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.

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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.

The Court observed that the petitioner had updated his email ID while filing Form No.35. However, the department continued to send notices to the old email address linked to the former auditor. Because of this, the petitioner was not aware of the proceedings and did not get a fair chance to respond.

Justice Pradeep Singh Yerur held that once the updated email was provided, the department should have used it for all future communication. Ignoring this resulted in a denial of fair hearing, which violated the principles of natural justice. Therefore, the assessment order could not be sustained.

The Court allowed the petition. It quashed the appellate order dated 17.03.2025 and directed the appellate authority to reconsider the appeal. The authority was instructed to update the correct email address and provide the petitioner an opportunity of hearing before passing a fresh order.

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