Reply Missed due to Income Tax Notices Served to Mail ID of Old Employee: Karnataka HC Gives Taxpayer Second Chance Conditionally [Read Order]

The Karnataka High Court has granted a taxpayer a fresh opportunity to contest reassessment proceedings after finding that income tax notices and show cause communications were sent only to the email ID of a former employee.

A writ petition was filed by a partnership firm, Sai Srushti Infrastructure, challenging reassessment orders passed for Assessment Years 2018- 19 and 2019- 20 under Sections 147, 144 and 144B of the Income Tax Act by the National Faceless Assessment Centre.

The petitioner contended that it could not respond to the show cause notices because all communications were issued to an email account belonging to an employee who had already left the organization. Therefore the firm had no knowledge of the proceedings and resulted in failure of reply to notices.

However, the Revenue asserted that notices were issued to the email ID furnished by the assessee itself and any issue from internal employee management could not invalidate the assessment.

The high court said that the impugned were passed on a best judgment basis without considering any reply from the assessee. It said that there was no discussion of objections on merits. Thus, according to the bench, the taxpayer requires an opportunity to show his side.

The bench of S. Sunil Dutt Yadav set aside the reassessment orders and all proceedings for both assessment years. It remitted the matter back to the stage of reply to the show cause notices on the condition of payment of Rs. 20,000 costs.

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