2025 (2) TMI 980 - AT - Income Tax

Digital signature date determines notice validity; reassessment quashed for non-compliance with section 151 requirements under new provisions

The ITAT Delhi upheld NFAC's decision quashing a reassessment notice issued under section 148. The court held that a digitally signed notice dated ... Reopening of assessment u/s 147 - Notice after the expiry of 4 (four) years - requirements under section 151(ii)(a) - notice was issued under the old provisions of the Act - scope of new provision/scheme introduced by the Finance Act 2021 - HELD THAT:- AO has completed the reassessment proceedings under old provisions of the Act. Since Section 149 of the Act 1961 requires notice to be issued by Income Tax Authority, therefore, in terms of sub Section (1) of Section 282A it has to be signed by that authority and to be issued in paper form or communicated in electronic form by that authority in accordance with procedure prescribed. Thus, considering the provisions of Section 282 and 282A of the Act, 1961 and the provisions of Section 13 of the Act, 2000 and meaning of the word 'issue' NFAC concluded that firstly notice shall be signed by the assessing authority and then it has to be issued either in paper form or be communicated in electronic form by delivering or transmitting the copy thereof to the person therein named by modes provided in section 282 which includes transmitting in the form of electronic record. Section 13(1) of the Act, 2000 provides that unless otherwise agreed, the dispatch of an electronic record occurs when it enters into computer resources outside the control of the originator. Thus, the point of time when a digitally signed notice in the form of electronic record is entered in computer resources outside the control of the originator i.e. the assessing authority that shall be the date and time of issuance of notice under section 148 read with Section 149 of the Act, 1961. In this case, it was observed from the copy of Notice u/s 148 filed by the assessee, that the Notice bears the date 31/03/2021 and the Digital Signature of AO shows the date 'Thursday April 1, 2021 2.27 PM' On the foot note of the said notice, following has been written: 'If digitally signed, the date of digital signature may be taken as date of document'. In view of the above discussion, NFAC concluded that the impugned notice u/s 148 of the Act shall be treated to have been issued on 01.04.2021 as the same has been digitally signed by the AO on 01-04-2021 and in no case, issue of notice can take place before signing of the same either electronically or otherwise. Thus, in this case, the reassessment notice was held to be issued on 01.04.2021 and accordingly, new provisions of making reassessment, Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 (hereinafter referred to as 'TOLA'), ratio of Supreme Court Judgement and consequent CBDT Instruction No. 1/2022 dated 11.05.2022 are made applicable by the NFAC. DR has failed to establish that the order of NFAC is in any way beyond the principles laid down by the Hon’ble Supreme Court in the aforesaid referred in Rajeev Bansal [2024 (10) TMI 264 - SUPREME COURT (LB)] and Ashish Aggarwal [2022 (5) TMI 240 - SUPREME COURT] The question to be examined is not just about the competence of sanction giving authority u/s 151 of the Act, but the larger issue has been examined by the NFAC and rightly decided against the AO. The appeal in this case was brought by the Revenue against the order of the Commissioner of Income Tax (Appeals)/National Faceless Assessment Centre (NFAC) pertaining to the assessment year 2015-16. The core legal questions considered were whether the reassessment notice issued under section 148 of the Income Tax Act, 1961 was valid and whether the requirements under section 151(ii)(a) of the Act were fulfilled.The Appellate Tribunal noted that the appellant, a Private Limited Company engaged in the coal business, had filed its return of income electronically but with a delay. The Assessing Officer (AO) had issued a notice under section 147 of the Act based on information regarding alleged accommodation/bogus entries. The appellant filed the return in response to the notice after the allowed time, leading the AO to treat the return as invalid. Subsequently, the AO added the alleged unexplained money to the total income of the appellant.The appellant argued that the notice under section 148 was digitally signed after the purported date of issue, rendering it non-existent and time-barred. The NFAC analyzed the issue and concluded that the notice was issued under the old provisions of the Act, as the AO had not followed the procedures under the new scheme introduced by the Finance Act 2021. The NFAC determined that the notice was effectively issued on the date of digital signature, making the new provisions applicable.In citing a Supreme Court judgment, the NFAC clarified the treatment of notices issued under the unamended Section 148 of the IT Act, deeming them to be under the substituted Section 148-A. The NFAC's decision aligned with the legal principles established by the Supreme Court.The NFAC rejected the Revenue's appeal, finding that the order was consistent with the Supreme Court's directives and correctly decided against the AO. The appeal was dismissed, and the order was pronounced on 21.02.2025.In conclusion, the NFAC's analysis focused on the validity of the reassessment notice under the amended provisions of the Act, ultimately upholding the decision in favor of the appellant and dismissing the Revenue's appeal based on the principles established by the Supreme Court.