The Bengaluru bench of the Income Tax Appellate Tribunal (ITAT) has held that merely uploading a Section 148 notice on the income tax e-filing portal does not establish that the notice was validly issued to the taxpayer. The Tribunal quashed a reassessment order after the tax department failed to produce evidence that the notice was served or that a real-time communication was sent to the taxpayer.
What is Section 148?
Section 148 of the Income Tax Act in India allows the tax authorities to re-evaluate a taxpayer’s income if they believe some income was not properly assessed for a specific year. Such notice is received if the income tax department suspects that there is some income that escaped assessment in previous assessment years.
What is the case?
The case related to Assessment Year 2015-16. The taxpayer had not filed an income tax return for the year. The Assessing Officer initiated reassessment proceedings after information showed cash deposits of Rs 1.14 crore in the taxpayer’s bank account.
A Section 148 notice was generated on March 31, 2021. The tax department maintained that the notice had been served through the email address registered on the e-filing portal. However, the taxpayer challenged the validity of the reassessment, arguing that the notice had only been uploaded to the e-filing account and the email copy relied upon by the Department, he argued, did not even identify a recipient’s email address.
ITAT: Upload and issuance are different
The Tribunal examined the electronic records submitted by the Revenue and found that the department could establish that the notice had been generated and uploaded to the taxpayer’s e-filing account.
However, it could not produce evidence showing that the notice had actually been served or that a real-time alert had been triggered for the taxpayer.
The Tribunal relied on an earlier Delhi High Court ruling which held that drawing up and digitally signing a notice is different from issuing it. There must be an overt act to ensure that the notice is dispatched to the taxpayer.
The distinction is important in reassessment cases where notices are issued close to the statutory limitation period.
What taxpayers should check
Uploading a notice on the e-filing portal can be a valid mode of electronic service. However, according to an tax expert, the department must also establish effective electronic communication.
“Uploading a notice on the e-filing portal is a valid mode of service. For effective service, taxpayers must be communicated through a recognised electronic address or receive a real-time alert when the notice is uploaded to the portal,” he said.
For electronic communication, the notice may be sent to an email address available in the relevant income tax return, the last return filed, the registered email address on the e-filing portal, the email provided during PAN application, or another email address made available to the tax authorities.
He said taxpayers should also examine the electronic trail associated with the notice.
“For electronic notices, the date and time when the email was triggered by the Income Tax system and left the Income Tax servers is considered the date of issuance,” he said.
If a notice is only uploaded on the portal and no real-time alert is received, the date and time when the taxpayer first viewed the notice on the portal, as recorded in the ITBA system, may become relevant in determining issuance, he added.
Reassessment proceedings quashed
In this case, the ITAT concluded that the Revenue had failed to establish the required communication of the Section 148 notice. It therefore held that the reassessment order was without jurisdiction and quashed it. The Tribunal did not examine the other grounds relating to the Rs 1.14 crore cash deposit addition because they became academic after the reassessment itself was held invalid.
He said issuance of a valid notice is a prerequisite for initiating reassessment proceedings. If it is established that the notice was not served, the reassessment proceedings can be rendered invalid for want of jurisdiction.
However, taxpayers should also note that Section 523 of the Income-Tax Act, 2025 provides that where an assessee has appeared in proceedings or cooperated in an inquiry relating to assessment or reassessment, the required notice may be deemed to have been duly served in time and in accordance with the law.
The ruling, therefore, does not mean that every notice uploaded to the e-filing portal is invalid. The key issue is whether the tax department can establish the required communication and issuance of the notice through the available electronic records.
