Digital Age, Human Justice: ITAT Ruling Emphasises Fair Tax Communication

Imagine spending years running a charitable trust, working hard to stay compliant, only to lose your 80G exemption because a tax notice ended up in your spam folder. That’s exactly what happened recently—until the Income Tax Appellate Tribunal (ITAT) in Chennai stepped in.

Says Tushar Kumar, advocate, Supreme Court of India: "It is an inescapable position in law that service of notice, however effected, must be real, intelligible, and capable of eliciting a response from the recipient. While the Income Tax Act, 1961, permits electronic communication of statutory notices, such service cannot, in jurisprudential fairness, be equated with actual receipt when the notice has been inadvertently diverted into a spam or junk folder by automated email filters."

The trust had applied to renew its Section 80G status, which allows donors to claim tax deductions. But a crucial request for additional documents, sent by the tax department via email, never reached them. It had been silently rerouted by their email provider's spam filter. The trust missed the notice, didn't respond in time, and saw its application rejected.

Fortunately, the tribunal recognised the reality of how digital systems actually work. It accepted the trust's explanation, noted the absence of any read receipts or delivery logs, and ordered a fresh review. In doing so, it acknowledged something every taxpayer knows deep down: sending an email doesn't always mean it's seen.

Digital Communication Can Leave Gaps 

For ordinary citizens and especially for small charitable organisations, this case raises serious concerns. Most don't have in-house legal teams or IT departments. Digital tools were meant to make the system smoother, not more fragile. When vital communication is reduced to an unread email, the process fails.

What The Income Tax Department Should Do

The Income Tax Department must revisit how it reaches people. Email alone is not enough. Important notices should be delivered through multiple channels—email, SMS, dashboard alerts, and maybe even app-based or WhatsApp notifications. There should also be a system where high-impact communications require confirmation of receipt. If a taxpayer hasn't acknowledged a key notice, a follow-up or grace period should be automatic, not optional.

"Regulators can no longer simply assume service in the digital age. They must actively design systems that genuinely ensure delivery, comprehension, and acknowledgement. Otherwise, the noble intentions behind the law risk being utterly thwarted by the mundane technicalities of modern communication," says Parth Contractor, Managing Partner, Chambers of Parth Contractor. 

Technology should help, not harm. The ITAT's decision is more than just a verdict—it's a reminder that justice must stay human, even in a digital world. Because when lives, livelihoods, or legacies are on the line, the system has to work better than a spam filter.

"Building a truly user-centric, multi-layered communication framework won't just reduce litigation; it will foster greater compliance, build more trust, and enhance inclusivity within the tax system—especially for organisations dedicated to serving society's most vulnerable," says Contractor.