PCIT Failed To Recorded Satisfaction Under His Signature Prior To Issuance Of Reassessment Notice By AO: Allahabad High Court

The division bench of Justice Surya Prakash Kesarwani and Justice Chandra Kumar Rai has observed that subsequent to the issuance of the reassessment notice by the Assessing Officer, the satisfaction under section 151 was digitally signed by the Prescribed Authority. Therefore, at the point of time when the Assessing Officer issued notices, he had no jurisdiction to issue the reassessment notices. Consequently, the notices issued by the Assessing Officer under section 148 were without jurisdiction.

The petitioner/assessee submitted that on the basis of an alleged digital approval under Section 151, the assessing officer issued notices to the assessees under Section 148 of the Act, 1961. The point of time when the approval under Section 151 of the Act, 1961 was signed, is subsequent to the issuance of notices by the Assessing Officer.

The PCIT granted approval on March 31, 2021 at 07:05 P.M., i.e., 19:05 hours by digitally signing the approval. The Jurisdictional notice under Section 148 was digitally signed by the Assessing officer on 31.03.2021 at 05:43 P.M., i.e., 17:43 hours, which is prior to the grant of digitally signed approval by the PCIT under Section 151 of the Act, 1961.

The issue raised was whether an unsigned content in an electronic record, said to be pushed through electronic mode at a particular point of time, can be a valid satisfaction of the PCIT under Section 151 for the assumption of jurisdiction by the Assessing Officer to issue a reassessment notice to an assessee.

Section 282A (1) specifically provides that a notice or other document issued by any income tax authority shall be signed by that authority in accordance with such procedure as may be prescribed.

Section 151 of the Act, 1961 specifically provides for the recording of satisfaction by the prescribed authority on the reasons recorded by the Assessing Officer that it is a fit case for the issue of a notice under section 148. Unless the satisfaction is recorded, the Assessing Officer would not have jurisdiction to issue a notice under section 148. A satisfaction, to be a valid satisfaction under section 151 of the Act, 1961, has to be recorded by the Prescribed Authority under his signature on application and not mechanically.

The petitioner submitted that the reassessment notices are wholly without jurisdiction. It was issued without the prior satisfaction or approval of the competent authority under Section 151 of the Act, 1961. Since at the point of time when notices under Section 148 of the Act, 1961 were issued, there was no valid satisfaction or approval of the competent authority. Therefore, the Assessing Officer could not assume jurisdiction to issue a notice under Section 148. Hence, the notices under Section 148 were without jurisdiction and thus invalid. Consequently, the subsequent proceedings, including reassessment orders, are also without jurisdiction. The recording of satisfaction or prior permission by the PCIT under Section 151 has no relevance with respect to the recording of satisfaction.

The department contended that the unsigned satisfaction of the PCIT stands validated in view of Section 282A. The digital or physical unsigned satisfaction recorded by the PCIT shall be deemed to be authenticated under Section 282A of the Act, 1961 read with Rule 127A of the Income Tax Rules, 1962 and Sections 2(d), 2(p), and 2(t) of the Information Technology Act, 2000. The satisfaction bears the name and office of a designated income tax authority, i.e., PCIT. The moment the PCIT has pushed in "Generate Tap in ITBA System", his satisfaction under Section 151 of the Act, 1961, would be deemed to be an authenticated document in terms of Section 282A and thus is a valid satisfaction under Section 151 of the Act, 1961. The digital signature affixed by the PCIT on his satisfaction under Section 151 of the Act, 1961, subsequent to issuance of the notice by the Assessing Officer under Section 148, would not invalidate the notices under Section 148.

The court has quashed notices under section 148 of the Act, 1961, and all consequential proceedings, if any, passed by the Assessing Officer. The Income Tax Authority shall be at liberty to initiate proceedings, if still permissible, strictly in accordance with the law and on due observance of the relevant provisions and the rules framed.

Case Title: Vikas Gupta Versus Union Of India

Case Citation: 2022 LiveLaw (AB) 430

Date: 08.09.2022

Counsel For Petitioner: Advocates Ankur Agarwal,Ankur Agarwal,Ashish Bansal

Counsel For Respondent: A.S.G.I.,Gaurav Mahajan,Krishna Agarawal

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