Service of Notice /  order not proper as per Income tax Act if notice is just placed on the Income tax portal only without simultaneously serving on the email of the assessee or physical correspondence at the address of the assessee

Hon’ble Punjab & Haryana HC in a case has decided an important issue that merely placing a notice on the Income Tax Portal without simultaneous serving on the email of the assessee or physical correspondence at the address of the assessee is not a valid service notice and hence it is clearly denioal of Principle of natural Justice and hence corresponding orders are liable to be quashed and assessee must be given a reasonable opportunity of being heard.

Munjal BCU Centre Of Innovation And Entrepreneurship, Ludhiana Through Its Authorized Signatory Sh. Bharat Goel Versus Commissioner Of Income Tax Exemptions, Chandigarh- [2024] 463 ITR 560 (P&H) 

 Issues involved:

The issues involved in the judgment are related to the service of a show cause notice electronically, specifically through an e-portal, and the interpretation of provisions under Section 282(1) of the Income Tax Act, 1961 and Rule 127(1) of the Income Tax Rules, 1962.

Issue 1: Service of notice through e-portal

The petitioner filed an application under Article 226 of the Constitution of India seeking to stay the operation of a Show Cause Notice dated 24.02.2024, which was a subsequent development after the filing of the main Writ Petition. The main issue was the communication of the notice and reminders through the e-portal of the Department without being served on the petitioner personally.

Details:

- The show cause notice was issued to the petitioner for initiating proceedings under Section 12A(1)(ac)(iii) of the Income Tax Act, 1961, but it was only reflected on the e-portal of the Department and not sent to the petitioner's email or otherwise.

- The Department argued that communication of the notice electronically would include placing it on the e-portal, and since the petitioner submitted forms on the e-portal, it could be presumed that he had knowledge of the notice and reminders.

- The Court disagreed with this interpretation, emphasizing the provisions of Section 282(1) of the Act of 1961 and Rule 127(1) of the Income Tax Rules, which specify the method and manner of service of notice and orders, including electronic communication.

Issue 2: Compliance with legal provisions

The Court analyzed Section 282(1) of the Income Tax Act, 1961 and Rule 127(1) of the Income Tax Rules, emphasizing the importance of following the prescribed procedures for communication of notices. The Court highlighted the need for a pragmatic approach and adherence to principles of natural justice in such matters.

Details:

- The provisions under Section 282(1) and Rule 127(1) outline the addresses to which a notice or communication may be delivered or transmitted, including electronic communication.

- The Court stressed that communication of a notice must be in accordance with the specified provisions, and it cannot be presumed by merely placing the notice on an e-portal.

- Upholding the principles of natural justice, the Court concluded that the petitioner had not been given sufficient opportunity to respond to the proceedings under Section 12A(1)(ac)(iii) due to the lack of proper service of notice.

Decision:
The Writ Petition was allowed, and the order dated 16.01.2023 was quashed and set aside. The Department was directed to provide the petitioner with an opportunity to be heard, allowing them to file a reply within three weeks. The Department was instructed to pass a fresh order after considering the petitioner's submissions, ensuring compliance with the principles of natural justice.