Mere Digitally Signing On Notice Contemplated U/S 148 Income Tax Act Won't Amount To Issuance Of Notice: Allahabad High Court

The Allahabad High Court has recently held that mere digitally signing the notice as contemplated under Section 148 of the Income Tax Act is not the issuance of notice and that the notice needs to be sent/dispatched to the income tax assessee through paper or electronic devices and when it is so sent, that day would be considered as the date of issuance of notice.

The Bench of Justice Surya Prakash Kesarwani and Justice Jayant Banerji observed thus as it further held that the dispatch of an electronic record occurs when it enters into computer resources outside the control of the originator.

The case in brief

Essentially, Petitioner - Daujee Abhushan Bhandar Pvt. Ltd. [regular assessee] had moved the High Court challenging a notice issued to it by the IT Dept under Section 148 of the Act, 1961 for the Assessment Year 2013-14 being time-barred.

It was the contention of the petitioner that though the notice was digitally signed by the Assessing Authority on March 31, 2021, however, it was sent to the assesses through e-mail, and the e-mail was received by the petitioner on April 6, 2021.

The petitioner's contention was that the notice was time-barred and thus it was without jurisdiction as it was issued on April 6, 2021, whereas the limitation for issuing notice under Section 148 read with Section 149 of the Act 1961 expired on March 3, 2021.

On the other hand, it was the contention of the IT Dept that since the notice was digitally signed on March 3, 2021, therefore, it shall be deemed to have been issued within time i.e. on March 31, 2021.

Now the primary question before the Court was as to whether digitally signing notice would automatically amount to the issuance of notice?

Court's observations 

At the outset, the Court referred to Section 282 and 282A of the IT Act to conclude that the signing of notice and issuance of the communication thereof have been recognized as different acts, meaning thereby the signing of the notice and issuance of the communication to the intended assessee are two independent acts.

Further, taking into account Rule 127 A(1) of the Income Tax Rules 1962 [Authentication of notices and other documents-], the Court opined that the issuance of notice and other documents would take place when the email is issued from the designated e-mail address of the concerned income tax authority

Against this backdrop, the Court observed that Section 149 of the Act 1961 requires that the notice has to be issued by the Income Tax Authority to the assessee, and therefore, the Court added, in terms of sub Section (1) of Section 282 A it has to be signed by that authority and to be issued in paper form or communicated in electronic form by that authority in accordance with the procedure prescribed.

"Thus, 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 Information Technology 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 a notice," the Court observed.

Thus, considering the provisions of Section 282 and 282 A of the Act, 1961 and the provisions of Section 13 of the Information Technology Act, 2000 and the meaning of the word "issue", the Court came to the conclusion that firstly notice shall be signed by the assessing authority and then it has to be issued either in paper form or be communicated in electronic form by delivering or transmitting the copy thereof to the person concerned.

"Thus, the point of time when a digitally signed notice in the form of electronic record is entered in computer resources outside the control of the originator i.e. the assessing authority that shall the date and time of issuance of notice under section 148 read with Section 149 of the Act, 1961," the Court held.

In view of this, noting that since the impugned notice under Section 148 of the Act, 1961 was issued to the petitioner on April 6, 2021, through e-mail, therefore, the Court held that that the impugned notice under section 148 of the Act, 1961 was time-barred. Consequently, the impugned notice was quashed.

Case title - Daujee Abhushan Bhandar Pvt. Ltd. v. Union Of India And 2 Others
Case Citation: 2022 LiveLaw (AB) 128

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