2025 (3) TMI 1436 - HC - Income Tax

Validity of order passed u/s 143(3) - allegation of violation of the principles of natural justice due to a lack of opportunity for the petitioner to be heard - as argued petitioner has no source of income other than salary earned from 2005 onwards and the tax payable by her for each assessment year would be deducted at source by the respective employer and after such deduction no further income tax was payable by her therefore there was no necessity for the petitioner to pay to file return of income hence the petitioner was not aware as to when the notice regarding re-assessment proceedings was caused by the respondent-Department. HELD THAT - As notices have been issued to the petitioner through all modes of service viz. Online Portal E-mail and RPAD. Insofar as notice sent through online portal is concerned since the petitioner is not a regular income tax payer she cannot be expected to view the Portal then and there. Notice sent via. E-mail is concerned since the same was stated to have bounced back the same could not be known to the petitioner. Finally the notice that was sent through RPAD is concerned the same was returned with an endorsement No such Addressee as the petitioner is no longer resident of India there is no possibility for her to respond to such notice. In the said scenario it is sheer clear that the petitioner is totally unaware of the proceedings being initiated by the respondent-Income Tax Department. That apart the sale with regard to which reassessment proceeding were initiated was made in the year 2015-16 whereas impugned proceedings were initiated in the year 2023- 24 therefore the petitioner being a non-tax payer cannot be expected to view the Portal after a lapse of 8 eight years. Thus the ignorance pleaded by the petitioner appears to be genuine. Thus this Court in the interest of justice is inclined to set aside the impugned orders as the order has been passed in violation of principles of natural justice however the same is subject to the payment of Rs.7, 500/- to the Cancer Institute Adyar Chennai.

Summary

ISSUES PRESENTED and CONSIDERED

The core legal questions considered in this judgment are:

• Whether the impugned order passed by the second respondent under Section 143(3) read with Section 114 of the Act, dated 11.03.2024, for the assessment year 2015-16, violated the principles of natural justice due to a lack of opportunity for the petitioner to be heard.
• Whether the petitioner was adequately notified of the reassessment proceedings, given the alleged failure in communication through various channels.
• What remedies are available to the petitioner if the principles of natural justice were violated?

ISSUE-WISE DETAILED ANALYSIS

1. Violation of Principles of Natural Justice

Relevant Legal Framework and Precedents:

The principles of natural justice require that individuals be given a fair opportunity to present their case before any adverse decision is made against them. This includes the right to be heard and the right to receive notice of proceedings.

Court's Interpretation and Reasoning:

The Court noted that the petitioner claimed not to have received any notice of the reassessment proceedings. The petitioner argued that the order was passed ex parte, without a fair hearing, thus violating the principles of natural justice. The Court found merit in the petitioner's claim, especially considering the failure of communication through various channels.

Key Evidence and Findings:

The petitioner was not residing in India and was unaware of the notices allegedly sent via RPAD, which were returned with an endorsement of 'No such Addressee'. Notices sent via email bounced back, and the petitioner, being a non-regular taxpayer, was not expected to check the online portal frequently.

Application of Law to Facts:

The Court applied the principles of natural justice to the facts, finding that the petitioner was not given a reasonable opportunity to be heard due to the failure of notice delivery, which was crucial for the reassessment proceedings.

Treatment of Competing Arguments:

The respondents argued that notices were duly sent via multiple channels, including the online portal, email, and RPAD. However, the Court found that the petitioner had a valid reason for not receiving these notices, given her residence outside India and the failure of communication methods.

Conclusions:

The Court concluded that the order was indeed passed in violation of the principles of natural justice and was liable to be set aside.

2. Adequacy of Notification

Relevant Legal Framework and Precedents:

Legal provisions require that adequate notice be given to parties involved in reassessment proceedings, ensuring they have the opportunity to respond.

Court's Interpretation and Reasoning:

The Court found that the methods used to notify the petitioner were inadequate, given her circumstances. The failure of email delivery and the return of RPAD notices indicated that the petitioner was not properly informed.

Key Evidence and Findings:

The evidence showed that the petitioner was residing in the USA, and the notices sent via RPAD were returned with 'No such Addressee'. The bounced emails further supported the petitioner's claim of not receiving adequate notice.

Application of Law to Facts:

The Court determined that the notification methods were insufficient, considering the petitioner's non-residence in India and the failure of communication channels.

Treatment of Competing Arguments:

The respondents maintained that all possible notification methods were used. However, the Court sided with the petitioner, emphasizing the importance of effective communication in ensuring a fair hearing.

Conclusions:

The Court concluded that the petitioner was not adequately notified, which contributed to the violation of natural justice principles.

SIGNIFICANT HOLDINGS

Preserve Verbatim Quotes of Crucial Legal Reasoning:

"Thus, this Court, in the interest of justice, is inclined to set aside the impugned orders as the order has been passed in violation of principles of natural justice."

Core Principles Established:

• The necessity of providing a fair opportunity to be heard in reassessment proceedings.
• The importance of effective communication and notification in upholding the principles of natural justice.

Final Determinations on Each Issue:

• The impugned order dated 11.03.2024, was set aside due to the violation of natural justice principles.
• The petitioner was required to pay Rs.7,500/- to the Cancer Institute Adyar, Chennai, as a condition for setting aside the order.
• The petitioner was directed to file a reply within three weeks, and the respondent was instructed to provide a 14-day notice for a personal hearing before passing a new order.