Case Law Details
Yesh Daga Vs PCIT (ITAT Jaipur)
In this case, it was found that the taxpayer did not receive the Show Cause Notice (SCN) as it was not sent to their email, despite the taxpayer updating their email addresses in their Income Tax Returns (ITRs) and personal profiles on the ITBA portal. The court emphasized that under Section 282 of the Income Tax Act, 1961, notices must be communicated directly to the taxpayer and cannot be presumed delivered merely by posting on the e-portal. Due to the absence of proper notice, the revisionary action initiated under Section 263 by the Principal Commissioner of Income Tax (PCIT) was deemed legally flawed and was therefore invalidated. The court further ruled that the taxpayer was not given a fair opportunity to respond, thus quashing the revisional order dated 25th March 2023. Consequently, other grounds of appeal were considered moot and left open for future adjudication when necessary. As a result, the appeal filed by the taxpayer was allowed. In conclusion, the ITAT Jaipur ruled in favor of the appellant, quashing the PCIT’s revisional order dated 25.03.2023.
FULL TEXT OF THE ORDER OF ITAT JAIPUR
The captioned appeal is filed by the assessee against the order of the Principal Commissioner of Income Tax (“the PCIT”), dated 25.03.2023 in respect of Assessment Year 2018-19 wherein the appellant has raised the following grounds of appeal:
1. That on the facts and in the circumstances of the case, the Id. Principal Commissioner of Income-tax-I, Jaipur grossly erred in passing an Ex-parte order dated 25.03.2023 passed u/s 263 of the Income-tax Act, 1961 and entire proceedings is bad-in-law and is vitiated and deserves to be set-aside and quashed.
1.1. That the impugned ex-parte order dated 25.03.2023 was passed without even service of notice dated 10.03.2023 issued u/s. 263 of the Act upon the assessee appellant and without providing any opportunity of hearing to the assessee appellant and thus entire proceedings is bad-in-law and is vitiated and deserves to be set-aside and quashed.
1.2. That the impugned notice dated 10.03.2023 & order dated 25.03.2023 are grossly vitiated on account of non-service of the same upon the assessee appellant and thus entire proceedings is bad-in-law and deserves to be set-aside and quashed. The impugned notice dated 10.03.2023 & order dated 25.03.2023 was neither sent by post nor by hand nor by email nor by SMS, however, the same was directly uploaded on the income tax portal of the assessee appellant.
1.3. That the impugned notice dated 10.03.2023 & order dated 25.03.2023 grossly suffers from non-compliance of the mandatory provisions as prescribed u/s. 282 of the Act and the relevant notifications issued in reference thereto with regards to service of notices / orders and thus entire proceedings is bad-in-law and is vitiated and deserves to be set-aside and quashed.
2. That on the facts and in the circumstances of the case, the Id. Principal Commissioner of Income-tax-I, Jaipur grossly erred in holding in the impugned order dated 25.03.2023 that the assessment made by the Assessing Officer, National Faceless Assessment Centre is found to be erroneous in so far as it is prejudicial to the interest of the revenue.
2.1. That on the facts and in the circumstances of the case, the Id. Principal Commissioner of Income-tax-II, Jaipur grossly erred in holding that “The said order has been passed by the Assessing Officer in a routine and casual manner without verification of the issue” is wholly unjustified, bad in law and deserve to be quashed.
2.2. That the Assessing Officer, National Faceless Assessment Centre has passed the assessment order after appreciating all the documents, evidences, statutory provisions of law and after thorough examination of facts and the same was just and proper, therefore the assessment order is neither erroneous nor is prejudicial to the interest of the revenue.
2.3. That the Id. Principal Commissioner of Income-tax-I, Jaipur has not appreciated the facts of the matter and thus has erroneously erred in holding that the impugned assessment order passed by the Assessing Officer, National Faceless Assessment Centre suffers from non-compliance of section 56(2)(x) of the Act and thus Rs. (Rs. is liable for income-tax.
2.4. That the impugned order passed by the learned Id. Principal Commissioner of Income-tax-I, Jaipur is based upon assumptions, presumptions, conjecture and surmises which is bad in law.
3. The appellant craves leave to add, alter, modify or amend any ground on or before the date of hearing.
2. The Ld. AR filed Condonation application dated 15.11.2023, explained therein that with the reason that the show cause notice and other notices issued, and the revisionary order passed u/s 263 by the Ld. PCIT have never been received by the appellant /with support of copies of photo print of downloads taken from ITBA Portal mentioning no email ID. The AR contended that the Order passed u/s 263 dated 25.03.2023 by the Ld. PCIT was never served upon the assesse either by post, or email or SMS. It had come to knowledge of the appellant when assessment notice issued u/s 144B of the Act dated 06.11.2023which received on the email as per personal profile of the assessee on ITBA portal. The Ld. DR could not controvert the contention of the assessee on condonation petition. In view of that matter, we hold that the appellant has sufficient cause and valid reason for the delay of 176 days in filing the present appeal before the Tribunal and it is considered deem fit to condone the delay and admit the appeal on merits of the case for hearing. Accordingly, the appeal is admitted for hearing on merits.
3. In ground no.1, the appellant has challenged that the impugned ex-parte order dated 25.03.2023 was passed against the principles of natural justice as the order is passed without affording opportunity of being heard and without even service of show cause notice dated 10.03.2023 issued u/s. 263 of the Act, that renders entire proceedings as bad-in-law and impugned order deserves to be set-aside and quashed.
4. The Ld. Counsel for the assessee has submitted that the Ld. PCIT has grossly errored in passing the order ex-parte qua the assessee without even service of show, notice dated 10.03.2023 issued u/s. 263 of the Act upon the assessee appellant and without providing any opportunity of hearing to the assessee appellant and thus entire proceedings is bad-in-law and deserves to be set-aside and quashed. The AR further submitted that the impugned notice dated 10.03.2023 and order dated 25.03.2023 was neither sent by post nor by hand nor by email nor by SMS to the assesse, however, the same was alleged to be directly uploaded on the income tax portal of the assessee appellant. The AR argued that the impugned notice dated 10.03.2023 and order dated 25.03.2023 grossly suffers from non-compliance of the mandatory provisions as prescribed u/s. 282 of the Act and the relevant notifications issued in reference thereto with regard’ to service of notices/ show cause notice and orders, and thus the order u/s 263 of the Income-tax Act, 1961 and entire proceedings is bad-in-law and deserves to be set-aside and quashed. In support, ji.t placed reliance ion the following case laws:
1. Maneka Gandhi vs Union of India, 1978 AIR 597(SC).
2. Nawabkhan Abbaskhan v. The State of Gujarat, 1974 AIR 1471(SC).
3. Ashutosh Bhargava v. PCIT in 2022 (1) TMI 586 (ITAT Jaipur Bench).
4. Dee Vee Projects Ltd. v. PCIT in 2021 (10) TMI 672 (ITAT Raipur Bench).
5. Fortune Metaliks Ltd. v. PCIT in 2022 (3) TMJ 918 (ITAT Chandigarh Bench).
6. Mandeep Malli, Jalandhar vs ACIT (In Situ), Nakodar, (ITAT Amritsar Bench).
7. Parshotam Singh v. ITO, Ward-1(4), Mansa [2016] (8) TMI 1180(ITAT Amritsar Bench).
8. CIT v. Naveen Chander [2010] 323 ITR 49 (Punjab & Haryana).
9. Munjal BCU Centre of Innovation and Entrepreneurship v. Commissioner of Income-tax (Exemptions) [2024] 160 taxmann.com 629 (Punjab & Haryana).
5. Per contra, the Ld. DR supported the impugned order contending that the notices were issued on the Income tax portal but failed to controvert service of the notices. The Id. DR objected that the technical ground of opportunity and service of show cause notice, but he did not refer any citation to distinguish the case law relied by the Ld. AR on violation of principles of natural justice and service of show cause in terms of section 282 of the Act.
6. We have heard both the sides, perused the material on record, impugned order, written submission and case law cited before us. Admittedly, it is not disputed that in the instant case the revisionary proceedings were instituted by the Id. PCIT by issuance of Show cause notice (SON) dated 10.03.2023 [PB 225-227], however the same was never served or communicated to the assessee either through post, email or SMS. Ii: is seen from the screen shot copy of the aforesaid SCN notice, dated 10.03.2023 [APB, Pg. 225] that no email is mentioned on the aforesaid SCN which reads as under:
7. The Ld. PCIT stated that the order of National Faceless Assessing Officer was erroneous and prejudicial to the interest of revenue, by issuance of SCN notice dated 10.03.2023 [PB 225-227] but he did not mention the fact regarding service of the said SCN on the assessee and proceeded to pass an order u/s 263 on 25.03.2023 exparte qua the appellant. Consequently, he set aside the assessment rider to the file of Assessing Officer. The Ld. PCIT vide Para 5 observed that proceedings u/s 263 of the Act were initiated and an opportunity of being heard was provided to the assessee vide notice dated 10.03.2023 fixing the case for hearing on 14.03.2023 which was sent to the assessee electronically on the ITBA system. It was also stated in the notice that in case of failure to submit the reply, the matter would be decided on merits on the basis of materials available on record. The assessee hat not filed any reply till date. In view of the same the issue is=being decided on the basis of material available on record.
8. The Ld. AR submitted that when notice dated 06.11.2023 [PB 228- 22911 was issued by the Assessing Officer, National Faceless subsequent to revision order passed by the Id. PCIT, was served upon the email address of the assessee appellant)and then the assessee came to know about the revisionary proceedings initiated by the Id. PCIT against the assessee appellant. It can be noticed that on the said notice of AO/NF, the email address of the assessee appellant is duly appearing, which is absent in the SCN dated 10.03.2023 issued by the Id. PCIT [PB 225]. The AR contended that the appellant’s personal profile as reflected on the income-tax portal also records his email address. Despite the email address being updated by the assessee appellant, the Id. PCIT did not send any notice on the email of the assessee appellant. Copy of photo print of personal details of assessee appellant as per income tax portal is filed in written paper book [APB, Pgs. 219-220].
9. The Counsel further submitted that assesses email address was duly reflected in the income-tax returns being filed by the assessee appellant from time to time. The appellant has filed photo print of the copy of ITR filed for Assessment Year 2018-2019 [APB, Pg. 221], Assessment Year 20212022 [APB. Pgs. 222], Assessment Year 2022-2023 [APB, Pg. 223] and Assessment Year 2023-2024 [APB, Pg. 224,11 for the ready reference of the Bench which are filed on record.
10. The principles of natural justice are firmly rooted and guaranteed under the Article 14 & 21 of the Constitution. The major objective of these principles are that they aid to avert miscarriage of justice by safeguarding rights of an individual. They further ensure that a judgment by the appropriate authority is just, fair and reasonable. The Principles of Natural Justice are mainly based on the following two broad principles:
1) Nemo Judex in causa Sua — no one should be made a judge in his own cause and
2) Audi alteram partem — no one should be condemned unheard.
11. In Quasi-judicial proceeding, the principle of Audi Alteram Partem laid the foundation of Natural Justice with the emphasis that “hear the other side” or “let the other side be heard as well”. This is the most fundamental rule of natural justice that says no one should be condemned unheard. In circumstances where a person against whom any action is sought to be taken and his right or interest is being affected, shall be given an equal opportunity of being heard to defend himself. It is the duty of every person or body exercising judicial or quasi-judicial functions to act in good faith and to listen fairly to both the sides before passing any order to meet the sole purpose of the rule of fair hearing to avoid the failure of justice. In our view, the decisions passed by the judicial and quasi-judicial courts in violation of the principle of Audi Alteram Partem are bad in law and liable to be quashed.
12. Further, the rule that no decision should be given against a party without giving an opportunity to be heard is emphatically embodied in section 263(1) itself which states “……………. he may after giving the assessee an opportunity of being heard”.
13. The Hon’ble Supreme Court in the case of Nawabkhan Abbaskhan v. the State of Gujarat, 1974 AIR 1471 has observed that an order which infringed a fundamental freedom passed in violation of the audi-alteram partem rule was a ‘nullity. A determination is no determination if it is contrary to the constitutional mandate of Art. 19. On this footing the extolment order was of no effect and its violation was no offence. Any order made without hearing the party affected is void and ineffectual to bind parties from the beginning if the injury is to a constitutionally guaranteed right. May be that in ordinary legislation or at common law a Tribunal having Jurisdiction and failing to hear the parties may commit an illegality which may render the proceedings voidable when a direct attack was made thereon by way of appeal, revision or review, but nullity is the consequence of unconstitutionality and so the order of an administrative authority charged with the duty of complying with natural justice in the exercise of power before restricting the fundamental right of a citizen is void ab initio and of no legal efficacy. The duty to hear menace/es his jurisdictional exercise and any act is, in its inception, void.
14. In the case of Ashutosh Bhargava v. PCIT (Supra), ITAT Coordinate Jaipur Bench has adjudicated the similar issue and observed as under:
It is mandatory to apply the principles of natural justice irrespective of the fact as to whether there is any statutory provision or not. As per the facts of the present case, the assessee was not afforded opportunity much less sufficient opportunity to give the reply to the show cause notice. Therefore, it is clear that the Id. Pr. CIT in a hurriedly manner without affording opportunity of hearing to the assessee, had passed impugned order by violating principles of audi alteram partem. Thus, keeping in view the principles laid down by the Coordinate Bench of Cuttack ITAT in the case of Jaidurga Minerals [2020 (8) TM/ 272 – ITA T CUTTACK and in the case of Jagnnath Prasad Bhargva [1942 (7) TM/ 23 – ALLAHABAD HIGH COURT and in view of the above factual position, the Id. Pr.CIT has committed a gross error in not providing effective/reasonable opportunity of being heard to the assessee before passing the order. Accordingly, the revisional proceedings framed u/s 263 stands quashed – Decided in favour of assessee.
15. In another case, Dee Vee Projects Ltd. v. PCIT (Supra), Raipur Tribunal has also held the order passed was in violation of the principles of natural justice, which is essence of fair trial, thus the same was quashed.
16. Further, ITAT, Chandigarh Bench in Fortune Metaliks Ltd. v. PCIT (Supra) observed that –
Revision u/s 263 – denial of natural justice – assessee has argued on the legality of the order passed which is stated to be an arbitrary exercise of power as order is assailed as having been passed without caring to provide reasonable opportunity of being heard to the assessee leading to the order being passed in a mechanical manner – Whether the order has been passed ignoring the submissions of the assessee admittedly received on the ITBA portal and incorrectly noting that no reply has been given by the assessee?
We deliberate that if the Id. PCIT who knowingly gives inadequate time to the assessee to file its reply considering the reply filed irrelevant notices that the assessee is seeking time, we do not find any reason why the Id. PCIT could not grant a hearing saying that time has been granted fix a date and then pass the order after hearing the assessee. However, in the facts of the present case, Id. PCIT falls to do so. So, whether the reply was noticed or remained un-noticed, the consequences are that if it was noticed, Id. PCIT failed to do what he was required to do and if it was not noticed, then he passed an order mechanically.
These facts when further noticed in the backdrop where the Id. PCIT after issuing the Short Cause Notice on 23.11.2020 sat over the very same information, made no efforts from any source, whatsoever to address the specific facts or the specific concerns from any other information in the public domain or made any efforts seeking information from the Investigation Wing of the Department, sat over the information for a period of almost 5 months and passed the order upsetting a statutory order which has been passed without any compunction. The arbitrary exercise of power cannot be upheld.
17. The Hon’ble HIGH COURT OF PUNJAB AND HARYANA in the case of Munjal BCU Centre of Innovation and Entrepreneurship v. Commissioner of Income-tax (Exemptions) [2024] 160 taxmann.com 629 (Punjab & Haryana) has held that merely uploading of information about the date of hearing on the Income Tax Portal is not an effective service of notice as per the provisions of Section 282 of the Income Tax Act. The relevant text of the judgment?: is being produced hereunder: –
Method of communication of notice – Service of notice generally u/s 282(1) – as per assessee SCN was not sent on the petitioner’s email or otherwise and was only reflected on the e-portal of the Department – Notice initiating proceedings under Section 12A(1)(ac)(iii) – HELD THAT:- It is essential that before any action is taken, a communication of the notice must be in terms of the provisions as enumerated herein above. The provisions do not mention of communication to be “presumed” by placing notice on the e-portal. A pragmatic view has to be adopted always in these circumstances. An individual or a Company is not expected to keep the e-portal of the Department open all the time so as to have knowledge of what the Department is supposed to be doing with regard to the submissions of forms etc.. The principles of natural listicle are inherent in the income tax provisions and the same are required to be necessarily followed.
This Court is of the firm view that the petitioner has not been given sufficient opportunity to put up his pleas with regard to the proceedings under Section 12A(1)(ac)(iii) of the Act of 1961 and as he was not served with any notice. Therefore, he would be entitled to file his reply and the Department would of course be entitled to examine the same and pass a fresh order thereafter.
Writ Petition is allowed, and the order is quashed and set aside.”
18. From the record, it is evident that the SCN or other notices alleged to be issued by the Id. PCIT through the online portal, were neither served on the registered email-id nor on any other address given in the ITR or in personal profile of the appellant assessee in ITBA portal as per the provisions of section 282 of the Act. From the impugned order, we find that the decision relied by the Ld. PCIT, do not apply to the peculiar facts of the present case, as the appellant was not served any notice, message or email for initiating the revisionary proceeding, and thereafter/and even show cause notice (SCN) was not served upon the appellant assessee. Meaning thereby that the Ld. PCIT has passed the 263 order exparte qua the appellant assessa.in gross violation of principles of natural justice without even service of the SCN.
19. In the present case, there was no service of SCN as it was not sent on the petitioner’s email as evident from the downloaded copy of SCN as the email of the appellant was not reflected on photo print of the SCN copy generated from the e-portal/ITBA portal of the Department, although the appellant has mentioned updated email addresses in its ITRs and personal profile on the ITBA portal of the respective Assessment Years as above.
20. In our view, it is essential for the Ld. PCIT that before any action is taken, a communication of the SCN notice and other notices shall be ensured in terms of the provisions as enumerated under the provisions of law as per the rule 17 and section 282 of the income tax act 1961. The provisions do not mention that communication to be “presumed” by placing notice on the e-portal.
21. Thus, in the absence of the assessee being aware of the show cause notice issued by the Ld. PCIT, the assessee cannot be faulted for not responding to the quires raised by the Ld. CIT(E) as in absence of service, because it is considered that it was never conveyed to the assessee. Therefore, the revisionary action-initiated u/s 263 of the Act by the Ld. PCIT is bad in law and it would be liable to be quashed.
22. In the above view, we hold that Ld. PCIT has committed a gross error in not providing effective/reasonable opportunity of being heard to the assessee before passing the impugned order. Accordingly, the revisional order passed u/s 263 of the act, dated 25.03.2023, is void ab initio and stands quashed.
23. As the impugned order is quashed on legal point, there is no need to decide the other grounds of appeal on merits of the case, which are rendered academic in nature, and we do not deem it necessary to adjudicate the same. These grounds of appeal are thus left open, to be decided at an appropriate time when the need for the same arises in future and for the present, they are dismissed as infructuous.
24. In the result, the appeal filed by the assessee is allowed.
Order pronounced in accordance with Rule 34(4) of the Income Tax (Appellate Tribunal) Rules, as on 0,5—.07.2024.
Author Bio
