2024 (7) TMI 1186 - HC - Income Tax

Validity of notice issued u/s 148 - period of limitation - dispatch and service of notices issued on or after 01.04.2021 - HELD THAT - Though there were some discrepancies reflected in the screen-shots taken from the portal pages, but on actual verification of the records which has come before us and which clearly indicate that the notices have been issued in all these writ petitions (not served) itself on 01.04.2021 or on a later date. The question of service of these notices and the date of service of notices upon the petitioners is of no relevance or consequence in all these writ petitions, as the notices itself have been dispatched from the office of the I.T. Department on or before 01.04.2021 which itself is beyond the period of limitation. It is relevant at this juncture to note that upon coming into force of the Finance Act, 2021, certain amendments were brought to the Income Tax Act, 1961 wherein Section 148 stood substituted with Section 148A by the Finance Act, 2021 w.e.f. 01.04.2021. In the landmark decision of the Hon ble Apex Court in the case of Ashish Agarwal 2022 (5) TMI 240 - SUPREME COURT which has also been followed by practically every High Court in the country, held that for any notice of re-assessment on or after 01.04.2021 it would be the new amended law which would be governing the field, as the un-amended provisions were valid only till 31.03.2021. We also are fully in agreement and endorse the views laid down by the Division Bench of the Delhi High Court in the case of Suman Jeet Agarwal 2022 (9) TMI 1384 - DELHI HIGH COURT and hold that the impugned notices in all these batch of writ petitions are barred by limitation under Sections 148 and 149 of the Act, since the said notices have left the I.T.B.A. portal on or after 01.04.2021. WP allowed.

Issues Involved:
1. Issuance of notice under Section 148 of the Income Tax Act, 1961.
2. Limitation period for issuing notice under Section 148.
3. Validity of notices issued after the limitation period.
4. Application of amended provisions post 01.04.2021.
5. Effective date of issuance of notice.

Issue-wise Detailed Analysis:

1. Issuance of Notice under Section 148 of the Income Tax Act, 1961:
The petitioners challenged the issuance of notice under Section 148 of the Income Tax Act, 1961, by the respondent-Department. The primary contention was whether mere preparation and forwarding of the notice for dispatch on 31.03.2021 met the requirements under Sections 148 and 149 of the Act. The court had to determine if the notices issued on or after 01.04.2021 were valid.

2. Limitation Period for Issuing Notice under Section 148:
The petitioners argued that under the unamended provisions, a notice under Section 148 had to be issued and served on or before 31.03.2021. Notices issued beyond this date should be governed by the amended provisions effective from 01.04.2021. The court examined whether the notices dated 31.03.2021 but dispatched on or after 01.04.2021 were barred by limitation.

3. Validity of Notices Issued After the Limitation Period:
The court considered the arguments from both sides. The petitioners highlighted discrepancies in the dispatch and service dates on the respondent-Department's portal. The respondents contended that the date on the notice should be considered the date of issuance, regardless of the dispatch date. The court reviewed precedents, including the Hon'ble Apex Court's decision in Union of India vs. Ashish Agarwal, which emphasized that notices issued after 31.03.2021 should follow the new provisions.

4. Application of Amended Provisions Post 01.04.2021:
The Finance Act, 2021, introduced amendments effective from 01.04.2021, substituting Section 148 with Section 148A. The court noted that any reassessment notice issued on or after 01.04.2021 should comply with the new provisions. The court referred to various judgments, including those from the High Courts of Gujarat, Madras, and Delhi, which supported this view.

5. Effective Date of Issuance of Notice:
The court analyzed whether the issuance of notice was complete upon signing or upon dispatch. The court referred to multiple judgments, including the Delhi High Court's decision in Suman Jeet Agarwal, which held that the notice is issued when it leaves the control of the originator (the Department) and enters a computer resource outside their control. The court concluded that notices dispatched from the I.T.B.A. portal on or after 01.04.2021 were beyond the limitation period.

Conclusion:
The court found that the impugned notices were issued beyond the limitation period and were thus invalid. The court quashed the notices on the ground of limitation and allowed the writ petitions. The court endorsed the view that the issuance of notice under Section 149 is complete only when dispatched as prescribed under Section 282 read with Rule 127 of the Income Tax Rules. The court's decision aligned with the judicial precedents emphasizing the importance of dispatch and service dates in determining the validity of notices under Section 148.

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