Mere preparation of income tax notice and forwarding the same for dispatch is not effective issuance of notice until it enters a computer resource outside the control of the AO.
In a recent judgment, Hon’ble Supreme Court dismissed the SLP of the Revenue gainst the judgment of Telangana High Court that mere preparation of the notice under Section 148 of the Act on 31.03.2021 and forwarding the same for dispatch is not sufficient to meet the requirement under Sections 148 and 149 of the Income Tax Act, 1961.
ABCAUS Case Law Citation:
4894 (2025) (11) abcaus.in SC
In the instant case, under the unamended provisions related to reopening of the cases, a notice under Section 148 by the Jurisdictional Assessing Officer (JAO) had to be issued and served on or before 31.03.2021 i.e. the effective date of Faceless Regime.
However, in number of cases, notices under section 148 had been issued from the office of the Department either on 01.04.2021 or on subsequent dates.
The issued was agitated in a batch of Petitions before the Hon’ble High Court. The bone of contention in all the Petitions were whether the notice which was issued itself on or after 01.04.2021 would be hit on the grounds of limitation or not?
It was contended by the Petitioners that in terms of the decision of the Hon’ble Apex Court in the case of Ashish Agarwal, it should be the amended provision which would come into force and notices should have been issued by Faceless Assessing Officer (FAO) and not JAO and for this reason, the impugned notice in all these writ petitions would not be sustainable.
The Petitioners submitted that it was illegal, unjustified and improper on the part of JAO in mere preparation of the notice under Section 148 of the Act on 31.03.2021 and forwarding the same for dispatch as it would not meet the requirement under Sections 148 and 149 of the Act. In other words, without proper effective dispatch and service of notice as is required under Sections 148 and 149 of the Act on or before 31.03.2021, the impugned notices would not be sustainable.
Also, the issue was also raised as to whether though the notice is dated 31.03.2021, but the dispatch being made on 01.04.2021 or thereafter from the I.T.B.A. portal would be sufficient so far as meeting the period of limitation as is prescribed under Sections 148 and 149 of the Act.
The Department heavily relied on the judgment of the Hon’ble Apex Court contending that Section 149 of the Act refers to “notice” whereas Section 148 refers to the “service of notice”, and as long as there is an effective issuance of notice before the period of limitation under Section 149, the service of notice loses importance and such a notice so issued within the period of limitation cannot be interdicted only on the ground of service being made effective beyond a period of limitation.
The Department also relied upon the decision of the High Court of Gujarat in which it the Division Bench held that once when the notice is handed over to post-office, it goes irretrievably out of the hands of the Assessing Officer and merely because there is delay at the behest of the postal authorities, the date of issuance would not get postponed.
The Department also relied on the decision of Madras High Court which took the stand that date of issuance of notice is what matters and not the date of service.
The Deptt. Further relied upon the judgment of Gujarat High Court contending that the moment the signature is appended on the notice under Section 148 by the Assessing Officer and forwards the file, it is officially put into circulation and that the concerned officer, i.e., the Assessing Officer loses control over such notice and therefore it has to be assumed that the date which is reflected on the notice is the date of issuance also.
The Department contended that the I.T.B.A. portal is to be equated with that of the postal department. Once the notice generated by the Assessing Officer reaches the I.T.B.A. Section, the Assessing Officer loses control over the notice so generated. Thereafter it goes into the queue where the technicians issue the notices in seriatim which often takes some time. Therefore, the time when the Assessing Officer has put his signature to the notice it has to be treated as ‘issued’.
The Hon’ble High Court observed the decision of the Madras High Court wherein the Division Bench had held that the date of issue would be the date on which the notices were handed over for service to the post office and till the point of time the envelopes are properly stamped with adequate value of postal stamps, it cannot be stated that the process of issue is complete. Issuance of notice under section 149 is complete only when the same is issued in the manner as prescribed under section 282 r/w rule 127 of the Income Tax Rules prescribing the mode of service of notice under the Act. The signing of notice would not amount to issuance of notice as contemplated under section 149 of the Act. In other words, the requirement of issuance of notice under section 149 is not mere signing of the notice under section 148, but is sent to the proper person within the end of the relevant assessment year.
The Hon’ble High Court further observed that Similar stand has also been taken by a Division Bench of the Allahabad High Court which while dealing with the provisions of the Information Technology Act, 2000 held that after digitally signing the notice the income tax authority has to issue it to the assessee either in paper form or through electronic mail. Sub-Section (1) of Section 13 of the Act 2000 provides that dispatch of an electronic record occurs when it enters a computer resource outside the control of the originator. The aforesaid sub Section (1) of Section 13 indicates the point of time of issuance of notice. Therefore, after a notice is digitally signed and when it is entered by the income tax authority in computer resource outside his control i.e. the control of the originator then that point of time would be the time of issuance of notice.
The Hon’ble High Court further observed that a Division Bench of the Madhya Pradesh High Court has held that when the date of issuance of a notice revealed by the ITBA system was 16/04/2021 and the date of issuance mentioned in the notice itself was 31/03/2021, the impugned notice was bad in the eye of law.
The Hon’ble High Court further observed that in a recent judgment, a Division Bench of the Delhi High Court also endorsed the view taken by the Allahabad High Court as well as the Madhya Pradesh High Court and elaborately dealt with the said issue and held that mere generation of notice on the Income Tax Business Application portal does not satisfy the test of “issue” without proving that the same has been despatched within the time barring period. Even though the service of notice is not relevant, however, for determining if a notice has been validly issued, the notice should be sent forth and go beyond the control of the authority issuing the same, to conclude that it has been issued.
The Delhi High Court observed that as per section 148 of the Act of 1961, valid issuance of notice is a jurisdictional requirement not just a mere procedural requirement. There is a heavy onus on the Department to provide the date on which the impugned notices have been posted or the date and time on which the e- mail was sent from the e-mail ID of the jurisdictional Assessing Officer.
In view of the aforesaid judicial precedents and the fact that the Delhi High Court had extensively dealt with these contentions, the Hon’ble High Court expressed full agreement and endorsd the views laid down by the Division Bench of the Delhi High Court
Accordingly, it was held that the impugned notices in all these batch of writ petitions were barred by limitation under Sections 148 and 149 of the Act, since the said notices have left the I.T.B.A. portal on or after 01.04.2021.
Not satisfied with the judgment of the High Court, the Department challenged it before the Hon’ble Supreme Court by way of filing a Special Leave Petition. However, the Apex Court dismissed the SLP with the following observations,
“This Special Leave Petition is reported to be delayed by 316 days. We do not find sufficient explanation to condone the delay. Otherwise also, we have perused the order impugned and find no palpable error therein. Consequently, the Special Leave Petition is dismissed both on the ground of delay as well as on merits.”
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