The Delhi Bench of Income Tax Appellate Tribunal (ITAT) has held that the date of signing of the reassessment notice through digital signature should be considered as the date of issue of the notice and not the date that has been mentioned as the date of issue on the notice.
The bench of Anubhav Sharma (Judicial Member) and Manish Agarwal (Accountant Member) has observed that 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 Income Tax Act, 1961.
The assessee filed its return of Income electronically showing total income of Rs. 13,18,15,770/- on 30/09/2015. Initially, the case was selected for scrutiny assessment and an order was passed u/s 143(3) of the Income Tax Act on 26/12/2017.
Subsequently, as per information flagged by the Directorate of Income Tax(Systems) as per risk profiling, it came to the knowledge of AO that the appellant was beneficiary of alleged accommodation/bogus entries of Rs. 3.00 Crores taken from entities controlled by one Mr. Himanshu Verma in whose case a search and search operation was conducted u/s 132(4) of the Act.
The AO accordingly, issued notice under section 147 of the Income Act dated 31/03/2021 requiring the appellant to file a return in response thereto within 30 days.
The appellant filed the return in response to notice u/s 148 on 17/02/2022 after expiry of time allowed and the AO thus treated the return filed by the appellant as invalid on the ground that the same has not been filed within time allowed.
While holding the return to be invalid, the AO noted that appellant dragged the compliance on its part till the last moment. The re-assessment proceedings were getting time barred on 31.03.2022.
The AO noted that since the return was filed with much delay beyond time allowed, the system was not accepting the return and the AO was not able to verify the filing of return on system/portal since the same was filed recently.
The appellant did not transmit copy of ITR-V to the AO, it simply asked for reasons of re-opening vide its letter dated 19.02.2022 which was provided by the AO to the appellant.
The AO then proceeded to complete the assessment u/s 144 of the Act and added the sum of Rs. 3.00 Crores to the total income of the appellant u/s 69A of the Act holding the same to be unexplained money representing alleged accommodation/bogus entries taken by the appellant from entity(s) controlled by Mr. Himanshu Verma.
The assessee contended that the notice issued u/s 148 dated 31.03.2021 has been digitally signed only on 01.04.2021, hence notice dated 31.03.2021 remained unsigned on the date of issue and thus non-exist and hence has been issued after the expiry of 6 years from the end of the relevant assessment year. Hence the assessment order passed on the basis of this time barred notice is bad in law and must be quashed.
NFAC has observed that the notice u/s 148 bears the date as 31/03/21 whereas, the notice is digitally signed by the AO on 01/04/2021. Notice u/s 148 was non-existent on the date of issue on 31/03/2021 as the same was digitally signed by the AO on 01-04-2021 and reassessment order passed on the basis of such notice is liable to be quashed. NFAC took note of the fact that the whole scheme of re- assessment has been changed w.e.f. 01.04.2021 by The Finance Act 2021.
NFAC examined the issue if the reopening notice in this case will be treated as having been issued on 31.03.2021 or on 01.04.2021. and observed that in case, the reopening Notice is found to have been issued on 31/03/2021, the old provisions of Section 147, Section 148, Section 149 and section 151 shall apply otherwise the new reassessment laws will apply.
It was conclude that in this case, the AO has issued notice u/s 148 which is dated 31-03-2021 and the AO has not followed the procedure prescribed under new scheme of reassessment and thus the AO has issued the notice u/s 148 under the provisions of section 147, section 148, section 149 and section 151 as they stood before their substitution by Finance Act 2021 w.e.f. 01-04- 2021.
The tribunal failed to establish that the order of NFAC is in any way beyond the principles laid down by the Supreme Court in the aforesaid referred two cases. 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.
Case Details
Case Title: DCIT Versus SBC Minerals Pvt. Ltd.
Case No.: ITA No. 3411/Del/2024
Date: 21.02.2025
Counsel For Appellant: Shari Sahil Kumar Bansal
Counsel For Respondent: Navneet Singh
