2024 (11) TMI 1203 - HC - Income Tax

Validity reassessment proceedings beyond period of limitation - when a notice can be considered as issued ? - delay is of only about two minutes in issuance of the impugned notice u/s 148A(b) - Revenue s contention that although the impugned notice bears the date of 01.04.2023, however, the same should be construed as having been issued on 31.03.2023. This contention is premised on the basis that the process for issuing the impugned notice had begun in the late hours of 31.03.2023 and the final act of affixing the digital signature which is system generated process was completed on 12 02 AM on 01.04.2023 HELD THAT - In the present case the impugned notice was digitally signed on 01.04.2023. Thus, the process of digitally generating the same on the system was completed on 01.04.2023. Plainly, the impugned notice could not have been issued prior to the same being signed. The fact that the steps to generate the impugned notice commenced on 31.03.2023 cannot be a ground to hold that the impugned notice was issued on 31.03.2023. The date of the said notice is correctly reflected as 01.04.2023. In addition, it is also pointed out that the DIN Notice Number mentioned in the impugned notice also indicates that the impugned notice was issued in the financial year 2023-24. Thus, we find merit in the contention that the re- assessment proceedings could not have been initiated beyond the period of three years from the end of the relevant assessment year (AY 2019-20) as the income in respect of which the AO has information to suggest that it has escaped assessment, is below the threshold limit of ₹50,00,000/-. The petition is accordingly allowed in assessee's favour.

Summary

Issues:
Reopening of assessment under Section 148A of the Income Tax Act for AY 2019-20 beyond the prescribed time limit.

Analysis:
The petitioner filed a return for AY 2019-20 declaring 'NIL' income and did not receive any intimation regarding the return. The Assessing Officer (AO) initiated proceedings under Section 148A by issuing a notice alleging that income had escaped assessment. The notice indicated transactions with specific companies suggesting income escapement. The petitioner contended that the notice was issued beyond the prescribed period under Section 149(1)(a) of the Act since the income threshold was below Rs. 50,00,000. The Revenue argued that the notice was issued within the timeframe, although dated 01.04.2023, contending it was issued on 31.03.2023. The court referred to Suman Jeet Agarwal case, emphasizing that a notice is considered issued only upon due despatch to the addressee.

The court found merit in the petitioner's argument that the re-assessment proceedings were initiated beyond the three-year period from the end of AY 2019-20, as the income threshold for escapement was below Rs. 50,00,000. The court noted that the impugned notice was digitally signed on 01.04.2023, indicating it was issued on that date. The court held that the steps to generate the notice on 31.03.2023 did not constitute issuance. The impugned notices and orders were set aside, allowing the petition.

The judgment clarifies the legal interpretation of issuing a notice under Section 148A, emphasizing the importance of due despatch for a notice to be considered issued. It highlights the significance of adhering to the prescribed time limits for reopening assessments under the Income Tax Act, especially concerning the threshold limits for income escapement. The decision provides guidance on determining the validity of notices based on the date of digital signatures and underscores the procedural requirements for initiating re-assessment proceedings within the statutory timeframe.