FOUR STAR NATURALS PRIVATE LIMITED, vs. INCOME TAX OFFICER,

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. 23738 OF 2021 PETITIONER: M/S.FOUR STAR NATURALS PRIVATE LIMITED, NO. 2, CHOICE GARDENS, CHEROOR, THRISSUR -680 008, 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 INCOME TAX OFFICER, WARD 1(1), THRISSUR, PIN 680 001. 2 THE ASSISTANT COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE, THRISSUR, PIN 680 001. P.K.RAVINDRANATHA MENON (SR.),SC JOSE JOSEPH, SC THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 29.03.2022, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:

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2 JUDGMENT The petitioner-Company, which is engaged in the business of production of spice extracts/essence/oil etc; is an assessee under the Income Tax Act, 1961 (hereinafter referred to as 'Act', for short). A survey u/s. 133A of the Act was conducted by the Income Tax 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 24.03.2020 issued by the 1st respondent, the Income Tax Officer, Ward I(1), Thrissur, was not received by the petitioner. The previous auditors of the petitioner received Ext. P4 notice u/s 142 (1) dated 21.09.2021 of the 2nd respondent, the Assistant Commissioner of Income Tax, Central Circle, and forwarded the same to the petitioner. On receipt of Exts. P3 and P4 notices, the petitioner met and apprised the 2nd respondent that the notices were served on the previous auditors and not at the e-mail id mentioned in the Income Tax web portal. However, the 2nd respondent issued Ext. P6 assessment order

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3 dated 30.09.2021 confirming the proposal and served the same physically. 2.The petitioner contends that notices under sections 148, 142 (1) and 143 (3) r/w 147 were served on wrong e-mail id/e- mail id of the previous auditors of the petitioner and not in the e- mail id of the petitioner available in the Income Tax Portal. The petitioner has produced Ext.P1 Jurisdiction Details and Ext.P2 Personal Details in the Income Tax Portal and Ext. P2 shows primary and secondary e-mail ids of the petitioner where communications are to be addressed. 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 was intimated to the Department and issued notices in wrong e-mail id which is in violation of principles of natural justice and seeks to quash Ext. P6. 3. An interlocutory application viz., I.A. No. 1 of 2021 has

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4 been filed on behalf of the respondents producing instructions received on behalf of the 2nd respondent wherein it is stated that notices have been served in the address available in the portal and that they are system generated and the petitioner has neither informed the assessing authority during the assessment proceedings nor updated the profile regarding change in e-mail address. The petitioner has filed a reply affidavit to the statement filed by the respondents stating that the notices were not served on the primary e-mail id available in the portal. It is also contended that there is no service of notice as contemplated under Rule 127 of the Income Tax Rules, 1962 ('Rules', for short). 4. A statement dated 06.12.2021 was also filed on behalf of the 2nd respondent producing the copy of the notices under Sections 142 (1) and 143 (2). A reply affidavit is filed by the petitioner to the said statement stating that those notices are served manually and that the address in the portal is contemplated for service of notice electronically and not manually.

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5 5. Heard Sri. Anil D. Nair, the learned counsel for the petitioner and Sri. Jose Joseph, the learned standing counsel for the respondents. 6. 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) thereof provides that such communication shall be delivered or transmitted at the: “(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

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6 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 Tax Portal, the primary e-mail id of the petitioner is not the one to which Exts. P3, P4, and P7 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. 7. Per contra, Sri. Jose Joseph would contend that the petitioner had not intimated the assessing officer with regard to 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

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7 the address available as per the PAN database. 8.According to the petitioner, Ext. P2 is the copy of the personal details of the petitioner available in the Income Tax Portal. It contains primary and secondary e-mail ids. However, the communications are 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.P6 assessment order is bad being passed in violation of the principles of natural justice. 9. Updated jurisdictional details as well personal details in the Income Tax 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

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8 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 Tax 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 same. Thus, there is violation of principles of natural justice while issuing Ext.P6 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 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.”

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9 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.P6 assessment order, to meet the ends of justice, I set aside Ext.P6 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

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10 APPENDIX OF WP(C) 23738/2021 PETITIONER’S EXHIBITS: Exhibit P1 TRUE COPY OF JURISDICTION 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 24.03.2020 ISSUED BY THE 1ST RESPONDENT. Exhibit P4 TRUE COPY OF THE NOTICE U/S. 142 DATED 21.09.2021 ISSUED BY THE OFFICE OF THE 2ND RESPONDENT. Exhibit P5 TRUE

COPY

THE

ACKNOWLEDGMENT DEMONSTRATING THAT NOTICE DATED 21.09.2021 WAS SERVED AT THE WRONG ADDRESS. Exhibit P6 TRUE COPY OF THE ORDER DATED 30.09.2021 ISSUED BY THE 2ND RESPONDENT. Exhibit P7 TRUE COPY OF NOTICE DATED 28.09.2021 ISSUED BY THE 2ND RESPONDENT. Exhibit P8 TRUE

COPY

THE

ACKNOWLEDGMENT DEMONSTRATING THAT NOTICE DATED 28.09.2021 WAS SERVED AT THE WRONG ADDRESS. RESPONDENTS’ EXHIBITS: R2(A) INSTRUCTION RECEIVED FROM THE OFFICE OF THE ASSISTANT COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE, THRISSUR WITH REFERENCE TO THE WRIT PETITION. R2(B) COPY OF THE NOTICE U/S 142(1) DATED 22.01.2021. R2(C) COPY OF THE NOTICE U/S 143(2) DATED 22.01.2021. R2(D) COPY OF THE ORDER SHEET DULY SIGNED BY THE AUTHORIZED

REPRESENTATIVE SHRI.C.A.VARGHESE, C.A ATTENDED FOR HEARING ON 8.2.2021 AND AGAIN ON 19.02.2021. spc/