Taxpayer Who Left Former Accountant’s Email As Contact Gets Chance To Answer Tax Notice As Karnataka HC Quashes Ex-Parte Assessment

The petitioner challenged an ex parte assessment order for AY 2024–25 under Sections 144 read with 144B of the Income Tax Act, 1961, along with related show-cause notices and penalty orders under Sections 272A(1)(d) and 270A

He submitted that he had discontinued his subcontracting business after the contractor failed to make payments, and that notices continued to be sent to the email address of a former Chartered Accountant whose engagement had ended years earlier.

He said he had not updated his contact details, was unaware of the portal notices, and had not received a communication said to have been sent by speed post on 21 November 2025.

He learned of the assessment while accessing the portal regarding a Section 148A notice for another assessment year and then updated his email address.

The respondents were heard through standing counsel.

The petition invoked the High Court’s jurisdiction under Articles 226 and 227 of the Constitution, and the challenged assessment and penalty proceedings arose under Sections 144 read with 144B, 272A(1)(d), and 270A of the Income Tax Act, 1961.

The Court stated no specific precedent or detailed statutory test; it applied the principle that, where bona fides in a taxpayer’s failure to participate are discernible, an ex parte assessment may be set aside to provide an opportunity to respond and enable complete adjudication.

The Court accepted the petitioner’s explanation that his former accountant’s email remained the primary contact and that he had not been aware of the notices, noting his account of discovering the proceedings while accessing the portal for another assessment year and then updating his contact details.

It discerned bona fides in his non-participation and considered that allowing a response would permit complete adjudication without protracting the matter.

On that basis, it set aside the assessment and connected penalty proceedings and directed that the petitioner be enabled to respond to the specified show-cause notice.

The Court quashed the assessment order dated 28 February 2026, the related show-cause notices, and the penalty orders dated 27 August and 3 September 2026.

It directed the respondents to enable the petitioner, upon receipt of a certified copy of the order, to file a response to the show-cause notice dated 24 January 2026.