Invalid service of Income Tax Notice via ITBA portal: ITAT remands business expense disallowance matter [Read Order]

The Cochin Bench of Income Tax Appellate Tribunal (ITAT) has ruled that service of notice through the Income Tax Business Application (ITBA) portal did not constitute valid service and remanded the matter to the Commissioner of Income Tax (Appeals) [CIT(A)].

M/s. Sree Narayana Sales and Services, (assessee) a partnership firm filed its income tax return for Assessment Year (AY) 2013-14, declaring a total income of Rs. 4,84,650. The Assessing Officer (AO), during scrutiny assessment, made certain additions under Sections 40(a)(ia) and 40A(3) of the Income Tax Act. The AO assessed the total income to Rs. 9,79,700.

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Aggrieved by the order of AO, the assessee filed an appeal before the Commissioner of Income Tax (Appeals) [CIT(A)]. However, the CIT(A) upheld the order of the AO citing on account of non-prosecution by the assessee. Aggrieved by the order of the CIT(A), the assessee approached ITAT.

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The single-member bench comprising Shri Inturi Rama Rao (Accountant Member observed from the order of the CIT(A) that the notices were served through the ITBA portal.

The tribunal relied on the judgment of the Punjab & Haryana High Court in the case of the Munjal BCU Centre of Innovation and Entrepreneurship vs. CIT (Exemptions) in which the court held that the service of notice through the ITBA portal was not a valid service.

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The Tribunal observed that electronic service of notice through the ITBA portal alone was not a valid mode of service under the provisions of the Act. The Tribunal held that service of notice must comply with Section 282(1) of the Income Tax Act, 1961, and Rule 127(1) of the Income Tax Rules, 1962.

Therefore, the tribunal set aside the CIT(A)'s order and remanded the matter back for fresh adjudication. The Tribunal further directed the CIT(A) to proper service of notice on the assessee and providing a reasonable opportunity for hearing.

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Thereby the appeal of the assessee was partly allowed for statistical purposes.

To Read the full text of the Order CLICK HERE

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