Section 148A(b) sent to outdated email ID: HC set-aside order & Notices

Azeem Infinite Dwelling India Pvt Ltd Vs ITO (Karnataka High Court)

In Azeem Infinite Dwelling India Pvt Ltd vs ITO, the Karnataka High Court addressed a tax dispute where the petitioner challenged multiple orders and notices issued under the Income Tax Act, 1961. These included an order under Section 148A(d) dated 1 April 2022, a notice under Section 148, and an assessment order under Section 147 read with Sections 144 and 144B. The petitioner argued that the assessment proceedings were invalid because all notices and correspondences had been sent to an email ID, gmaccounts@gminfinite.com, created by a former accountant who no longer worked for the company. This resulted in the petitioner not receiving the notices, thereby violating the principles of natural justice. The petitioner requested that the court set aside the assessment order and allow the case to return to the Section 148A(b) stage, giving them a fair chance to respond to the notices.

The Karnataka High Court considered the memo filed by the petitioner, which showed that the notice under Section 148A(b) had been sent to an outdated email ID. Recognizing the procedural flaw, the court set aside the earlier orders and notices, including the assessment order, demand notice under Section 156, and penalty notice under Section 274. The court remitted the case back to the stage of the Section 148A(b) notice, thereby giving the petitioner an opportunity to respond properly to the income tax proceedings. This decision underlines the importance of proper communication in tax assessments and upholds the taxpayer’s right to be heard before any adverse action is taken.

FULL TEXT OF THE JUDGMENT/ORDER OF KARNATAKA HIGH COURT

The petitioner has challenged the order passed under Section 148A(d) of the Income Tax Act, 1961 (¹the Act for brevity) at Annexure-¹A¹ dated 01.04.2022, the notice issued under Section 148 at Annexure-¹B¹ dated 01.04.2022, the Assessment Order passed under Section 147 read with Section 144 read with Section 144B at Annexure-¹D¹ dated 26.02.2024, the notice of demand issued under Section 156 at Annexure-¹E¹ dated 26.02.2024 and the notice of penalty issued under Section 274 read with Section 272A(1)(d) at Annexure-¹F¹ dated 26.02.2024.

2. It is the case of the petitioner that the petitioner has not been communicated with the notice which has culminated in the passing of Assessment Order and that the E-mail ID referred to in the Assessment Order refers to the E-mail ID previously created by the earlier Accountant who has left the services of the Company and in light of the same, all correspondences and notices addressed to the E-mail ID referred to in the Assessment Order as gmaccounts@gminfinite.com not having been communicated, the entirety of proceedings are vitiated by the violation of principles of natural justice and that the petitioner may be granted an opportunity to respond to the notice issued under Section 148A(b) and the petitioner would cooperate in the conclusion of proceedings expeditiously.

3. Learned counsel for the petitioner has filed a memo enclosing copy of the notice dated 15.03.2022 issued under Section 148A(b) to the petitioner.

4. Taking note of the memo filed and submission made and in particular, to the E-mail ID to which the correspondences and notices have been sent being that of the former Accountant who is no longer in the services of the Company, it would meet the ends of justice to relegate the petitioner to the stage of reply to notice under section 148A(b) of the Act dated 15.03.2022.

5. In light of the above, Annexure-‘A’ dated 01.04.2022, Annexure-‘B’ dated 01.04.2022, Annexure-‘D’ dated 26.02.2024, Annexure-‘E’ dated 26.02.2024 and Annexure-‘F’ dated 26.02.2024 are set aside. The matter is remitted to the stage of Section 148A(b).

Accordingly, the petition is disposed off.