2026 (4) TMI 196 - HC - Income Tax

Limitation for income-tax assessment turns on signature date, and late-signed assessment documents were treated as time-barred and invalid.

A time-bound assessment under section 153(1) of the Income-tax Act is made only when the competent authority signs the operative document, because ... Assessment order and notice of demand as barred by limitation - digitally signed after the expiry of the period prescribed u/s 153(1) - Limitation for making assessment order - Requirement of digital or manual signature for validity of assessment order HELD THAT: - The Court held that, for AY 2023-24, the period prescribed u/s 153 expired on 31st March 2025. Relying on the principle that an order becomes effective only when it is signed and ceases to remain in draft form, the Court held that the mere dating of the assessment order on 21st March 2025 did not amount to making the order within time. Since the assessment order was digitally signed only on 25th December 2025, and the computation sheet and notice of demand were also signed after expiry of the limitation period, they could not be regarded as having been made within time. The Court further treated signature as an essential requirement for legal validity and concluded that the impugned assessment order, computation sheet and notice of demand were all time-barred and liable to be quashed. [Paras 7, 8, 9, 10, 11] The assessment order, computation sheet and notice of demand, having been signed after expiry of the limitation period, were held invalid and were quashed. Final Conclusion: The writ petition was allowed. The Court quashed the impugned assessment order and notice of demand for Assessment Year 2023-24 on the ground that they were signed beyond the statutory period of limitation and therefore could not be treated as validly made. Issues: Whether the assessment order and notice of demand for Assessment Year 2023-24 were barred by limitation because they were digitally signed after the expiry of the period prescribed under section 153(1) of the Income-tax Act, 1961, and whether an order can be said to be made only when it is signed by the competent authority.Analysis: The assessment year in question attracted the twelve-month limitation under the fourth proviso to section 153(1), making 31 March 2025 the outer limit for completion of the assessment. The assessment order, computation sheet, and notice of demand were all dated 21 March 2025 but were digitally signed only on 25 December 2025, 24 December 2025, and 12 December 2025 respectively. The governing principle applied was that an assessment or other operative order is made only when it is signed and thereby ceases to remain within the authority's locus poenitentiae. The Court also relied on the statutory requirement that notices or documents issued under the Act must be signed, and treated the absence of timely signature as fatal to validity where the act is time-bound. On that basis, documents signed after the limitation period could not be regarded as having been made within time.Conclusion: The assessment order, computation sheet, and notice of demand were held to be time-barred and invalid, and were quashed.Ratio Decidendi: For a time-limited assessment under section 153(1) of the Income-tax Act, 1961, the order is made only upon signature by the competent authority, and any assessment-related document signed after expiry of the prescribed limitation is invalid.