Yashaswini Gruha Nirmana Sahakara Sangha Niyamitha Vs ITO (Karnataka High Court)
Karnataka HC Sets Aside Faceless Ex-Parte Assessment for Non-Service of 142(1) Notice – Notice Sent to Wrong Email Invalid – Case Remanded for Fresh Hearing
The Karnataka High Court has quashed an ex-parte assessment order & consequential penalty proceedings after finding that the entire assessment was vitiated by lack of proper service of notice u/s 142(1). The decision reaffirms that assessment proceedings based on notices sent to an incorrect or inactive email ID violate principles of natural justice & cannot be sustained.
The petitioner, Yashaswini Gruha Nirmana Sahakara Sangha Niyamitha, a house building co-operative society, had not filed its return of income for AY 2017–18 on the ground that it had no taxable income, as formation of sites for its members was still in progress. However, the Department issued a notice u/s 142(1) through an old, inactive email ID recorded in departmental records. The petitioner did not receive this communication & hence could not file any response.
Subsequently, the ITO passed an ex-parte assessment order u/s 144 on 28.12.2019, treating cash deposits of ₹64.28 lakh made during the demonetisation period as unexplained money. Thereafter, penalty orders were successively issued u/s 271F, 272A(1)(d), & 271AAC(1), all based on the same ex-parte assessment.
