2025 (7) TMI 1431 - AT - Income Tax

Non service of notice to the assessee in accordance with the prescribed mode of transmission between the Income tax authority and the assessee as per provision of Section 144B clause (6)(ii)(a) HELD THAT - Notice in the case of the assessee as evident from the Income Tax portal does not spell out viz. (i) who has sent the said notice? (ii) to whom notice has been sent? (ii) subject of the notice therefore it can be construed that such notice u/s. 142(1) of the Act has not been issued at all leaving apart serving of the same to the assessee. That in absence of any evidence contrary to the contention placed on record by assessee and taking guidance of the aforesaid judicial pronouncements hold that for such non issuance of notice u/s. 142(1) of the Act and non serving of such notice to the assessee as per valid mode of transmission makes the assessment order arbitrary bad in law and void ab initio and accordingly the same is liable to be quashed. Since the assessment is quashed thereafter all the other proceedings becomes non-est in the eyes of law. Appeal of the assessee is allowed.

Summary

ISSUES:

Whether service of notice under Section 142(1) of the Income Tax Act, 1961, by uploading on the E-filing portal without real-time alert or email constitutes valid service.Whether non-service or invalid service of notice under Section 142(1) vitiates the assessment order and renders it void ab initio.Whether the principles laid down in the judgment regarding electronic service of notices under Section 282 and Section 144B(6)(ii)(a) of the Income Tax Act apply to the present case.Whether an order passed under Section 263 of the Income Tax Act based on a notice not validly served is sustainable.

RULINGS / HOLDINGS:

Service of notice under Section 142(1) by merely uploading it on the E-filing portal without issuing a "real time alert" as mandated under Section 144B(6)(ii)(a) is not valid service of notice.Non-compliance with the prescribed mode of service under the Act makes the notice akin to "no due despatch of Notices," rendering the assessment order "arbitrary, bad in law and void ab initio."The principles laid down by the Hon'ble Delhi High Court in the case concerning category 'D' notices, which require a real-time alert accompanying electronic service, are applicable and binding in the instant case.An order passed under Section 263 based on a notice that was not validly served as per statutory requirements is unsustainable and liable to be quashed.

RATIONALE:

The Court applied statutory provisions under the Income Tax Act, 1961, particularly Section 142(1), Section 144B(6)(ii)(a), and Section 282, along with Rule 127 of the Income Tax Rules and CBDT Notification No. 4/2017.The Court relied heavily on the precedent set by the Hon'ble Delhi High Court, which clarified that electronic service of notices must be accompanied by a real-time alert to constitute valid service, and mere uploading on the E-filing portal without such alert is insufficient.The Court noted that the prescribed mode of service under Section 282 and Rule 127 mandates communication through email, which is not optional, and that the Department failed to provide evidence of valid service via email or real-time alert.The Court observed that failure to follow the statutory mode of service deprives the assessee of the opportunity of being heard, thereby invalidating the assessment and revisionary proceedings.There was no dissent or doctrinal shift; the Court followed established judicial principles emphasizing strict compliance with procedural requirements for service of notices.