TIME OF SIGNATURE ON ASSESSMENT ORDER, COMPUTATION, DEMAND NOTICE AND PENALTY NOTICES IS IMPORTANT – without an order other documents cannot be issued. Officers must take care. And harassed assesses can get protection from invalid demands.

[DEVKUMAR KOTHARI]

Order:

An assessment order or order for levying any interest or penalty must be passed at earliest occasion. This is because it is only order based on which further documents like computation sheet, demand notice and penalty notices, if any can be issued. This is a matter of natural sequencing of events, common sense and logical process of doing a set of related works like passing of an order and in consequence of such order only other required documents are to be prepared. In fact , the order is to grant basis and authority to make other related documents.

When computation was made manually by clerks, the clerk could make computation as a consequence of the order. The same thing prevails in automated system also. Without an order how the next step can be taken.

An order is an order only when it has been signed. Without signature, it is only a draft working and is not an order.

Even law requires that an order has to be made and in consequence of the order other documents, as may be required in a given case can be made.

For example in this regard let us take case of demand notice under the Income-tax act, 1961. The provision is found in section 156. Relevant part of S.156 is reproduced below with highlights added.

Notice of demand.

156. 1. When any tax, interest, penalty, fine or any other sum is payable in consequence of any order passed under this Act, the Assessing Officer shall serve upon the assessee a notice of demand in the prescribed form specifying the sum so payable.

Therefore, whatever be the nature and sum found payable it must be in consequence of any order. An order can be about a single item say tax or penalty or multiple items like tax and interest.

NOTICE ABOUT PENALTY:

A notice about penalty can be a show cause notice for levying penalty. It can also be for amount of penalty imposed which is demanded by issue of demand notice u/s 156.

A show cause notice is also generally to be issued in consequence of an order holding circumstances in which penalty can be levied. Sometimes a notice can also be issued while any proceeding is going on and the concerned officer notice or apprehend violation or infraction of any law or provisions of law. and he can issue a notice.

For example some provisions- relevant portion:

271. (1) If the Assessing Officer or [the Joint Commissioner (Appeals) or the Commissioner (Appeals)] [or the [Principal Commissioner or] Commissioner] in the course of any proceedings under this Act, is satisfied that any person-

(b) has ⁷[* * *] failed to comply with a notice ....

(c) has concealed the particulars of his income ....

[Penalty for under-reporting and misreporting of income.

270A. (1) The Assessing Officer or [the Joint Commissioner (Appeals) or the Commissioner (Appeals)] or the Principal Commissioner or Commissioner may, during the course of any proceedings under this Act, direct that any person who has under-reported his income shall be liable to pay a penalty in addition to tax, if any, on the under-reported income.

Procedure.

274. (1) No order imposing a penalty under this Chapter shall be made unless the assessee has been heard, or has been given a reasonable opportunity of being heard.

......

From format for notice to show cause:

Notice for Penalty under section 274 read with section 271AAC(1) of the Income-tax Act,1961 Ms/Mr/M/s,

Whereas in the course of proceedings for the Assessment Year it appears that income determined in your case, includes income chargeable to tax under the provisions of section 115BBE of the Income Tax Act, 1961.

2. You are required to show cause why an order imposing penalty u/s 271AAC(1) of the Income-tax Act,1961 should not be passed.

Notice for Penalty under section 274 read with section 270A of the Income-tax Act,1961

Ms/Mr/M/s,

Whereas in the course of proceedings for the Assessment Year 2016-17, it appears that you have under-reported income which is in consequence of misreporting thereof as per details given in the assessment order.

Thus, we find that notice for penalty is also after determination of income and that is in the assessment order.

Computation sheet:

A computation sheet may also be made in case of assessment of any income or determination of penalty. In computation sheet there can be different situations for different rate of tax, levying of interest or granting of interest and many incidental computations like tax on normal income and MAT or AMT.

Therefore, computations is to be made based on outcome and directions issued in an order.

Date of and time assessment should generally be earliest :

Therefore, first of all there should be a final assessment order in which directions are decided and orders are given in accordance with which computation sheet demand notice and penalty notices etc. need to be prepared.

Without there being a valid (duly signed) assessment order, if other documents are prepared and signed before hand, then those document will be invalid, void and without authority and jurisdiction, hence can be held to be void ab initio.

Care required by Assessing officers / Assessment Unit:

Therefore, Assessing Officers and Assessment Units in case of faceless assessment, must take care to ensure that assessment order is signed first and demand notice and penalty notices after a computation has also been made in terms of assessment order.

Actual example of a case:

Examples are given below for two cases in which it is noticed that assessment order was signed after signature of demand notice and other documents. For privacy of assessee and the officer identifiable aspects name, PAN and DIN are not given and time is given in tabular form withut actual dates

Details of Date& Time of Signature for AY 1

Particular	DIN	Date	Time
Computation Sheet	ITBA/AST/S/114/2024-25/ xxx	xxxx/2025	16:14:05
Notice of Demand u/s 156	ITBA/AST/S/156/2024-25/ xxx	xxxx/2025	16:23:33
Notice for Penalty u/s 274	ITBA/PNL/S/270A/2024-25/ xxx	xxxx/2025	17:12:50
section 270A
Notice for Penalty u/s 274	ITBA/PNL/S/271AAC(1)/2024-25/xxx	xxXx /2025	17:19:56
section 271AAC(1)
Assessment Order	ITBA/AST/S/147/2024-25/xxx	xxXx /2025	17:48:10

 In the above case the assessment order has been signed at last and there are significant time gaps.

 The computation sheet was also signed much before the assessment order.

 The demand notice was more than one hour and 25 minutes before signing of assessment order this is significant. In such circumstances demand notice can be considered as without authority and void ab initio hence not enforceable which is definitely a serious legal aspect.

Details of Date& Time of Signature for AY 2

Particular	DIN	Date	Time
Notice for Penalty u/s 274	ITBA/PNL/S/271AAC(1)/2024-25/	dd/mm/2025	21:05:28
section 271AAC(1)
Notice for Penalty u/s 274	ITBA/PNL/S/270A/2024-25/	dd/mm2025	21:05:35
Section 270A
Computation Sheet	ITBA/AST/S/319/2024-25/	dd/mm2025	21:06:46
Notice of Demand u/s 156	ITBA/AST/S/156/2024-25/	dd/ mm/2025	21:07:01
Assessment Order	ITBA/AST/S/147/2024-25/	Dd /mm2025	21:07:02

In the above case the assessment order has been signed in last. And other documents were signed before hand. The more or less time makes no difference the fact remains that demand notice , computations sheet, and penalty notices were signed without finality and signature of assessment order. Therefore, all these can be considered as void.

In such circumstances demand notice can also be considered as without authority and void ab initio hence not enforceable though time gap is minimal but fact remains that demand notice was signed without finalization and authorization in form of assessment order.

Assessees can take advantage:

Assessees who have been hard hit due to harassing practices adopted by Assessing Officers (JAO) including Assessment Unit (FAO) leading to high pitched assessment can find some relief if careful analysis of time of signature is made to find out similar situations. If the assessment order has been signed at a later point of time , definitely demand notice issued beforehand can be considered on legally valid ground as without authority and illegal and not enforceable. If this contentions is allowed all other issues leading to assessment and high demand shall become not important. Though it is advisable to contest all issue on merit also.

Suggested ground of appeal:

Void demand notice and computation:

Order and other documents reveal that computation and demand notice were made and signed before assessment order was made and signed as follows with altered data about day, month year and time etc. for sake of privacy

Computation sheet has been signed digitally on date dd .mm .yyyy at 23:57:54 IST.

Demand notice u/s. 156 was digitally signed on date d1 mm.yyy at 00:29:18 IST on next day

Assessment order u/s 147 read with S.144B DIGITALLY SIGNED ON DATE dd1 mm yyyy at 01:02:01 IST on next day

Therefore, computation sheet and demand notice having been signed without a valid assessment order in existence, are without authority and are void and illegal and demand cannot be enforced. The Ld. AO may be directed not to enforce the demand.