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Case Law Details

Case Name : Renga Fabricators Private Limited Vs Additional/Joint/Deputy/ACIT/ITO (Madras High Court)
Appeal Number : W.P.No.25812 of 2022
Date of Judgement/Order : 29/08/2023
Related Assessment Year : 2015-16

Renga Fabricators Private Limited Vs Additional/Joint/Deputy/ACIT/ITO (Madras High Court)

Introduction: The Madras High Court’s decision in the case of Renga Fabricators Private Limited vs. Additional/Joint/Deputy/ACIT/ITO highlights the importance of proper communication and adherence to legal procedures in the context of income tax assessments. The court ruled in favor of the petitioner, setting aside an assessment order due to a crucial notice being sent to an outdated email address.

Impugned Assessment Order and Notice: The petitioner contested an Impugned Assessment Order dated March 27, 2022, with reference to DIN ITBA/AST/S/147/2021-2022/1041745769(1). This order followed a notice under Section 148 of the Income Tax Act, 1961, dated March 30, 2021, which was issued because the petitioner had failed to file regular returns for the Assessment Year 2015-2016.

Outdated Email Communication: The problem arose because the notice was sent to an email address (esai@vsnl.com) that was no longer in use. Bharat Sanchar Nigam Limited (BSNL) had discontinued IT services from April 2019. Although the petitioner had an alternate email ID (esaiandco@gmail.com), it was not used for communication.

Non-receipt of Notices: The petitioner claimed that none of the communications, starting from the March 30, 2021 notice, were received due to the outdated email address. The petitioner only became aware of the Impugned Order after a notice under Section 274, combined with Section 271(1)(c) of the Income Tax Act, 1961, was sent to the petitioner’s Chartered Accountant and the alternate email ID (esaiandco@gmail.com).

Legal Challenge: Under these circumstances, the petitioner challenged the Impugned Order, arguing that it should be set aside.

Respondent’s Perspective: The Senior Standing Counsel for the respondents argued that even if the notice wasn’t received via email, it was posted on the web portal. The petitioner could have downloaded it from there and participated in the proceedings leading to the Impugned Order.

Non-compliance with Legal Requirements: The respondents also highlighted that the petitioner had not complied with the legal requirements established by the Supreme Court’s decision in GKN Driveshafts (India) Limited vs. Income Tax Officer and Ors [2003] 259 ITR 19 (SC). This included filing returns and submitting objections to the reopening of the assessment.

Conclusion: The Madras High Court found the Impugned Order dated March 27, 2022, unsustainable due to the notice being sent to an outdated email address. The case was remitted to the respondents with instructions to issue a proper notice under Section 148A(b) of the Income Tax Act, 1961, within twelve months. Additionally, the consequential penalty notice issued on August 3, 2022, and August 4, 2022, was quashed.

This case serves as a reminder of the critical importance of maintaining up-to-date contact information for communication related to legal matters. It underscores that failure to comply with legal requirements can impact the validity of assessment orders, even if the communication is available through other means. Proper communication and adherence to procedures are essential in legal proceedings. 

FULL TEXT OF THE JUDGMENT/ORDER OF MADRAS HIGH COURT

The petitioner is aggrieved by the Impugned Assessment Order dated 27.03.2022 bearing reference DIN ITBA/AST/S/147/2021-2022/1041745769(1). The Impugned Order precedes a notice under Section 148 of the Income Tax Act, 1961 dated 30.03.2021. The said notice was issued to the petitioner as the petitioner had failed to file a regular returns for the Assessment Year 2015-2016.

2. However, the said notice was transmitted to one of the other designated E-mail ID of the petitioner at esai@vsnl.com which was no longer in use as Bharat Sanchar Nigam Limited (hereinafter referred to as BSNL) had stopped providing IT Service from April 2019, although the petitioner also had an alternate E-mail ID at esaiandco@gmail.com.

3. The specific case of the petitioner is that notices that were issued subsequently were also sent to the same E-mail ID.

4. The learned counsel for the petitioner therefore submits that none of the communications starting from the issuance of Section 148 of the Income Tax Act, 1961 dated 30.03.2021 was received by the petitioner.

5. The learned counsel for the petitioner further submits that the petitioner came to know about the passing of the Impugned Order only after a notice under Section 274 read with Section 271(1)(c) of the Income Tax Act, 1961 was sent to the petitioner’s Chartered Accountant and petitioner’s alternate E-mail ID at esaiandco@gmail.com.

6. It is under these circumstances the petitioner has challenged the Impugned Order. It is therefore submitted that the Impugned Order is liable to be set aside.

7. The learned Senior Standing Counsel for the respondents on the other hand would submit that even if the notice was not sent to the petitioner’s E-mail ID, the notice and the communication were posted in the web portal and nothing precluded the petitioner from downloading the same and participate in the proceedings which ultimately culminated in the Impugned Order dated 27.03.2022.

8. The learned Senior Standing Counsel for the respondents submits that the petitioner has also not complied with the requirements of the decision of the Hon’ble Supreme Court in Hon’ble Supreme Court in GKN Driveshafts (India) Limited Vs. Income Tax Officer and Ors [2003] 259 ITR 19 (SC) by filing returns and filing objection to the reopening of the assessment. Hence, he submits that the present writ petition is liable to be dismissed.

9. I have considered the arguments advanced by the learned counsel for the petitioner and the learned Senior Standing Counsel for the respondents.

10. Clearly the Impugned Order dated 27.03.2022 is unsustainable as the notice which preceded the Impugned Order have been sent to the E-Mail ID which was no longer in use as BSNL has stopped providing services from April 2019.

11. Considering the above, the Impugned Order dated 27.03.2022 is set aside and the case is remitted back to the respondents to issue a proper notice under Section 148A(b) of the Income Tax Act, 1961. In view of the above, the consequential penalty notice issued under Section 271(1)(c) of the Act on 03.08.2022 & 04.08.2022 is also stands quashed. The respondents shall pass order under Section 148A(d) of the Income Tax Act, 1961 within a period of twelve (12) months from the date of receipt of a copy of this order.

12. The writ petition stands allowed with the above observations and directions. No costs. Consequently, connected miscellaneous petitions are closed.

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