2022 (3) TMI 784 - HC - Income Tax

Reopening of assessment u/s 147 - Date of issuance of notice - communication in electronic form - Whether digitally signing notice would automatically amount to issuance of notice ? - Whether digitally signing a notice and issuing it are two different acts ? - Whether issuance of notice shall take place on the date and time when it is dispatched either electronically or through other mode ? - whether merely generating notice from the Departmental Portal and digitally signing it thereafter, would amount to issuance of notice ? - HELD THAT - 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 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 notice. The words issue or issuance of notice have not been defined under the Act 1961. However, the point of time of issuance of notice may be gathered from the provisions of the Act, 1961, the Rules, 1962 and the Act, 2000, as discussed above. Similar would be the position if the meaning of the word issue may be gathered in common parlance or as per dictionary meaning. Considering the provisions of Section 282 and 282 A of the Act, 1961 and the provisions of Section 13 of the Act, 2000 and meaning of the word issue we find 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 therein named by modes provided in section 282 which includes transmitting in the form of electronic record. Section 13(1) of the Act, 2000 provides that unless otherwise agreed, the dispatch of an electronic record occurs when it enters into computer resources outside the control of the originator. 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. We hold that mere digitally signing the notice is not the issuance of notice. Since the impugned notice under Section 148 of the Act, 1961 was issued to the petitioner on 06.04.2021 through e-mail, therefore, we hold that the impugned notice under section 148 of the Act, 1961 is time barred. Consequently, the impugned notice is quashed.

Issues Involved:
1. Whether digitally signing notice would automatically amount to issuance of notice.
2. Whether digitally signing a notice and issuing it are two different acts.
3. Whether issuance of notice shall take place on the date and time when it is dispatched either electronically or through other mode.
4. Whether merely generating notice from the Departmental Portal on 31.3.2021 and digitally signing it thereafter, would amount to issuance of notice.

Issue-wise Detailed Analysis:

Issue 1: Whether digitally signing notice would automatically amount to issuance of notice.

The court clarified that the act of digitally signing a notice does not equate to its issuance. Section 149 of the Income Tax Act, 1961, necessitates that a notice must be issued within the prescribed period, and mere digital signing does not fulfill this requirement. Section 282A of the Act differentiates between signing and issuing a notice, indicating that these are distinct actions. Rule 127A of the Income Tax Rules, 1962, further supports this distinction by stipulating that a notice is authenticated when it is communicated electronically from the designated email address of the income tax authority. Therefore, the court concluded that digitally signing a notice alone does not constitute its issuance.

Issue 2: Whether digitally signing a notice and issuing it are two different acts.

The court emphasized that digitally signing a notice and issuing it are indeed two separate acts. Section 282A(1) of the Income Tax Act, 1961, specifies that a notice must be signed and then issued either in paper form or communicated electronically. The Information Technology Act, 2000, particularly Section 13(1), states that the dispatch of an electronic record occurs when it enters a computer resource outside the control of the originator. Thus, the court held that the issuance of a notice involves not just signing but also dispatching it to the assessee, either physically or electronically.

Issue 3: Whether issuance of notice shall take place on the date and time when it is dispatched either electronically or through other mode.

The court determined that the issuance of a notice occurs at the point when it is dispatched, either electronically or through other means. Section 13 of the Information Technology Act, 2000, clarifies that an electronic record is dispatched when it enters a computer resource outside the control of the originator. This means that the issuance of a notice is complete when it is sent out from the designated email address of the income tax authority. Consequently, the court concluded that the date and time of issuance are when the notice is dispatched, not merely when it is digitally signed.

Issue 4: Whether merely generating notice from the Departmental Portal on 31.3.2021 and digitally signing it thereafter, would amount to issuance of notice.

The court held that generating a notice from the Departmental Portal and digitally signing it does not constitute its issuance. The court referred to previous judgments, including those from the Gujarat High Court and the Supreme Court, which established that the issuance of a notice involves its dispatch to the assessee. In this case, the notice was digitally signed on 31.03.2021 but dispatched via email on 06.04.2021. Therefore, the court concluded that the notice was issued on 06.04.2021, making it time-barred as the limitation period expired on 31.03.2021.

Conclusion:

The court concluded that the impugned notice under Section 148 of the Income Tax Act, 1961, was time-barred as it was issued on 06.04.2021, beyond the limitation period which expired on 31.03.2021. Consequently, the notice was quashed, and the writ petition was allowed.

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