Issuance Of Notice To Unrelated Mail Address Does Not Constitute Due Despatch: Delhi High Court

The Delhi High Court has held that the issuance of e-mail-attaching electronic notice to an unrelated e-mail address does not constitute due despatch and, therefore, the notices cannot be said to have been issued on 31st March 2021.

The division bench of Justice Manmohan and Justice Manmeet Pritam Singh Arora has observed that since an authenticated copy of the notice was placed on the registered account of the assessee on the E-filing portal, as that is how the petitioners learnt about the notices, the notices will be held to have been issued on the date on which the notices were first viewed by the assessees on their e-filing portal.

The court, while hearing the batch of petitions, issued the directions according to the circumstances in which the notices were issued.

The court stated that the notices which have been digitally signed on or after April 1st, 2021, are held to bear the date on which they were digitally signed and not March 31st, 2021. The petitions were disposed of with the direction that the notices were to be considered as show-cause-notices under Section 148A (b) of the Income Tax Act.

The court observed that the notices sent through the registered e-mail ID of the respective JAOs, though not digitally signed, are held to be valid. The petitions were disposed of with the direction to the JAOs to verify and determine the date and time of their despatch as recorded in the ITBA portal. If the date and time of dispatch recorded are on or after April 1st, 2021, the notices are to be considered as show-cause-notices under Section 148A (b).

The court disposed of the petitions challenging notices which were digitally signed on with the direction to the JAOs to verify and determine the date and time of despatch as recorded in the ITBA portal in accordance with the law laid down in this judgement as the date of issuance. If the date and time of despatch recorded is on or after April 1st, 2021, the notices are to be considered as show-cause-notices under Section 148A (b).

The court said that in the case of notices which were only uploaded on the E-filing portal of the assessees without any real-time alert, the JAOs were directed to determine the date and time when the assessees viewed the notices in the E-filing portal, as recorded in the ITBA portal.

The court stated that the notices which were sent to unrelated e-mail addresses are disposed of with the direction of the JAOs to verify the date on which the notice was first viewed by the assessee on the E-filing portal and consider the date of issuance.

A batch of petitions was filed challenging the validity of the notices issued under Section 148 of the Income Tax Act, 1961 as it stood prior to its amendment on April 1, 2021, by the Finance Act, 2021.

As per the unamended Section 149(1) of the Act of 1961, the reassessment proceedings could be initiated within 4 years from the end of the relevant assessment years. The reassessment proceedings could be initiated within 6 years from the end of the relevant AY if the income chargeable to tax that has escaped assessment amounts to one lakh rupees or more for that year. The reassessment proceedings could be initiated within 16 years from the end of the relevant AY if income in relation to any foreign asset chargeable to tax has escaped assessment.

With effect from 1st April 2021, under the amended Section 149(1)(a) of the Income Tax Act of 1961, reassessment could be initiated within 3 years from the end of the relevant AY. Thus, under amended Section 149(1)(a) as on amended Section 149(1)(a) of the Income Tax Act of 1961, reassessment could be initiated within 3 years from the end of the relevant AY. Thus, under amended Section 149(1)(a) as on April 1, 2021, reassessment could only be reopened up to AY 2018–19 and all prior assessment years were barred.

The issue raised was whether the notices were issued on or before March 31st, 2021 or thereafter. If the Court holds that the notices were validly issued under the unamended Section 149 on or before 31st March 2021, then the re-assessment proceedings would be governed by the unamended provisions of Section 147, 148, 149, and 151 as they stood before 1st April 2021.

The court held that the notice under Section 148 of the Income Tax Act, 1961 must be served in accordance with the procedure established by law, to the correct addressee, otherwise, the reassessment proceedings would be invalid in law.

Case Title: Suman Jeet Agarwal Versus ITO

Citation: 2022 LiveLaw (Del) 918

Date: 27.09.2022

Counsel For Petitioner: ASG Anuj Aggarwal

Counsel For Respondent: Sr. Standing Counsel Sanjay Kumar

Click Here To Read Order