NIYATI SUTARIA JEMES ,MUMBAI vs. INCOME TAX DEPARTMENT , MUMBAI

We have considered the submissions of both sides and perused the material available on record. The brief facts of the case are that the assessee is an individual and, for the year under consideration, did not file her return of income. Subsequently, on the basis of the information that the assessee purchased any immovable property for INR 1,31,34,333 and earned interest income of INR 11,054, a notice under section 148 of the Act was issued to the assessee. However, in response to the notice issued under section 148 of the Act, the assessee did not file her return of income. Further, the assessee also did not respond to various statutory notices issued under section 142(1) of the Act. Therefore, the Assessing Officer (“AO”) proceeded to complete the assessment on a best judgment basis on the basis of the material available on record. Vide order dated 01/01/2024 passed under section 147 read with section 144 read with section 144B of the Act, the AO assessed the total income of the assessee at INR 1,31,45,387.

Since the assessee did not comply with the notice issued under section 142(1) of the Act, the AO initiated penalty proceedings under section 271(1)(b) of the Act and issued a notice under section 274 read with section 271(1)(b) of the Act. In response, the assessee submitted that the assessee filed her first return of income for the assessment year 2010-11, declaring a total income of INR 1,03,650, wherein the email address of her then- consultant was given as parish.mehta@gmail.com. The assessee further submitted that thereafter, for subsequent years, since the total income was below the maximum amount not chargeable to income tax, she had not filed her return as she was not liable to file her return of income. The assessee submitted that the registered email address on the electronic filing account was updated to the email address of her husband, i.e., mjames@in.loreal.com. Thus, the assessee submitted that all the notices under section 148A(b), section 148, section 142(1), communications regarding non-compliance of notice under section 142(1), notice under section 271(1)(b), show cause notice under section 144, show cause notice regarding proposed variation and orders under section 148A(d) and assessment order have all been sent to the old email address of parish.mehta@gmail.com. Thus, the assessee submitted that she has not received any of the above-mentioned notices, communications and orders on her registered email address on the e-filing portal.

The AO, vide order dated 12/04/2024 passed under section 271(1)(b) of the Act, disagreed with the submissions of the assessee and held that the assessee should have intimated the Department about the change in her residential address. Accordingly, the AO held that since the notices/letters/communication have been served on the email address registered in the Income Tax Portal by the assessee herself, it should not be construed that the assessee has not received the notices. Accordingly, the AO held that the same cannot be construed as “reasonable cause” as per the provisions of section 273B of the Act for the purpose of imposing a penalty under section 271(1)(b) of the Act. Since the assessee failed to furnish the details as called for vide notice dated 08/09/2023 under section 142(1) of the Act, till the completion of the assessment proceedings under section 147 read with section 144 read with section 144B of the Act on 01/01/2024, the AO held that the assessee is liable for penalty under section 271(1)(b) of the Act. Accordingly, the AO levied a penalty of INR 10,000 under section 271(1)(b) of the Act.

The learned CIT(A), vide impugned order, dismissed the appeal filed by the assessee and upheld the penalty levied under section 271(1)(b) of the Act. The learned CIT(A) held that the assessee ought to have changed her email address and her mobile no. in the Income Tax Portal and should have intimated the Department about the change in her residential address. The learned CIT(A) held that the assessee was given several opportunities by the AO, which were not availed by the assessee, and the assessee has not filed any plausible explanation for non-compliance of the notices neither at the time of assessment proceedings, penalty proceedings, nor during the appellate proceedings. Being aggrieved, the assessee is in appeal before us.

During the hearing, the learned Authorised Representative (“learned AR”) placed on record the email sent to the email address parish.mehta@gmail.com, which the assessee claims to be the email address of her then-consultant and was provided in her return of income for the assessment year 2010-11. The learned AR submitted that vide the aforesaid email, a notice dated 08/09/2023 issued under section 142(1) of the Act was sent during the assessment proceedings. The learned AR also placed on record the Income Tax Return of the assessee for the assessment year 2023-24, filed on 26/07/2023, wherein the assessee provided her email address, i.e., shibanis2000@yahoo.com. The learned AR also placed on record the screenshot from the activity log, last updated on 25/08/2021, whereby the assessee provided the email address of her husband, i.e., mjames@in.loreal.com, and her own email address, i.e., shibanis2000@yahoo.com, as the primary email address. Accordingly, the learned AR submitted that once the assessee has updated the email address in the Income Tax Portal and said email address was also mentioned in the assessee’s last filed return of income, the statutory notices under section 142(1) of the Act should have been sent to these email addresses instead of the email address of the assessee’s then-consultant, which was provided in her return of income for the assessment year 2010-11.

As per the provisions of Explanation (t) to section 144B of the Act, the “registered email address” for the purpose of electronic communication between the National Faceless Assessment Centre and the assessee are as follows: –

From the plain reading of the provisions of Explanation (t) to section 144B of the Act, it is evident that all the sub-clauses of this provision are alternatives to each other, and each of them indicates an independent mechanism for the determination of the “registered email address”. The very first email address, which is treated as the “registered email address”, is the email address available in the electronic filing account of the assessee registered in the designated portal, which we find in the present case was the email address of the assessee and her husband. The next email address, which is treated as a “registered email address”, is the one made available in the last Income Tax Return furnished by the assessee. As noted above, the last Income Tax Return furnished by the assessee was for the assessment year 2023-24 on 26/07/2023, wherein the assessee provided her own email address. Therefore, in the present case, no material has been brought on record by the Revenue to ignore the email addresses considered as “registered email address” as per the provisions of clauses (i) and (ii) of Explanation (t) to section 144B of the Act and to send the notice under section 142(1) of the Act at the email address which can be considered to fall within the last clause, i.e., clause (vi) of Explanation (t) to section 144B of the Act.

Since in the present case the statutory notice dated 08/02/2023 issued under section 142(1) of the Act was not sent on the email addresses, which are also recognised as “registered email address” for the purpose of electronic communication between the National Faceless Assessment Centre and the assessee and falls within the first two categories of “registered email address” as per the provisions of Explanation (t) to section 144B of the Act, we find merits in the submission of the assessee in not responding to the notice dated 08/02/2023 issued under section 142(1) of the Act. We are further of the view that the explanation of the assessee falls within the scope of “reasonable cause” within the meaning of the provisions of section 273B of the Act for failure to respond to the notice issued under section 142(1) of the Act. Therefore, we direct the deletion of the penalty levied under section 271(1)(b) of the Act. As a result, the grounds raised by the assessee in its appeal are allowed.

In the result, the appeal by the assessee is allowed. Order pronounced in the open Court on 03/04/2025