2025 (5) TMI 1800 - HC - Income Tax

Order passed in violation of principles of natural justice - notices including the show cause notice were sent at an incorrect email address - whether the service of notice at the email address as provided by an assessee to the Ministry of Corporate Affairs MCA and ROC is compliant with the provisions of the Act and the Income Tax Rules 1962? HELD THAT - As in terms of Rule 127 (2) (b) (iii) of the Rules a communication can be transmitted electronically to the email address of the company as available on the website of the MCA. In the present case the notices were sent to the petitioner at the email address as available at the website of the MCA and therefore the contention that the notices had been sent to an incorrect email address is unmerited. In the present case there is no cavil that the notice informing the petitioner that its return had been picked up for scrutiny was duly communicated to the petitioner on 01.06.2023 at its email ID kalkajee2016 @gmail.com which the petitioner acknowledges is a correct email ID. Therefore the petitioner was fully aware that its return for AY 2022-23 had been selected for scrutiny. Admittedly the petitioner had also received a notice dated 31.07.2023 issued under Section 142 (1) of the Act which was sent at its email ID- [email protected] and which the petitioner claims is an incorrect email address. We find it difficult to accept the petitioner s objection in regard to the notices being sent at its email address considering that there is no dispute that the petitioner had received the said notice. This is also evident from the fact that the petitioner had responded to the said notice. It is the petitioner s case that the notice had been sent at the email address which is not the registered email address of the petitioner. Nonetheless the petitioner had responded by submitting a partial reply to the said notice on 14.08.2023. Although the petitioner had committed that it would furnish the remaining information by 07.09.2023 the petitioner had not done so. In the given facts the provisions of Section 292BB of the Act are clearly applicable as the petitioner had participated in the inquiry relating to the assessment and therefore it was precluded from raising any objection that the notice was not served or was served in an improper manner. In these facts we are unable to accept that the impugned order has been passed in violation of principles of natural justice on the ground that the petitioner s has not been afforded the sufficient opportunity to represent its case. There is also no dispute that the notices have been duly put up on the ITBA Portal and the petitioner was aware of the assessment proceedings.

Summary

The core legal questions considered in this judgment include:

• Whether the impugned assessment order and penalty proceedings under the Income Tax Act, 1961 were passed in violation of the principles of natural justice due to alleged non-receipt of notices sent to an incorrect email address;
• The validity and compliance of service of notices via electronic communication under the provisions of the Income Tax Act and Rules, particularly the use of email addresses registered with the Ministry of Corporate Affairs (MCA) and as furnished in income tax returns;
• The applicability of Section 292BB of the Income Tax Act, which deems notices to be validly served when the assessee has appeared or cooperated in proceedings, despite objections regarding improper service;
• The interpretation and hierarchy of email addresses for communication under Rule 127 of the Income Tax Rules, 1962, especially in cases involving companies with multiple email addresses recorded with different authorities.

Issue-wise detailed analysis:

1. Validity of service of notices via electronic communication and alleged incorrect email address

The petitioner contended that notices, including those under Section 142(1) and show cause notices, were sent to an incorrect email address and thus were not received, resulting in a violation of natural justice. The petitioner relied on precedents where assessment orders were set aside due to notices being sent to incorrect email addresses, including a decision of a Coordinate Bench of this Court and a Bombay High Court judgment emphasizing the primacy of the email address furnished in the income tax return over others.

The Revenue countered that the notices were sent to the email address registered with the MCA and ROC, which was not disputed by the petitioner's counsel. The Court examined the relevant statutory provisions governing service of notices electronically under the Income Tax Act and Rules.

Section 282 of the Income Tax Act authorizes service of notices by electronic means, including email, and empowers the Central Board of Direct Taxes (CBDT) to prescribe rules regarding addresses to which communications may be sent. Rule 127 of the Income Tax Rules, 1962, specifically provides a hierarchy for email addresses for electronic communication:

• (i) Email address available in the income-tax return furnished by the addressee;
• (ii) Email address available in the last income-tax return;
• (iii) For companies, email address as available on the MCA website;
• (iv) Any email address made available by the addressee to the income-tax authority or authorized persons.

The Court noted that sending notices to the email address available on the MCA website is expressly permitted under Rule 127(2)(b)(iii). Since the impugned notices were sent to the petitioner's email address as per MCA records, the petitioner's contention that notices were sent to an incorrect email address was unmerited.

2. Applicability of Section 292BB of the Income Tax Act regarding deemed valid service of notice

Section 292BB provides that if an assessee has appeared or cooperated in any proceeding or inquiry relating to assessment or reassessment, any notice required to be served is deemed to have been duly served in time and in accordance with the Act. It precludes the assessee from objecting to non-service, delayed service, or improper service of notices, unless such objection is raised before completion of the assessment or reassessment.

In the present case, it was undisputed that the petitioner received the initial notice dated 01.06.2023 informing that the return was selected for faceless assessment. The petitioner also received and responded to the notice dated 31.07.2023 issued under Section 142(1), albeit claiming it was sent to an incorrect email address. The petitioner's partial reply to this notice indicated cooperation in the proceedings.

Given the petitioner's participation in the inquiry, Section 292BB applied, barring the petitioner from objecting to the service of notices on grounds of improper or non-service at a later stage. The Court found no merit in the petitioner's argument that the impugned order was passed in violation of natural justice due to lack of proper notice.

3. Treatment of competing arguments regarding email address hierarchy and notice service

The petitioner's reliance on precedents emphasizing the primary email address furnished in the income tax return was considered. However, the Court noted that Rule 127 explicitly allows communication to be sent to the MCA-registered email address for companies, which is a valid and recognized address for service.

The petitioner did not dispute that the MCA records contained the email address to which notices were sent, nor did it deny receipt of the notices. The petitioner's claim that it may have become aware of notices via the ITBA portal was unsubstantiated by any averments.

Thus, the Court gave primacy to the statutory framework and the petitioner's actual participation in the proceedings over the petitioner's technical objection about the email address used.

4. Principles of natural justice and opportunity to represent

The petitioner argued that the impugned order violated natural justice due to non-receipt of notices. The Court found that since notices were duly sent to the MCA-registered email address and were also available on the ITBA portal, and the petitioner had responded to at least one notice, the petitioner was afforded sufficient opportunity to represent its case.

There was no dispute that the petitioner was aware of the assessment proceedings and had ample opportunity to submit explanations and documents but failed to provide complete information as promised.

5. Directions regarding appellate remedies

Although the petition was dismissed, the Court directed that if the petitioner avails statutory appellate remedies within two weeks, the appellate authority shall consider the appeal uninfluenced by any question of delay. This reflects a procedural safeguard to ensure substantive justice despite procedural disputes.

Significant holdings include:

"It is expressly clear that in terms of Rule 127 (2) (b) (iii) of the Rules, a communication can be transmitted electronically to the email address of the company as available on the website of the MCA. In the present case, the notices were sent to the petitioner at the email address as available at the website of the MCA and therefore, the contention that the notices had been sent to an incorrect email address, is unmerited."

"In the given facts, the provisions of Section 292BB of the Act are clearly applicable as the petitioner had participated in the inquiry relating to the assessment and therefore, it was precluded from raising any objection that the notice was not served or was served in an improper manner."

"We are unable to accept that the impugned order has been passed in violation of principles of natural justice on the ground that the petitioner has not been afforded sufficient opportunity to represent its case."

Core principles established:

• Service of notices electronically under the Income Tax Act is valid if sent to the email address registered with MCA for companies, as per Rule 127 of the Income Tax Rules;
• Section 292BB precludes objections to service of notice if the assessee has cooperated in proceedings, even if the service is alleged to be improper;
• Receipt of notices and participation in assessment proceedings constitute compliance with natural justice requirements;
• Technical objections regarding email addresses used for communication cannot override statutory provisions and actual participation in proceedings;
• Appellate authorities should consider appeals on merit notwithstanding procedural delays if statutory remedies are invoked promptly.

Final determinations:

• The impugned assessment order and penalty proceedings were validly passed and not in violation of natural justice;
• The notices sent to the MCA-registered email address constituted valid service under the Act and Rules;
• The petitioner's objection regarding incorrect email address was rejected as unmerited;
• The petition was dismissed with a direction to consider any appellate remedies without being influenced by delay.