Assessment Order Valid: Assessee’s Partial Participation and Knowledge of Proceedings Attract Section 292BB, Precluding Service Objections

Assessment Order Valid: Assessee’s Partial Participation and Knowledge of Proceedings Attract Section 292BB, Precluding Service Objections

Issue:

Whether an assessment order passed under Section 143(3) of the Income-tax Act, 1961, is valid, despite the assessee claiming that the Section 142(1) notice was sent to an incorrect email ID, when the assessee had partially replied to the notice, expressed intent to submit further information, and the notices were also uploaded on the portal, thereby activating Section 292BB.

Facts:

For the assessment year 2022-23, the assessee-company was issued a notice under Section 142(1) of the Income-tax Act, 1961 (requiring production of accounts or information). This notice was sent to an email ID. The assessee claimed that this email address was incorrect and that its correct email ID was different.

However, despite claiming the incorrect email ID, the assessee had submitted a partial reply to the notice and certain explanations. Critically, the assessee also stated that further remaining documents and explanations would be submitted by a later date. Subsequently, the assessee failed to provide any further information as sought by the Section 142(1) notice. Following this, the Assessing Officer (AO) passed an assessment order under Section 143(3).

The assessee then contended that the impugned order had been passed without proper issuance of notices to the assessee and, thus, was liable to be set aside. It was noted by the court that the notices were sent to the email address as available at the website of the Ministry of Corporate Affairs (MCA). Furthermore, the notices had been duly put up on the portal, and the assessee was aware of the assessment proceedings (evidenced by their partial reply and promise of further submission).

Decision:

Yes, the court held that the provisions of Section 292BB would be applicable as the assessee had participated in the inquiry relating to the assessment. Therefore, the assessee was precluded from raising any objection that the notice was not served or was served in an improper manner. The decision was in favor of the revenue.

Key Takeaways:

• Section 292BB (Deemed Valid Notice): This section is a crucial provision designed to curb technical objections to notice service. It states that where an assessee has appeared in any proceeding or co-operated in any inquiry relating to an assessment or reassessment, it shall be deemed that any notice required to be served under the Act was duly served upon him in the proper manner. This presumption is rebuttable only if the assessee raises the objection at the earliest possible opportunity.
• Participation in Inquiry: The assessee’s actions of (a) submitting a partial reply to the notice, and (b) stating that further documents/explanations would be submitted, clearly constituted “participation in inquiry relating to assessment.” This active engagement, despite claiming a wrong email ID, signifies knowledge of the proceedings.
• Email ID on MCA Website: Sending notices to the email address registered on the Ministry of Corporate Affairs (MCA) website is generally considered proper service, as it is a publicly available official record for companies.
• Upload on Portal: The fact that notices were also duly uploaded on the departmental portal further strengthened the revenue’s case for valid service, particularly in the context of faceless assessment where portal communication is central.
• Waiver of Objection: By participating in the proceedings, even partially, the assessee is generally deemed to have waived their right to object to the mode or validity of notice service at a later stage, unless they can prove genuine prejudice despite participation.
• Due Process vs. Technicality: The court prioritized the substance of due process (assessee’s knowledge and partial participation) over a technical objection regarding the email ID, preventing the assessee from exploiting a minor discrepancy after having engaged with the process.
• Favor of Revenue: The outcome is in favor of the revenue, upholding the validity of the assessment order.