Case Law Details
Sterling Urban Ventures Private Limited Vs Assessment Unit (Karnataka High Court)
Introduction: The recent case of Sterling Urban Ventures Private Limited Vs Assessment Unit before the Karnataka High Court brings attention to a crucial aspect of income tax assessments. The petitioner contested the validity of the assessment order under Section 143(3) read with Section 144B of the Income Tax Act, 1961, dated December 19, 2022, pertaining to the assessment year 2021. The challenge was centered around the notices sent by the Income Tax Department to an incorrect email ID, raising questions about procedural compliance and the petitioner’s right to respond.
Detailed Analysis: The petitioner’s primary contention revolved around the fact that the notices under Section 142(1) were directed to an email ID not registered with the Income Tax Department by the assessee. The petitioner’s registered email IDs were listed as accounts@sterlingdevelopers.com (Primary) and bsvc99@gmail.com (Secondary). However, all notices were sent to the email ID of Sudhakar (sudhakar@sterlingdevelopers.com), which was not declared by the assessee.
Examining the assessment order, it was noted that despite details of several notices issued under Section 142(1), there was no response from the assessee. The court acknowledged that the notices sent to an incorrect email ID deprived the petitioner of the opportunity to respond appropriately. Consequently, the Karnataka High Court set aside the Assessment Order, Notice of Computation Sheet, Consequential Demand Notice, and Penalty Notices. The matter was remitted back to the respondent for resuming from the stage of reply to the Section 142(1) notice.
The court emphasized the lack of opportunity for the assessee to submit a reply due to the misdirection of notices. The decision highlights the importance of adherence to procedural requirements and ensuring that communications reach the correct recipients.
Conclusion: The Karnataka High Court’s decision in the Sterling Urban Ventures case underscores the significance of procedural accuracy in income tax assessments. Invalidating the assessment order and related notices, the court emphasized the need for correspondence to be directed to the correct email IDs registered with the Income Tax Department. This ruling serves as a reminder to tax authorities to exercise diligence in communication, ensuring taxpayers have a fair opportunity to respond and participate in the assessment process.
FULL TEXT OF THE JUDGMENT/ORDER OF KARNATAKA HIGH COURT
The pet1t1oner has challenged the val1d1ty of the assessment order under Sect1on 143 (3) r/w 144B of the Income Tax Act, 1961 dated 19.12.2022 relat1ng to assessment year 2021 at Annexure-A1 as also the computat1on sheet at Annexure-A2, Not1ce of Demand at Annexure-A3 and has also assa1led the penalty not1ce at Annexure-A4 as well as Annexure-A5 and A6.
2. The principle contention raised by the petitioner is that the notices under Section 142 (1) by the Income Tax Department have been addressed not to the Email ID which is registered with the Income Tax Department by the assessee. Attention is drawn to the personal details uploaded with the portal of Income Tax Department by the petitioner-assessee wherein the Email ID furnished are as follows:
Primary : accounts@sterlingdevelopers.com
Secondary: bsvc99@gmail.com
3. It is submitted that all notices were sent to the Email ID of one Sudhakar (sudhakar@sterlingdevelopers.com). Attention is drawn to the notices at Annexure-J1 to 33. Accordingly, it is submitted that the eventual order passed under Section 142 (1) has been passed without reference to any stand of the petitioner.
4. Perused the assessment order. It contains details of several notices under Section 142 (1) which had been issued. However, it is stated that there was no response by the assessee. The said details are detailed at Para 2 of the impugned order. As show-cause notice having been issued and in light of no response, assessment order has been passed. The details furnished at Annexure-1D1 are not in dispute. The contention raised on behalf of the petitioner deserves acceptance to the extent that notice ought to have been issued to the Email ID furnished at Annexure-1D1 and not otherwise. The notices sent to the Email ID which is not that declared by the assessee has justifiably resulted in the assessee not having had an opportunity to respond to the notices.
5. Accordingly, in light of the admitted facts and in light of lack of opportunity to the assessee to submit its reply to the notice issued under Section 142 (1), Assessment Order at Annexure-Al as well as notice of computation sheet at Annexure-A2, Consequential Demand Notice at Annexure-A3 and Penalty Notices at Annexure-A4, A5 and A6 are set aside. The matter is remitted back to the respondent no.1 and the same shall be resumed from the stage of reply to 142 (1) notice.
6. The learned counsel for Revenue submits that reply may be submitted to 142 (1) notice dated 11.2022, 11.11.2022 and 23.11.2022 at Annexure-J1, 32 and 33 respectively.
7. Accordingly, the petition is disposed off.
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