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Facts
The appellant, an individual engaged in cattle trading, did not file a regular income tax return for AY 2016-17. The AO, based on a cash deposit of Rs. 1,06,14,500/-, initiated reassessment proceedings under section 148 and subsequently made a best judgment assessment under section 144, taxing Rs. 3,01,92,100/- as unexplained money under section 115BBE.
Held
The Tribunal held that the notice of hearing was not validly served on the appellant as it was sent only through the ITBA portal, which is not a prescribed method under the Income Tax Act. Citing a Punjab & Haryana High Court decision, the Tribunal found that the principles of natural justice were violated.
Key Issues
Whether the service of notice through the ITBA portal is a valid mode of service under the Income Tax Act, 1961, and whether the ex-parte assessment order passed by the CIT(A) violates the principles of natural justice.
Sections Cited
139(1), 148, 142(1), 144, 115BBE, 282(1), 127(1), 12A(1)(ac)(iii)
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Income Tax Appellate Tribunal, COCHIN BENCH
Before: SHRI INTURI RAMA RAO, AM & SHRI SONJOY SARMA, JM
O R D E R Per: Inturi Rama Rao, AM These appeals filed by the assessee are directed against different orders of the National Faceless Appeal Centre, Delhi [CIT(A)] dated 13.03.2025 for Assessment Years (AY) 2016-17 & 2017-18.
Since identical issues and facts are involved in these appeals, they are heard together and disposed of by this common order.
For the sake of convenience and clarity the facts relevant to the appeal bearing for AY2016-17 are stated herein.
& 358/Coch/2025 Padinjarethil Shamsudheen 4. Brief facts of the case are that the appellant is an individual engaged in the business of trading in cattle. No regular return of income for AY 2016-17 was filed by the appellant under the provisions of section 139(1) of the Income Tax Act, 1961 (the Act). The National Faceless Assessment Centre (hereinafter called "the AO"), based on the information that the appellant made cash deposit of Rs. 1,06,14,500/- during the previous year relevant to AY 2016- 17, formed an opinion that income escaped assessment to tax. Accordingly, issued a notice u/s. 148 of the Act on 30.03.2021. 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 proceeded with making best judgement assessment u/s. 144 of the Act by assessing to tax the entire cash deposit of Rs. 3,01,92,100/- as unexplained money of the appellant and taxed u/s. 115BBE of the Act.
Being aggrieved, an appeal was filed before the CIT(A) contending that the AO ought not have made the best judgement assessment without giving reasonable opportunity of being heard to the appellant. Further, it is submitted that service of notice through ITBA portal is not a valid service. However, after giving 4 opportunities the CIT(A) dismissed the appeal for non prosecutoin.
Being aggrieved, the appellant is in appeal before this Tribunal in the present appeal.
& 358/Coch/2025 Padinjarethil Shamsudheen 7. At the outset we find that the CIT(A) has passed exparte order. We find from the impugned order that notices of hearing were issued by the National Faceless Appeal Centre trough 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 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 denovo 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 & 358/Coch/2025 Padinjarethil Shamsudheen 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 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.
10. 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.” 8. In view of the above legal position, we of the considered opinion that proper notice(s) of hearing were not served properly on 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 CIT(A) for denovo adjudication after affording reasonable opportunity to the appellant, in accordance with law. The appellant
In the result, the appeals filed by the assessee stand partly allowed for statistical purposes.