, inadvertently, had not changed the contact details, and as such, was not aware of the notices uploaded on the Portal and the petitioner is bonafide in contending that he was not served with the Communication dated 21.11.2025, which is supposed to be sent by speed post.

[d] The petitioner accessed the Portal in respect of service of notice under Section 148A of the Income Tax Act, 1961 [for short, ‘the IT Act’] for another assessment year and it is only at this stage, he has come to know about the impugned Scrutiny Assessment Order. The petitioner has immediately updated the primary e-mail address.

Mr. Hemant Venkatray Pai submits that the petitioner is bonafide in setting forth these circumstances and that this Court could consider whether the petitioner must have an opportunity to show cause against the disallowance in the afore circumstances and also because the trigger for the present proceedings is the TDS effected by the contractor who was in default insofar as certain payments to the petitioner. Mr. M. Dilip, the learned Standing counsel who accepts notice for the respondents, is heard.

This Court discerns bonafides in the failure to participate in the proceedings; and for a complete adjudication without protraction, this Court is of the view that there must be interference with the Assessment Order with liberty to the petitioner to file response to the Show Cause Notice dated 24.01.2026. Hence, the following.

ORDER

[A] The petition is allowed in-part and the following are quashed.

[B] The respondents are called upon to enable an opportunity to the petitioner to file response to the Show Cause Notice dated 24.01.2026 upon receipt of a certified copy of this order.