*******Failure to Send Income Tax Notices to Updated Email Address Denies Fair Hearing: Karnataka HC Quashes Assessment Order [Read Order]

Clipped from: https://www.taxscan.in/top-stories/failure-to-send-income-tax-notices-to-updated-email-address-denies-fair-hearing-karnataka-hc-quashes-assessment-order-1427492

The Court found that the department should have used the updated contact for all further communication

The High Court of Karnataka, quashed an income tax assessment order, holding that the department’s failure to send notices to the petitioner’s updated email address denied a fair hearing.

Suresh Kumar Paruchuri, petitioner-assessee, was a registered taxpayer with Permanent Account Number (PAN) No. ACSPP1326Q and had regularly filed his income tax returns. During the relevant assessment year, he earned income from rent and capital gains.

He had purchased land on 13.10.2010 from M/s. Shree Manjunatha Constructions, constructed a commercial-cum-residential apartment complex, and later sold it to individual buyers.

He filed his ITR-03 on 07.11.2022, declaring total income of ₹58,35,000, including long-term capital gains of ₹2,80,510. His case was selected for scrutiny under CASS. He claimed that assessment-related notices were mistakenly sent to the email address of his former auditor, who had been replaced.

The assessee counsel stated that the petitioner did not update the new auditor’s email ID in the department records by mistake. Because of this, all notices were sent to the old email address, and the petitioner was unaware of the assessment proceedings and could not respond.

Understanding Common Mode of Tax Evasion with Practical Scenarios, Click Here

An ex-parte assessment order was passed on 13.02.2024, disallowing some claims for not providing necessary details. The petitioner came to know about the order only through a phone call from one of the officers.

He filed an appeal on 29.03.2024 by submitting Form No.35 and paid 20% of the disputed tax. In the appeal, he gave his correct email ID. But the department continued to send notices to the old email address and did not give him a chance to be heard.

The counsel argued that this was a violation of natural justice and sought to quash the order.

The department, however, argued that the notices were sent to the email provided earlier and the petitioner should have updated the records. They claimed the order was valid and the petition should be dismissed.