Unsigned notice u/s 143(2) invalidates scrutiny assessment u/s 143(3); assessment order quashed entirely

The ITAT Visakhapatnam held that an assessment framed u/s 143(3) on the foundation of an unsigned notice u/s 143(2) is invalid. It ruled that a notice lacking the Assessing Officer's signature is not a valid statutory notice and thus cannot confer jurisdiction to complete scrutiny assessment. Since the jurisdictional precondition of a validly issued notice u/s 143(2) was not satisfied, all consequential assessment proceedings were vitiated. The assessment order was quashed and the assessee's appeal was allowed in full.

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1. ISSUES PRESENTED AND CONSIDERED

1.1 Whether delay of 149 days in filing the appeal before the Tribunal was liable to be condoned on showing sufficient cause.

1.2 Whether an additional legal ground challenging the validity of the assessment on the basis of an unsigned notice under section 143(2) could be admitted at the appellate stage.

1.3 Whether an unsigned notice issued under section 143(2), subsequently manually signed by another Assessing Officer and allegedly served on an unidentified person, constitutes a valid notice conferring jurisdiction to complete assessment under section 143(3).

1.4 Whether the defect of absence of signature on a statutory notice is curable under section 292B of the Act.

1.5 Consequentially, whether the assessment order passed under section 143(3) based on such notice is void and liable to be quashed, rendering other grounds of appeal academic.

2. ISSUE-WISE DETAILED ANALYSIS

2.1 Condonation of delay in filing the appeal (Issue 1.1)

Interpretation and reasoning

2.1.1 The assessee, a resident of USA, explained on affidavit that: (i) she has a minor son suffering from Autism Spectrum disorder requiring continuous supervision; (ii) her mother, from whom she drew "courage and mental strength", passed away on 14.05.2022, causing severe mental depression; (iii) she failed to notice the order of the Commissioner (Appeals) emailed to her and came to know of it only on receipt of a subsequent notice dated 23.12.2022 under section 271AAC; and (iv) her earlier counsel at Hyderabad expressed inability to file appeal before the Visakhapatnam Bench, requiring time to identify new counsel.

2.1.2 The Tribunal noted that, despite these circumstances, the appeal was filed on 25.01.2023, i.e., within 27 days from 29.12.2022 (date of knowledge), and found the delay of 149 days neither intentional nor deliberate but due to reasons beyond the assessee's control.

Conclusion

2.1.3 The Tribunal held that the assessee was prevented by reasonable and sufficient cause from filing the appeal within the prescribed limitation; the delay of 149 days was condoned and the appeal was admitted.

2.2 Admission of additional legal ground (Issue 1.2)

Interpretation and reasoning

2.2.1 The assessee sought to raise an additional ground that the assessment order under section 143(3) was liable to be quashed as it was based on an unsigned notice under section 143(2), later manually signed by another officer.

2.2.2 The Tribunal treated this as a pure question of law going to the root of the validity of assessment and examined it on the basis of material already on record, including the notice bearing DIN and the mode of issuance and service.

Conclusion

2.2.3 The additional ground challenging the jurisdiction and validity of the assessment on the basis of an unsigned notice under section 143(2) was admitted and taken up for adjudication.

2.3 Validity of unsigned notice under section 143(2) and its effect on the assessment (Issues 1.3 and 1.5)

Legal framework discussed

2.3.1 The Tribunal examined the requirement of a valid notice under section 143(2) as a condition precedent to assumption of jurisdiction to frame assessment under section 143(3).

2.3.2 Section 282 of the Act, regarding service of notice as if it were a summons under the Code of Civil Procedure, 1908, and Order 5 Rule 1(3) CPC, requiring that every summons be signed by the judge or authorised officer, were noted through the precedent relied upon.

2.3.3 Section 292B of the Act, dealing with curing of certain mistakes, defects or omissions in notices, was considered in light of judicial precedents.

Interpretation and reasoning

2.3.4 It was undisputed that: (i) notice under section 143(2) dated 17.08.2018 was generated by Income Tax Officer, Ward-1(3), Vijayawada, bearing DIN, but remained unsigned (neither physically nor digitally); (ii) after the assessee's PAN was migrated to Income Tax Officer, Ward-2, Ongole on 20.08.2018, the latter manually signed the very same notice and claimed to have served it on 20.09.2018; (iii) the Revenue produced an acknowledgement slip showing receipt by one "Santosh Reddy", whose identity or authority to receive on behalf of the assessee could not be established; and (iv) the assessment order under section 143(3) was passed subsequently by Income Tax Officer, Ward-International Taxation, Vijayawada.

2.3.5 The assessee contended that an unsigned notice is non est and cannot confer jurisdiction; subsequent manual signing by another officer, and alleged delayed service on an unidentified third person, did not cure the inherent invalidity. Reliance was placed on the decision holding that a notice under section 148 without any signature (digital or manual) is invalid and does not vest jurisdiction in the Assessing Officer.

2.3.6 The Tribunal also relied on a High Court decision (following an earlier Calcutta High Court ruling) holding that absence of signature on a notice is not a mere irregularity or clerical mistake; a notice without signature "lacks an essential and/or an integral and/or an inseparable vital part or requirement" and is equivalent to no notice, such defect not being curable under section 292B.

2.3.7 Applying these principles, the Tribunal held that the original notice under section 143(2) having been issued without signature was invalid at inception. The subsequent manual signing by a different Assessing Officer and alleged service after the date mentioned in the notice for hearing could not validate the notice or confer jurisdiction.

Conclusions

2.3.8 The Tribunal held that an unsigned notice under section 143(2) is invalid and non est in law and cannot be treated as a valid statutory notice conferring jurisdiction to complete assessment.

2.3.9 Any assessment proceedings initiated and completed pursuant to such invalid notice are without jurisdiction and not valid in the eyes of law.

2.3.10 The assessment order passed under section 143(3) on the basis of the impugned unsigned notice under section 143(2) was quashed; the additional ground was allowed.

2.3.11 In view of the quashing of the assessment on this jurisdictional ground, the Tribunal held that the other grounds relating to additions under section 69A, explanation of cash deposits, and allied issues would be a mere academic exercise and therefore did not require separate adjudication.

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