Allowing a petition filed by a taxpayer, the Bombay High Court ruled that an order passed, based on unsigned notice, is bad in law while setting aside the notice and order issued by the income tax (I-T) department.
In an order passed earlier this month, the division bench of justice Dhiraj Singh Thakur and justice Valmiki Sa Menezes, says, "...in the present case, the notice under Section 148 (of the I-T Act) dated 2 April 2022 having no signature affixed on it, digitally or manually, the same is invalid and would not vest the assessing officer (AO) with any further jurisdiction to proceed to reassess the income of the petitioner."
"Consequently, the notice dated 2 April 2022 under Section 148 of the I-T Act issued to the petitioner being invalid and sought to be issued after three years from the end of the relevant assessment year (AY)15-16 with which we are concerned in this petition, any steps taken by the respondents in furtherance of notice dated 21 March 2022 issued under clause (b) of Section 148A of the Act and order dated 2 April 2022 issued under clause (d) of section 148A of the Act, would be without jurisdiction, and therefore, arbitrary and contrary to Article 14 of the Constitution of India," the bench said while quashing and setting aside the notices and order issued to the taxpayer.
Prakash Krishnavtar Bhardwaj, a non-resident Indian (NRI) residing in Dubai, had filed the petition against the notices and order issued by the I-T department. Since his total income was below the maximum amount chargeable to tax, he did not file tax returns for AY2015-2016. However, on 21 March 2022, he received a notice from the I-T department under clause (b) of Section 148A of the I-T Act stating that the income chargeable to tax for the relevant AY had escaped assessment, within the meaning of Section 147 of the Act. It also called upon Mr Bhardwaj to show cause why a notice under Section 148 of the Act should not be issued to him.
The taxpayer replied to the notice electronically on 28 March 2022. However, on 2 April 2022, he was issued an order from the I-T department. Mr Bhardwaj contended that he never received the order through email. However, he says on 16 April 2022, he received a copy of the order by speed post.
Further, he contended that he never received the notice issued by the I-T department on 2 April 2022 through email. He says both the notice and order he received were not signed by the tax authorities.
In his petition, Mr Bhardwaj contended that "since the notice dated 2 April 2022 issued under Section 148 of the Act was unsigned and never sent to him, it is invalid, bad-in-law and deserves to be quashed and set aside. Also, since the purported unsigned notice issued under Section 148 of the Act itself was never issued in the eyes of the law and three years have elapsed from the end of the relevant AY, in this case, AY15-16, as prescribed under Section 149(1)(b) of the Act, the action is beyond limitation."
The I-T department, in an affidavit, submitted that the notice issued to Mr Bhardwaj on 2 April 2022 was not signed by the assessing officer digitally or manually.
Ajeet Manwani, counsel for the I-T department, contended that the notice was unsigned manually or digitally as per the record, which by itself would not vitiate further proceedings since provisions of Section 292B of the Act would cure this defect or mistake. He argued that applying the provisions of Section 292B of the Act, the notice which is mistakenly not signed would not be vitiated since, in any event, the unsigned notice, at a later point in time, was sent to Mr Bhardwaj by courier.
However, while referring to a judgement from the Madhya Pradesh HC, the division bench of Bombay HC pointed out that, in the absence of a signature on the notice, it would not constitute a mistake or omission and would not be curable under the provisions of Section 292B of the Act.
It then quashed and set aside the notice dated 2 April 2022 issued by the I-T department under Section 148 of the Act, the order dated 2 April 2022 under clause (b) of Section 148A of the Act and the notice dated 21 March 2022 issued under clause (b) of Section 148A of the Act.
(Writ Petition No.9835 of 2022 Date: 9 January 2023)