Karnataka High Court Quashes Reassessment for Notices Sent to Secondary Email and Old Address

Apoorva Harish Ruparel Vs Assessment Unit (Karnataka High Court)

NOTICE SENT TO SECONDARY E-MAIL AND OLD ADDRESS—KARNATAKA HIGH COURT QUASHES REASSESSMENT, PENALTIES AND BANK ATTACHMENT

The Karnataka High Court has quashed an entire chain of proceedings comprising the order under section 148A(d), notice under section 148, ex parte reassessment order, three separate penalty orders, consequential demands and attachment of the assessee’s bank account. The relief was granted because the statutory communications were sent to the assessee’s secondary e-mail address and an old residential address, though the assessee was residing abroad and was no longer staying at the physical address used by the Department.

The Court, however, did not terminate the reassessment permanently. It restored the matter to the section 148A(b) stage and permitted the assessee to submit his response by 5 October 2026.

Facts of the case

The proceedings related to AY 2016-17. The Assessing Officer issued a notice under section 148A(b) on 25 February 2023. This was followed by an order under section 148A(d) and notice under section 148, both dated 15 March 2023.

As the assessee did not respond, an ex parte assessment order was passed on 25 January 2024 under sections 147, 144 and 144B. The Department thereafter passed three different penalty orders: under section 271(1)(b) for non-compliance, section 271F for failure to file the return and section 271(1)(c) for alleged concealment or furnishing of inaccurate particulars.

The Department ultimately issued a notice under section 226(3) on 14 November 2025 and attached the assessee’s ICICI Bank account for recovery of the outstanding demand.

The assessee approached the High Court and contended that none of the notices or orders had been effectively served upon him. His registered primary e-mail address was stated to be [[email protected]](mailto:[email protected]), whereas the communications had been sent to his secondary e-mail address, [[email protected]](mailto:[email protected]). Certain communications were also sent to his old residential address.

The assessee was residing abroad, and the writ petition was therefore instituted through his father acting as his authorised representative and GPA holder.

Importantly, an inspection report prepared pursuant to an enquiry under section 133(6) on 4 January 2024 itself recorded that the assessee was no longer residing at the address to which some of the notices had been sent.

On merits, the assessee submitted that he had purchased an immovable property in 2012 and sold it in 2016 at a loss. According to him, the transaction had been disclosed in the income-tax return and could be properly explained if an effective opportunity was granted.

High Court’s decision

The Department did not dispute that the communications, including the section 148A(d) order, had been sent to the assessee’s secondary e-mail address. It was also not disputed that the assessee was no longer residing at the physical address used by the Department.

Considering these circumstances together, the High Court held that the assessee had shown sufficient reasons for not responding to the notices. The assessee was therefore entitled to another opportunity to contest the proceedings.

Accordingly, the Court quashed the section 148A(d) order, notice under section 148, ex parte assessment order, computation sheet and demand notice. It also quashed the penalty orders under sections 271(1)(b), 271F and 271(1)(c), together with the related computation sheets and demand notices.

The consequential bank attachment under section 226(3) was also quashed.

The assessee was directed to file his reply to the original notice dated 25 February 2023 under section 148A(b) before the ITO, Ward 5(3)(4), Bengaluru, on or before 5 October 2026. All questions were left open for consideration by the Assessing Officer.

Author’s comments

The decision is significant because the Court did not merely set aside the ex parte assessment. It dismantled every consequential proceeding founded upon that assessment, including three penalty orders and the bank attachment.

Once the assessee was deprived of an effective opportunity at the foundational stage under section 148A(b), the subsequent section 148 notice, assessment, penalties, demands and recovery action could not independently survive. The ruling thus recognises that an opportunity of hearing must be real and effective and not merely technical or illusory.

However, the judgment should not be read as laying down a blanket proposition that service at a secondary e-mail address is always invalid. The Court’s conclusion was based on the cumulative circumstances: communications were sent to the secondary e-mail, notices were dispatched to an old address, the assessee was residing abroad, and the Department’s own inspection report acknowledged that he no longer lived at that address.

Therefore, taxpayers cannot automatically ignore communications sent to a secondary e-mail address recorded in the income-tax database. The safer course is to regularly update the registered e-mail, mobile number and address both in the PAN database and on the income-tax portal. Courts may not grant similar relief where the taxpayer has failed to update his particulars or has otherwise accessed the notices through the portal.

The relief is also procedural and not on merits. The Court has not held that the property transaction resulted in a genuine capital loss, nor has it declared that no income escaped assessment. The Assessing Officer remains free to examine the purchase cost, sale consideration, stamp-duty valuation, period of holding and computation of capital loss after considering the assessee’s reply.

An interesting feature is that the petitioner had also challenged the constitutional validity of section 147A inserted by the Finance Act, 2026, alternatively seeking that it should operate only prospectively. The newly inserted provision concerns the controversy over whether reassessment notices could be issued by the jurisdictional Assessing Officer instead of through the faceless mechanism.

The High Court did not decide this constitutional challenge. Having granted relief on the ground of lack of effective opportunity, it allowed the writ petition only partly and left all questions open. Therefore, this decision cannot be cited as either upholding or striking down section 147A, or as deciding the JAO-versus-FAO controversy.

The practical ratio is narrower but important: where the surrounding facts establish that notices never effectively reached the assessee, an ex parte reassessment and every consequential penalty and recovery proceeding may be set aside, but the Department can be permitted to recommence the proceedings from the stage at which the denial of opportunity occurred.

FULL TEXT OF THE JUDGMENT/ORDER OF KARNATAKA HIGH COURT

The petitioner has called in question the following which are for the Assessment Year 2016-17.

2. The petitioner’s case is that he was not served with any of the notices, including the notice under 148A(1) of the Income Tax Act, 1961 [for short, ‘the IT Act’]. Mr. Janak Purohit, the learned counsel for the petitioner, submits that he would request this Court’s interference for restoration of the proceedings with liberty to the petitioner to file a response to the notice dated 25.02.2023 under Section 148A(b) of the IT Act, and to support the petitioner’s request for such, the learned counsel submits the following.

A. The petitioner’s primary E-mail address is [email protected] and the secondary E-mail address is [email protected].

B. All the notices have been addressed to the secondary E-mail or sent to the petitioner’s old address.

C. An Inspection Report based after an enquiry on 04.01.2024 under Section 133(6) of the IT Act also mentions that the petitioner no longer resides at the address where some notices have been sent.

D. The petitioner has been residing abroad, and the present petition is filed through an authorized representative [his father].

3. On merits, Mr. Janak Purohit submits that the petitioner has purchased an immovable property in the year 2012 and sold it in the year 2016 under a loss which is part of the Income Tax Returns, and the petitioner can justify return. Mr. M. Thirumalesh, the learned Senior Standing counsel, and Mr. Nirmal Mathew, the learned Standing counsel for the respondents, are heard on whether this Court must intervene in the circumstances to restore the proceedings with an opportunity to the petitioner to file a response to the notice under 148A of the IT Act.

4. The service of notices/communication, and even the Order under 148A(d) of the IT Act, is to the petitioner’s secondary E-mail Address is not in dispute, and it is also indisputable that the petitioner no longer stays at the address as mentioned. If notice is sent to the petitioner’s secondary E-mail address and if the notice is sent to the address where the petitioner does not reside, this Court is of the view, especially in the present circumstances, that sufficient reasons are offered to interfere on the ground that the petitioner must have another opportunity leaving open all questions to be considered. In the light of the afore, the following.

ORDER

The petition is allowed-in-part and the following are quashed with liberty to the petitioner to file response to the notice dated 25.02.2023 under Section 148A(b) of the IT Act with the Income Tax Office, Ward 5(3)(4), Bengaluru [the second respondent] by 05.10.2026.