Kerala HC Rejects Writ Petition Challenging Notice as Assessee Failed to Update Email with Dept.

The Kerala High Court has dismissed the writ petition contesting the assessment order and notice of demand based on the fact that they were issued in violation of the principles of natural justice.

The bench of Justice Murali Purushothaman has noticed that when the applicant/taxpayer is at fault, as they did not update or revise the email address with the Department, they cannot legally complain that there is a breach of the principles of natural justice.

The petitioner/assessee company is running a hospital by the name ‘Lakeshore Hospital’. The e-mail address of the Chief Financial Officer (CFO), the Principal Officer, was given to the Income Tax Department by the petitioner for official communication.

U/s 143(1) applicants assessment for the AY 2022-2023 was processed and chosen under the Computer-Assisted Scrutiny Selection category (CASS category) for complete scrutiny. Under section 143(2) of the Income Tax Act, a notice has been issued to the applicant.

A reply has been submitted by the applicant. The applicant was issued a notice u/s 142(1) including a questionnaire to which the applicant furnished a response furnishing essential information.

The petitioner furnished that, before filing a reply, the CFO of the company had resigned with effect from November 15, 2023. The department had issued two notices u/s 142(1) of the Act to the email address of the CFO, which was not accessible to the company and hence can not be responded to.

Under Section 144 of the Act show cause notice was issued to the applicant via the respondent, which was followed by an SCN asking to add 10% of the amount availed in the returns as ‘other expenses’. Such notices were also sent to the e-mail address of the former CFO, which was not accessible to the company, and hence, the applicant was unaware and could not answer. The chance to file submissions online was closed.

It was argued by the applicant that since the applicant had not obtained any notice according to the reply, they were of the view that the case was no longer proceeding. Implementing the same the department has achieved the assessment u/s 143(3). It was just on receipt of the assessment order that the applicant realized that the before notices had been obtained at the e-mail address of the former CFO, who is now defunct.

The department argued that the e-mail ID given by the taxpayer in the e-filing portal is cfo@lakeshorehospital.org, which is the organizational e-mail ID of the applicant, and all correspondences were made to it, along with the final SCN (show cause notice). The applicant’s reply after the resignation of the company’s CFO was indeed filed via the email ID. The petitioner cannot argue that there is a breach of the principles of natural justice as it is acknowledged that the error was being committed by the taxpayer.

As per the court because of an error on their end in not updating or revising the email address with the department, the SCN was not been noticed and can not be responded to within time.

Hence when the applicant has committed a fault, they cannot statutorily complain that there is a breach of the principles of natural justice, as they did not update or modify the e-mail address with the Department.

The writ petition has been dismissed by the court and mentioned that when the applicant furnishes a plea u/s 246A of the act prior to the legal appellate authority within 15 days from the date of receipt of a copy of this judgment, the appeal would be entertained by the authority and appropriate orders will get passed on merits.