CPC intimation u/s 143(1) valid though digitally signed after expiry of limitation period

CPC intimation u/s 143(1) valid though digitally signed after expiry of limitation period – ITAT

In a recent judgment, ITAT Ahmedabad has held that CPC intimation u/s 143(1) was valid even though it was digitally signed by the AO after expiry of limitation period

ABCAUS Case Law Citation:
ABCAUS 4157 (2024) (07) ITAT

In the instant case, the assessee had challenged the order passed by the CIT(A), National Faceless Appeal Centre (NFAC), in confirming adjustment by CPC on account of delay in deposit of employees’ contribution to PF & ESI.

The return of the appellant assessee was processed by the CPC, Bangalore and an intimation under Section 143(1) of the Income Tax Act, 1961 (the Act) was sent electronically by email the very next day. While processing the return an adjustment was made by the CPC u/s 143(1)(a) on account of delay in deposit of employees’ contribution to PF & ESI as mentioned in the tax audit report filed by the assessee.

Before the Tribunal, the assessee took an additional ground that the Intimation issued u’s. 143(1) was digitally signed on the date which was beyond the statutory time period specified in Proviso 5 to section 143(1) thus the intimation was time barred and was invalid, void ab-initio and bad in law.

Although the Revenue objected to admission of legal grounds by relying on the decision of Hon’ble Supreme Court, the Tribunal observed that the Hon’ble Supreme Court held that Tribunal has jurisdiction to examine a question of law which arises from facts as found by the authorities below. The Court further held that the question of law may be allowed to be raised when it is necessary to consider that question in order to correctly assess the tax liability of an assessee. Thus, it is clear from this decision that any question of law may be allowed to be raised only in order to correctly assess the tax liability of the assessee.

The Tribunal further observed that so far as the correct assessment of the tax liability in the instant case was concerned, the issue involved was already settled by the decision of Hon’ble

Supreme Court in the case of Checkmate Services Private Limited.

Therefore, the Tribunal concurred with the submission of the Revenue that this was not a fit case where the legal grounds as raised by the assessee are relevant to consider the question of correct assessment of tax liability of the case. The only objective of the assessee behind raising these legal grounds was to obviate the correct tax liability.

However, considering the issue of limitation and natural justice, while processing the return, the Tribunal also considered the legal ground as well.

The Tribunal observed that the intimation had a Document Identification Number (DIN) and it was mentioned in the intimation that “This communication is computer generated and may not contain signature. Where sent by email, this is signed with the digital signature of the Income Tax Department – CPC, which is obtained from a certifying authority under the Information Technology Act, 2000…”

Thus, the Tribunal noted that it was evident that the intimation under section 143(1), which was computer generated, did not contain any signature. This intimation was communicated to the assessee vide email dated after expiry of the limitation period and the email was digitally signed by the authorized officer of the CPC. Thus the signature on which great reliance was been placed by the assessee, was not the date of intimation but it was the date of communication of the intimation through email. From the DIN number and the date as appearing on the intimation, it was evident that the return of the assessee was processed well within the limitation period.

Further, the Tribunal opined that the intimation under Section 143(1)(a) of the Act can’t be considered as barred by limitation, even if, it was communicated after the expiry of the limitation period. The time limit for processing the return under Section 143(1) of the Act was extended by the CBDT vide order F. No.225/132/2023/ITA-II Dated 01.12.2023 issued by the Under Secretary to the Government of India whereby the time limit for processing the return was extended and the extended time limit was squarely applicable for processing the return of the assessee.

The assessee had also taken a ground that the exact type of adjustment, as stipulated in the clauses (i) to (vi) of Section 143(1) of the Act, was not mentioned in the intimation. However, the Tribunal noted that there is no dispute to the fact that any incorrect claim, if it was apparent from any information in the return, was liable for adjustment while processing the return. From the intimation sheet as sent by the CPC, the adjustment made was categorically indicated at Sl. No. 14 of the Annexure. In fact, this annexure contains details of all the claims made by the assessee in the return of income and the computation as made by the CPC under Section 143(1) of the Act and the variance if any, is also indicated in respect of each item. Thus, the nature of adjustment as made by the CPC was very much reflected in the intimation. Further, the nature/type of adjust was also mentioned in the prior intimation sent to the assessee by the CPC, which was reproduced later in the order. In view of these facts, the ground as taken by the assessee was dismissed.

The 3rd legal ground taken by the assessee was in respect of no prior intimation given to the assessee before making the adjustment. The Tribunal noted that as per copy of “Dashboard: User Profile Administration” containing details of action taken by the CPC on the return of the assessee, a communication was sent to the assessee on the email ID with the remark “Pending response under Section 143(1)(a)”.

The assessee submitted that in the same “User Profile Administration”, there was mention of communication wherein it was mentioned that the “ITR filed is defective or incomplete”. The AR contended that the processing could not have been done until & unless the defect was rectified by the assessee. On this logic the AR submitted that no presumption can be drawn from the “User Profile Administration” and that the communication generated by CPC was not transmitted to the assessee. Accordingly, the AR made a request that the sheet “User Profile Administration” should not be used against the assessee. He also submitted that there was no mention of any proposed adjustment in the “User Profile Administration”. Further, the AR also pointed out that the communication was sent to email ID which was not legally valid as it was an unrelated email ID. He drew attention to the fact that in the return of income a different email ID was mentioned for transmitting all communications electronically.

The Tribunal observed that as per copy of the intimation for proposed adjustment, assessee was communicated about the proposed adjustment under Section 143(1)(a). The nature of adjustment was also explained in the Annexure in Part-A. While five of the proposed adjustments were in respect of incorrect claim under Section 143(1)(a)(ii) of the Act, three adjustments were in respect of disallowance of expenditure indicated in audit report under Section 143(1)(a)(iv) of the Act. In view of these facts, the contention of the assessee that no prior intimation of the adjustment was given was incorrect and misleading.

The Tribunal also observed that though in the return the email address of the assessee was different, the email ID on which this communication was sent also belonged to the assessee. In fact, the said email ID was the primary email ID as appearing on user profile of the assessee. Further, in the RTI application filed by the assessee with the AO as well as in Form No.-36, same email ID as mentioned therein was “account@checkmateservices.com”.

Therefore, there cannot be any doubt that the email ID account to which communication was sent belonged to the assessee and that the assessee was duly communicated about the adjustments before the processing of the return.

In the result, appeal preferred by the assessee was dismissed. 

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