2025 (9) TMI 1019 - AT - Income Tax

Unsigned s.148 reassessment notices invalid; assessments based on them quashed; AO failed verification and s.133(6) notice lapse

ITAT, Kolkata held that reassessment notices issued under s.148 without any digital or manual signature are invalid, and proceedings and assessment orders ... Validity of Reassessment notices - notices issued without any signature digitally or manually of the authority issuing the said notice - HELD THAT:- Admittedly, notice u/s 148 of the Act was without any signature digitally or manually of the authority issuing the said notice therefore, the proceedings initiated on the basis of said notice is invalid and cannot be sustained and so is the assessment order passed. The case of the assessee are squarely covered in the case of Manoj Jain [2024 (7) TMI 1691 - ITAT KOLKATA] wherein held that re-opening of assessment on the basis of a notice issued u/s 148 of the Act which is unsigned is invalid. Notice issued u/s 148 of the Act as well as the assessment framed is invalid and is hereby quashed. Unexplained investments - As we note that the AO has framed the assessment without doing any verification on the evidences by the assessee. Similarly, the AO relied on the fact that the assessee has filed only evidences which would not prove the genuineness of the transaction without doing any enquiry into the matter of without pointing out any defect in the evidemces. The AO did not issue u/s 133(6) were not issued to the purchaser on investments. Moreover the investments were coming from the earlier assessment years. Therefore, when the purchase of investment were accepted by the department in the earlier years, the same cannot be doubted in the year of sale. Appeal of the assessee is allowed. ISSUES PRESENTED AND CONSIDERED 1. Whether a notice issued under Section 148 of the Income Tax Act that does not bear the signature (digital or manual) of the authority issuing it is valid and vests jurisdiction in the Assessing Officer to reopen assessment. 2. Whether omission of signature on a Section 148 notice can be cured as a 'mistake or omission' under Section 292B of the Act, or otherwise waived by the assessee. 3. Whether the Assessing Officer's addition of an amount as 'unexplained credit' (on account of a Rs. 10,00,000 receipt) was sustainable where the assessee produced ledger accounts, bank statements, ITR, balance sheet of the counterparty and no independent verification or enquiry (e.g., under Section 133(6)) was made by the AO. ISSUE-WISE DETAILED ANALYSIS Issue 1 - Validity of unsigned Section 148 notice and jurisdictional consequence Legal framework: A valid notice under Section 148 is a condition precedent to the Assessing Officer's assumption of jurisdiction to reopen assessments. Procedural requirements and service formalities are integral to jurisdictional exercise under the Act and allied rules (e.g., by virtue of Section 282 and applicable provisions of the Code of Civil Procedure). Precedent treatment: The Tribunal followed and applied the reasoning of High Court decisions (including B.K. Gooyee and subsequent Calcutta and Madhya Pradesh High Court authorities) holding that absence of the signature on a notice renders it invalid and equivalent to no notice; the Tribunal also relied on a coordinate-Bench decision reaching the same conclusion. Interpretation and reasoning: The Court reasoned that a notice without signature lacks an essential integral requirement and therefore cannot constitute a valid notice that confers jurisdiction. The Tribunal examined contrary authorities relied upon by Revenue (where notices bore signatures or where defects were collateral, e.g., address errors) and distinguished them on facts: those cases did not involve completely unsigned notices. Ratio vs. Obiter: Ratio - A Section 148 notice unsigned (digitally or manually) is invalid and does not confer jurisdiction on the Assessing Officer to proceed with reassessment. Obiter - Observations distinguishing cases where only authenticity or partial defects were in issue (e.g., curved line signature, partial address) as not applicable to unsigned-notice scenario. Conclusion: The unsigned Section 148 notice is invalid; reassessment proceedings and assessment framed thereunder are without jurisdiction and liable to be quashed. Issue 2 - Applicability of Section 292B (curative provision) and waiver Legal framework: Section 292B (as introduced) allows rectification of mistakes/omissions which are inconsequential technicalities so as not to defeat justice; waiver principles apply where an assessee accepts authenticity and does not raise objection. Precedent treatment: The Tribunal relied on High Court rulings (Aparna Agency, Umashankar Mishra, B.K. Gooyee) which hold that signing of certain notices is not an inconsequential technicality but a jurisdictional requirement; accordingly Section 292B cannot cure absence of signature where signature is an essential precondition to assumption of jurisdiction. Interpretation and reasoning: The Tribunal concluded that signing is a vital requirement (a 'soul' of the notice) and its absence cannot be treated as mere clerical mistake curable under Section 292B. Further, waiver cannot validate a notice where the condition precedent for jurisdiction was not fulfilled; absence of signature is not a defect susceptible to estoppel by silence where jurisdictional fact is missing. Ratio vs. Obiter: Ratio - Absence of signature on a notice under Section 148 is not a curable mistake under Section 292B and cannot be cured by subsequent acts or alleged waiver. Obiter - Distinction of authorities where signature existed or only authenticity/address defects arose. Conclusion: Section 292B does not cure an unsigned Section 148 notice; waiver or later conduct does not validate an unsigned notice that is jurisdictionally defective. Issue 3 - Adequacy of AO's verification before treating receipt as unexplained credit and the propriety of addition Legal framework: Additions as unexplained credit require proper enquiry and satisfaction by AO; evidence produced by assessee (books, bank statements, records of counterparty, past acceptance of investments in earlier years) must be meaningfully considered and, where necessary, independent verification may be required (e.g., issuance of summons under Section 133(6) to third parties). Precedent treatment: The Tribunal noted that Assessing Officer did not conduct any independent verification or issue enquiries to the purchaser/investor, and relied on the mere assertion that genuineness was not proved without pointing to any defect in the evidence supplied by assessee; this approach was treated as legally unsustainable in light of principles requiring application of mind and verification. Interpretation and reasoning: The Tribunal observed that the assessee furnished ledger account, bank statement, ITR and balance sheet of the counterparty and that purchases/investments originated in earlier assessment years where they had been accepted by the Department; in absence of any pointed defects in evidence or further enquiries by AO, addition as unexplained credit could not be sustained. The Tribunal also noted AO's failure to issue Section 133(6) notices to the purchaser and absence of any inquiry into the alleged defects in documents. Ratio vs. Obiter: Ratio - Where assessee furnishes documentary evidence and there is no probing inquiry by AO nor pointed deficiencies in the evidence, treating a receipt as unexplained credit and making an addition is not sustainable. Obiter - Comment that investments accepted in earlier years carry persuasive value and cannot be lightly doubted in year of sale absent fresh material. Conclusion: The AO's addition as unexplained credit was unsustainable on the record; the Tribunal set aside the addition and directed deletion, remitting no further enquiry given the invalidity of the reopening notice and deficiencies in AO's fact-finding. Overall Disposition The Tribunal held the reassessment notice under Section 148 to be invalid for lack of signature, quashed the reassessment and the assessment framed thereunder for want of jurisdiction, and on merits directed deletion of the addition made as unexplained credit because AO failed to undertake necessary verification or point to defects in the documentary evidence furnished by the assessee.