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Facts
The assessee, engaged in air ticket booking, did not file a regular return of income for AY 2017-18. The AO issued a notice under section 148 and passed a best judgment assessment, adding cash deposits and unexplained expenditure. The NFAC confirmed the AO's action.
Held
The Tribunal held that the service of notice through the ITBA Portal was not a valid method of service as per section 282(1) of the Income Tax Act, 1961, and Rule 127(1) of the Income-tax Rules, 1962. This violated the principles of natural justice.
Key Issues
Whether the service of notice through the ITBA Portal is a valid method of service and whether principles of natural justice were followed.
Sections Cited
148, 147, 144, 144B, 69C, 282(1), 127(1)
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Income Tax Appellate Tribunal, COCHIN BENCH
Before: SHRI INTURI RAMA RAO, AM & SHRI RAHUL CHAUDHARY, JM
O R D E R Per: Inturi Rama Rao, AM This appeal filed by the assessee is directed against the order of the National Faceless Appeal Centre, Delhi dated 13.05.2025 for Assessment Year (AY) 2017-18.
Brief facts of the case are that the appellant is engaged in business of air ticket booking. No regular return of income ups 139(1) of the Income Tax Act, 1961 (the Act) was filed by the appellant for AY 2017-18. Based on the information that the appellant made cash deposit, in bank account aggregating to Rs. Aboobacker Siddieque 1,15,72,700/- the National Faceless Assessment Centre, Delhi (hereinafter called "the AO") issued a notice u/s. 148 of the Act on 24.03.2021. The appellant neither complied with the notice issued u/s. 148 nor u/s. 142(1) of the Act. In the circumstances, the AO had passed best judgement assessment vide order dated 28.03.2022 passed u/s. 147 r.w.s. 144, r.w.s. 144B of the Ac at a total income of Rs. 1,17,22,700/-. While doing so, the AO made addition of cash deposit of Rs. 1,15,72,700/- in bank as unexplained money of the appellant. The AO also made addition of Rs. 1,50,000/- as unexplained expenditure u/s. 69C of the Act.
Being aggrieved, an appeal was filed before the NFAC, who vide the impugned order confirmed the action of the AO for non prosecution.
Being aggrieved, the appellant is in appeal before this Tribunal in the present appeal.
We have heard the rival contentions and perused the material on record. At the outset, we find that the NFAC had issued notices of hearing through ITBA Portal. In our considered opinion, it is not a valid method and manner of service of notice as specified under the provisions of section 282(1) of the Income-tax Act, 1961 Act and Rule 127(1) of the Income-tax Rules, 1962. Therefore, it is crystal clear that the notices were not served upon the appellant. To fortify our view, we would like to make reference to a decision Aboobacker Siddieque rendered by the Hon’ble Punjab & Haryana High Court in the case of Munjal BCU Centre of Innovation and Entrepreneurship Vs. CIT (Exemptions) (2024) 463 ITR 560 (P&H), wherein the Hon’ble High Court after making reference to provisions of 282(1) held that service of notice through ITBA portal is not valid service and remanded the matter to AO for de novo disposal of case. The relevant paragraphs of the judgment are reproduced below :
“7. We are afraid that we cannot subscribe to the submissions as advanced by the learned counsel for the Revenue-respondent. The provisions of section 282(1) of the Act of 1961 and rule 127(1) of the Income-tax Rules, 1962 provides for a method and manner of service of notice and orders which read as follows : . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
In view of the above, it is essential that before any action is taken, communication of the notice must be done in terms of the provisions as enumerated hereinabove. The provisions do not mention communication to be “presumed” by placing notice on the e-portal. A pragmatic view has to be adopted always in these circumstances. An individual or a company is not expected to keep the e-portal of the Department open all the time so as to have knowledge of what the Department is supposed to be doing with regard to the submissions of forms etc. The principles of natural justice are inherent in the income-tax provisions and the same are required to be necessarily followed.
Having noticed as above, this court is of the firm view that the petitioner has not been given sufficient opportunity to put up its please with regard to the proceedings under section 12A(1)(ac)(iii) of the Act of 1961 and as it was not served with Aboobacker Siddieque any notice. Therefore, he would be entitled to file his reply and the Department would of course be entitled to examine the same and pass a fresh order thereafter.
In view of the above, the writ petition is allowed and the order dated January 16, 2023 (annexure P-5) is quashed and set-aside. The Department would provide an opportunity of hearing to the petitioner and they will also allow the petitioner to appear personally for the purpose and pass a speaking order independent of the order passed earlier by them on January 16,2023. The same shall be done expeditiously provided the petitioner file his reply within a period of three weeks.” In view of the above legal position, we are of the considered opinion that proper notice(s) of hearing were not served properly to the appellant. Therefore, we are of the considered opinion that in the interest of justice, the matter should be remitted back to the file of ld. CIT(A) for denovo adjudication after affording reasonable opportunity to the appellant, in accordance with law. The appellant is at liberty to file any evidence in support of her claim as he deems expedient.
In the result, the appeal filed by the assessee stands partly allowed for statistical purposes.
Order pronounced in the open court on 19th August, 2025.