2024 (2) TMI 585 - HC - Income Tax

Validity of reopening notice issued u/s 148A - not signed either physically or digitally - minimum period of seven days prescribed under Section 148A(b) not provided - HELD THAT - This Court has come to the categorical conclusion that the notice under Section 148A(b) of the IT Act, is not signed either physically or digitally and the same is illegal, invalid and inoperative and further proceedings pursuant thereto including the order u/s 148A(d) of the IT Act, penalty notices, orders, etc., deserve to the quashed. Lesser period than a period of seven days - So also, having regard to the minimum period of seven days prescribed under Section 148A(b) of the IT Act as held by the High Court of Bombay in the case of Mukesh J. Ruparel Vs. Income Tax Officer, Ward 27(2)(1) 2023 (8) TMI 228 - BOMBAY HIGH COURT that if notice u/s 148A(b) prescribes a period lesser than a period of seven days as contemplated in the said provision, the said notice would be vitiated resulting in quashment of not only the notice but also the subsequent assessment orders, penalty notices, orders, etc. In the instant case, it is an undisputed fact that the Notice is not signed either physically or digitally but the impugned notice also prescribes a period of six days, which is lesser than the minimum prescribed period of seven days as contemplated under Section 148A(b) of the IT Act. Under these circumstances, in the light of the judgment of this Court in Begur s case 2023 (11) TMI 1222 - KARNATAKA HIGH COURT and the judgment of the Bombay High Court in Mukesh s case supra, Impugned notice and also consequential proceedings, orders, notices, etc., deserves to be quashed by reserving liberty in favour of the respondents to take recourse to such remedies as available in law. Decided in favour of assessee.

Summary

Issues Involved:
1. Validity of Notice under Section 148A(b) of the Income Tax Act
2. Validity of Notice under Section 148A(d) of the Income Tax Act
3. Validity of unsigned Notices under Section 148 of the Income Tax Act
4. Validity of Re-assessment Order under Section 147 read with Section 144 of the Income Tax Act
5. Validity of Penalty Orders under Section 271(1)(c) and 271(1)(b) of the Income Tax Act

Summary of Judgment:

1. Validity of Notice under Section 148A(b) of the Income Tax Act:
The petitioner contended that the notice dated 21/03/2022 issued under Section 148A(b) was invalid as it was not digitally or physically signed and provided only six days for response instead of the prescribed minimum period of seven days. The court agreed, citing the precedent set in Begur Sinappa Venkatesh Vs. The Income Tax Officer and another, and concluded that the notice was "illegal, invalid and inoperative."

2. Validity of Notice under Section 148A(d) of the Income Tax Act:
The petitioner argued that the subsequent notice dated 29/03/2022 under Section 148A(d) was also invalid as it was based on the initial flawed notice under Section 148A(b). The court, following the same reasoning, quashed this notice as well.

3. Validity of unsigned Notices under Section 148 of the Income Tax Act:
The petitioner challenged the unsigned notices dated 29/03/2022 and 30/03/2022 under Section 148. The court found these notices invalid due to the lack of digital or physical signatures, consistent with the ruling in the Begur Sinappa Venkatesh case.

4. Validity of Re-assessment Order under Section 147 read with Section 144 of the Income Tax Act:
The re-assessment order dated 31/03/2023 was also contested. The court quashed this order, noting that it was based on the invalid notices under Sections 148A(b) and 148A(d).

5. Validity of Penalty Orders under Section 271(1)(c) and 271(1)(b) of the Income Tax Act:
The penalty orders dated 27/09/2023 under Sections 271(1)(c) and 271(1)(b) were challenged for being consequential to the invalid notices and re-assessment order. The court quashed these penalty orders as well.

Conclusion:
The court allowed the petition, quashing all the impugned notices, orders, and penalty orders. It reserved liberty for the respondents to initiate fresh proceedings in accordance with the law, subject to all just exceptions.