Income Tax Notices Sent via Email against Assessee's Request: ITAT Sets aside CIT(A)’s Ex Parte Order [Read Order]

The Ahmedabad “B” bench of Income Tax Appellate Tribunal ( ITAT ) in a recent case set aside an ex parte order passed against the appellant, noting that the notices were sent to the appellant through email, opposed to their request for physical notices.

The assessee/appellant in the case, Luv Procon Private Limited, filed an income return for the assessment year 2013-14 on May 21, 2014, declaring a "Nil" income.

Later on, the Assessing Officer (AO) received information that the assessee had allegedly received accommodation entries (fake transactions)  from entities controlled by an individual named Shri Jignesh Shah.

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The AO sent show cause notices regarding the matter to the assessee, to which there was no response. Thus, the AO took this as non-compliance from the assessee’s side, and completed the assessment under Section 147 read with Section 144 of the Income Tax Act 1961 (ITA). The AO determined the assessee's total income to be ₹66 lakhs.

Aggrieved by the AO’s order, the assessee filed an appeal before the first appellate authority, the Commissioner of Income Tax (Appeals) [CIT(A)].

However, this appeal was dismissed on the reason that the assessee did not respond to the CIT(A)'s notices sent electronically. Thus, the CIT(A) passed an ex parte order, without considering the merits of the case.

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Aggrieved, the assessee appealed before the ITAT.

Before the tribunal, the assessee raised several grievances regarding the handling of the case. The first contention of the assessee was that the CIT(A) erred in passing an ex parte order without providing a reasonable opportunity for a hearing.

The assessee argued that the notices issued were sent exclusively through email, despite their express request in Form No. 35 that communications should not be sent via email. Since the assessee was not tech-savvy and did not regularly check their email, they remained unaware of the notices, leading to non-compliance.

The second ground raised by the assessee was that the CIT(A) had erred in dismissing the appeal without considering the substance of the case.

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Hence, the assessee urged the tribunal to remand the matter to the CIT(A) with a direction to decide the appeal on its merits, ensuring that physical notices are also sent in the future.

The bench of Mr Senthil Kumar and Mr Narendra Prasad Sinha, after considering the submissions and examining the facts, observed that the assessee had indeed notified in Form No. 35 that they did not wish to receive notices via email.

Despite this, the CIT(A) only issued electronic notices and did not send any physical notices. Given this clear instruction from the assessee, the tribunal concluded that the CIT(A) was incorrect in dismissing the appeal without ensuring that physical notices were sent.

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Given these circumstances, the tribunal decided that the matter should be remanded to the CIT(A) for fresh adjudication. The tribunal thus set aside the order of the CIT(A) and directed a fresh hearing on the merits of the case, ensuring that the assessee received a fair opportunity to be heard.

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