FOUR STAR GRANITE PRIVATE LIMITED V. DEPUTY COMMISSIONER OF INCOME TAX

WP(C)/22840/2021

AI Insights

The case involves Four Star Granite Private Limited, which faced an assessment order from the Income Tax Department following a survey that suspected income suppression. The company contended that the notices and the assessment order were served to the email of their erstwhile auditors instead of their updated email, as recorded in the Income Tax Portal. The court examined whether the notices were served in compliance with Rule 127 of the Income Tax Rules, 1962, which governs electronic communications. The court found that the service was not compliant, leading to the setting aside of the assessment order.

• Counselvise Citation: [2022] 140 COUNSELVISE.COM (IT) 686110 (HC-KERALA)
• Appeal Type: Others
• Pronouncement Date: 29-03-2022
• Assessment Year: misc
• Other Referred Cases: Bhima Jewels v. Principal Commissioner of Income Tax, Ekm, and another [2022 (1) KHC 217], Principal Commissioner of Income Tax v. I-ven Interactive Limited [(2019) 418 ITR 662 (SC)]
• Laws Referred To: Income Tax Act, 1961, Income Tax Rules, 1962
• Result in Favour of: Others
• Court: HIGH COURT
• Department Lawyers: JOSE JOSEPH
• Assessee Lawyers: ANIL NAIR; TELMA RAJU; SANGEETH JACOB; CHRISTINA PAUL EDATHARA; VINEETA ARAVIND SREEKUMAR
• Keywords: Assessment Order; Email Communication; Income Tax; Natural Justice; Notice
• Section: 147; 148; 143(3); 142(1); 133A; 282; 127

Judgement Text

"IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT THE HONOURABLE MR.JUSTICE MURALI PURUSHOTHAMAN TUESDAY, THE 29TH DAY OF MARCH 2022 / 8TH CHAITHRA, 1944 WP(C) NO. 22840 OF 2021 PETITIONER: FOUR STAR GRANITE PRIVATE LIMITED MANGALATH, KOOTTALA, PAANCHERY, THRISSUR-680 652, REPRESENTED BY ITS MANAGING DIRECTOR, ANIYAN MATHEW. BY ADVS. ANIL D. NAIR TELMA RAJU SANGEETH JOSEPH JACOB CHRISTINA ANNA PAUL EDATHARA VINEETA KRISHNAN ARAVIND SREEKUMAR RESPONDENT: 1 DEPUTY COMMISSIONER OF INCOME TAX CIRCLE 1 (1) & TPS, THRISSUR, PIN-680 001. 2 THE ASSISTANT COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE, THRISSUR, PIN-680 001. BY JOSE JOSEPH, SC, FOR INCOME TAX THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 29.03.2022, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: W.P . (C) 22840/2021 2 JUDGMENT The petitioner-Company, which is engaged in the business of mining and production of quarry items, is an assessee under the Income T ax Act, 1961 (hereinafter referred to as 'Act', for short). A survey u/s. 133A of the Act was conducted by the Income T ax Department at the business premises of the petitioner and certain materials suspecting suppression of income were impounded. The petitioner contends that, Ext. P3 notice under section 148 dated 23.03.2020 issued by the 1st respondent, the Deputy Commissioner of Income T ax, Circle I(1), Thrissur, was not received by the petitioner. The previous auditors of the petitioner received Ext.P4 notice u/s 142 (1) dated 20.09.2021 of the 2nd respondent, the Assistant Commissioner of Income T ax, Central Circle, and made over the same to the petitioner. On perusal of Ext.P4 notice, the petitioner noticed that there is change in jurisdiction of the officer. Though the petitioner met and apprised the 2nd respondent that the notices were served on the previous auditor and not at the e-mail id mentioned in the web portal, the 2nd respondent issued Ext.P5 assessment order dated 30.09.2021 W.P . (C) 22840/2021 3 confirming the proposal on the premise that section 143(3) notice has not been replied. 2.The petitioner contends that notices under sections 148, 142 (1), 143 (3) r/w 147 and the assessment order were served on wrong e-mail id/e-mail id of the erstwhile auditors of the petitioner and not in the e-mail id of the petitioner available in the Income T ax Portal. The petitioner has produced Ext. P1 Jurisdiction Details in the portal which shows the jurisdictional officer as the 1st respondent and the petitioner contends that no notice was served on the petitioner before the case was transferred to the 2nd respondent. 3.The personal details of the petitioner available in the portal are produced as Ext.P2 which shows primary and secondary e-mail ids. However, the communications were addressed to a different e-mail id, which is the e-mail id of the erstwhile auditors. The petitioner contends that, the 2nd respondent did not note the changes in the personal details of the petitioner in the web portal, which were intimated to the Department and issued notices and assessment order in wrong e-mail id which is in violation of principles of natural justice and seeks to quash Ext. P5. W.P . (C) 22840/2021 4 4. A statement has been filed on behalf of the respondents wherein it is stated that since the petitioner has not filed return of income in response to notice u/s 148, the system has taken the communication e-mail id shown in the return for the assessment year 2016-17 and that the petitioner had not intimated the assessing officer about change of id or updated the profile regarding change of e-mail address. 5. The petitioner has filed a reply affidavit to the statement filed by the respondents wherein the petitioner contends that there is non-compliance of Rule 127 of the Income T ax Rules, 1962 ('Rules', for short) in serving the notices and the assessment order. 6. Heard Sri. Anil D. Nair, the learned counsel for the petitioner and Sri. Jose Joseph, the learned standing counsel for the respondents. 7. Sri. Anil D. Nair refers to section 282 of the Act and Rule 127 of the Rules. Rule 127 enables service of notice, summons, requisition, order and other communication (referred to as 'communication' in section 282) under the Act by electronic means (e-mail) and sub rule (2) (b) of Rule 127 provides that such communication shall be delivered or transmitted at the: W.P . (C) 22840/2021 5 “(i) e-mail address available in the income-tax return furnished by the addressee to which the communication relates; or (ii) the e-mail address available in the last income-tax return furnished by the addressee; or (iii) in the case of addressee being a company, e-mail address of the company as available on the website of Ministry of Corporate Affairs; or (iv) any e-mail address made available by the addressee to the income-tax authority or any person authorised by such income-tax authority.” The learned counsel contends that the communications were not delivered or transmitted in terms of Rule 127. It is contended that, in Ext.P2, which is a copy of the personal details of the petitioner, available in the Income T ax Portal, the e-mail id of the petitioner is not the one to which Exts. P3, P4, P5 and P6 were sent and the service of communication is not as mandated under the Rules. Sri. Anil D. Nair also relies on the decision of this Court reported in Bhima Jewels v. Principal Commissioner of Income Tax, Ekm, and another [2022 (1) KHC 217] to contend that in similar circumstances, this Court has interfered with the order of assessment. 8. Per contra, Sri. Jose Joseph would contend that the petitioner had not intimated the assessing officer with regard to W.P . (C) 22840/2021 6 change in e-mail id. Sri. Jose Joseph also relies on the decision of the Hon'ble Supreme Court in Principal Commissioner of Income Tax v. I-ven Interactive Limited [(2019) 418 ITR 662 (SC)], wherein the Court has held that, in the absence of any intimation to the assessing officer with respect to change in address, the assessing officer was justified in issuing notice at the address available as per the PAN database. 9.According to the petitioner, Ext.P2 is the copy of the personal details of the petitioner available in the Income T ax Portal. It contains primary and secondary e-mail ids with request that the communication to be addressed to both primary and secondary e-mail ids. However, the communications were delivered by the 2nd respondent at another e-mail id, which is the e-mail id of the erstwhile auditors. Therefore, the petitioner was not in receipt of the notices and assessment order. Since the petitioner did not receive the notices, the petitioner could not reply to the same. Since the notices were issued in wrong e-mail id, the petitioner contends that there was no proper service of notice and therefore, Ext.P5 assessment order is bad being passed in violation of the principles of natural justice. 10. Updated jurisdictional details as well personal details in W.P . (C) 22840/2021 7 the Income T ax Web Portal are vital for the communication of notice, summons, requisition, order and other communication by the Department, particularly in case of system generated communications. While the respondents contend that the petitioner did not update the profile and thereby communications were sent through the e-mail id mentioned as default, Ext.P2 personal details in the Income T ax Portal shows primary and secondary e-mail ids and fact remains that the notices and assessment order were not served on these e-mail ids. It is not evident as to when the changes in the personal details were made in the web portal. Since the petitioner did not receive notices, the petitioner did not get opportunity to put forth its response to the notices. Thus, there is violation of principles of natural justice while issuing Ext. P5 assessment order. This Court, in Bhima Jewels (supra), in somewhat similar circumstances, observed as under: “18. Viewed in the entire conspectus of the circumstances that surround the order of assessment, this Court is of the opinion that, though the assessing officer cannot be faulted, petitioner did not get an effective opportunity to put forth his response for the year 2017-18. Since the assessment order is the platform from which the rights and obligations of not only the assessee but also of the department arise, it is essential that such a W.P . (C) 22840/2021 8 platform is built upon strong foundations, especially when the amount involved is large. The burden of an assessment order issued without hearing the assessee will fall, not only upon the petitioner alone but even upon the system itself and may create further waste of resources.” Without venturing into the question as to who is to be faulted for the non-service of communications, in the facts and circumstances, particularly, the fact that the petitioner did not get opportunity to put forth its responses to the notices leading to the issuance of Ext. P5 assessment order, to meet the ends of justice, I set aside Ext.P5 order of assessment and direct the petitioner to submit its response to Ext.P3 and subsequent notices within two weeks from the date of receipt of a copy of this judgment and the assessing officer shall consider the response of the petitioner to the notices and pass fresh assessment order within one month thereafter, after hearing the petitioner. The writ petition is allowed as above. There will be no order as to costs. Sd/- MURALI PURUSHOTHAMAN JUDGE W.P . (C) 22840/2021 9 APPENDIX OF WP(C) 22840/2021 PETITIONER EXHIBITS Exhibit P1 TRUE COPY OF JURISDICTIONAL DETAILS AVAILABLE IN THE PORTAL Exhibit P2 TRUE COPY OF PERSONAL DETAILS AVAILABLE IN THE INCOME TAX PORTAL Exhibit P3 TRUE COPY OF NOTICE DATED 23.3.2020 ISSUED BY THE 1ST RESPONDENT Exhibit P4 TRUE COPY OF THE NOTICE DATED 20.9.2021 ISSUED BY THE 2ND RESPONDENT TO THE PETITIONER Exhibit P5 TRUE COPY OF THE ASSESSMENT ORDER DATED 30.9.2021 ISSUED BY THE 2ND RESPONDENT Exhibit P6 TRUE COPY OF NOTICE DATED 28.9.2021 ISSUED BY THE 2ND RESPONDENT TO THE PETITIONER Exhibit P7 TRUE COPY OF SCREEN SHOT DEMONSTRATING NOTICE U/S 142(1) BEING SERVED AT THE WRONG E-MAIL ID Exhibit P7(A) TRUE COPY OF SCREEN SHOT DEMONSTRATING NOTICE U/S 147 BEING SERVED AT THE WRONG-E MAIL ID RESPONDENTS’ EXHIBITS: R2(A) COPY OF THE NOTICE DATED 28.01.2021. R2(B) COPY OF THE NOTICE U/S 142(1) DATED 28.01.2021. R2© COPY OF THE ORDER SHEET DULY SIGNED BY THE AUTHORIZED REPRESENTATIVE SHRI.C.A.VARGHESE, C.A ATTENDED FOR HEARING ON 8.2.2021. spc/ "