Income Tax: HC Quashes Assessment as Notice Sent to Son’s Email Without Mother’s Consent

The petitioner filed her income tax return for AY 2006-07 on 26.6.2006, declaring taxable income of Rs 1,13,020. Along with this, she declared agricultural income at Rs 86,800. Here, the income from business and profession was negative, with a loss of Rs 1,22,707, and the Long Term Capital Gain (LTCG) was Rs 2,35,727.

However, the Income Tax Department completed the assessment under Section 143(3) and determined her taxable income at Rs 30,01,806, higher than what she declared.

When she received the assessment order u/s 143(3), she filed an appeal with the CIT(A). But it dismissed her appeal. After being dissatisfied with the order passed by CIT(A). The petitioner filed an appeal with the Income Tax Appellate Tribunal (ITAT), Rajkot, where ITAT partly allowed her appeal and sent the case to the Assessing Officer for a fresh decision. However, the AO issued a draft assessment order under the faceless scheme without a proper hearing.

The petitioner appealed to the Gujarat High Court since the order was passed without a proper hearing. The high court quashed the order for violating natural justice and directed the issuance of a fresh assessment order with a proper hearing.

New assessment order on 11.10.2022 was passed, but the notices were sent only to the son’s email in the USA, and no SMS or speed post was sent. The petitioner came to know about the same after her husband visited the office of the tax officer.

Petitioner’s Argument

The learned advocate of the petitioner submitted that:

• All notices and draft orders were sent to the email ID [email protected], which belongs to the petitioner’s son living in the USA.
• The petitioner and her son had no cordial relationship and were not in contact, so she never received any of the emails.
• The petitioner did not receive any SMS or physical notice even after her mobile number was linked with her Aadhaar and PAN. This violated Standard Operating Procedure (SOP).
• The Faceless Assessment Centre failed to comply with the SOP, which requires sending a speed post and SMS.
• The assessment order dated 11.10.2022 was passed without giving any opportunity of hearing to the petitioner.

Gujarat High Court Decision

The Gujarat High Court quashed and set aside the assessment order dated 11.10.2022. The matter was sent back to the Faceless Assessment Authority for fresh adjudication.

The court also directed that the income tax department must follow the rules of the Standard Operating Procedure (SOP) and must give a chance for a hearing to the petitioner.