The Rajkot Bench of the Income Tax Appellate Tribunal (ITAT) has held that a notice issued under Section 148 without either a manual or digital signature is legally invalid and incapable of conferring jurisdiction upon the Assessing Officer and quashed the entire reassessment proceedings initiated against the assessee for Assessment Year (AY) 2019-20.
The bench of Dr. Arjun Lal Saini (Accountant Member) has observed that an unsigned notice is not merely an irregularity but strikes at the very jurisdiction of the reassessment proceedings. It observed that a notice without authentication lacks legal sanctity and cannot be regarded as a valid notice under the Act.
The appellant/assessee had challenged the reassessment proceedings initiated under Sections 147 and 148 of the Income Tax Act. The reassessment stemmed from a large-scale investigation conducted following a search and seizure operation under Section 132 in September 2022 on a group allegedly involved in facilitating bogus political donations through Registered Unrecognized Political Parties (RUPPs).
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According to the department, these entities were allegedly used to enable taxpayers to claim fraudulent deductions under Sections 80GGC and 80GGB, while the donated amounts were subsequently routed back to donors after deducting a commission.
Based on information gathered during the investigation, the Revenue alleged that the assessee had claimed a deduction of ₹2 lakh under Section 80GGC by making a donation to Rashtriya Samajwadi Party. Proceedings under Section 148A were initiated, followed by issuance of a notice under Section 148 and reassessment under Section 147.
The Assessing Officer ultimately disallowed the ₹2 lakh deduction under Section 80GGC and further disallowed ₹3.35 lakh claimed as expenditure under Section 57, leading to additions in the assessee’s income. The National Faceless Appeal Centre (NFAC) affirmed the assessment, prompting the appeal before the Tribunal.
Before the Tribunal, the assessee sought to raise an additional legal ground challenging the very validity of the reassessment proceedings. It was contended that the notice issued under Section 148 had not been signed either manually or digitally, thereby violating the mandatory requirements of Section 282A of the Income Tax Act.
The Tribunal admitted the additional ground, observing that it was a pure question of law going to the root of the jurisdiction of the Assessing Officer. Relying upon the Supreme Court’s decisions in National Thermal Power Co. Ltd. v. CIT and CIT v. Varas International, the Tribunal held that such legal grounds can be raised at any stage of appellate proceedings.
The Tribunal undertook a detailed examination of Section 282A, which governs the authentication of notices and other documents issued by Income Tax authorities.
It observed that the statute expressly provides that every notice required to be issued by an Income Tax authority “shall be signed” before being issued in paper form or communicated electronically. The Tribunal emphasised that the use of the word “shall” makes the requirement mandatory rather than directory.
According to the Tribunal, after the shift to electronic communication, the statutory requirement of authentication has not been diluted. Instead, notices issued electronically must bear a valid Digital Signature Certificate (DSC), while notices issued in physical form require manual signatures.
Upon examining the notice issued to the assessee, the Tribunal found that it neither contained a manual signature nor a digital signature of the Assessing Officer.
The Tribunal further noted that an unsigned notice fails to establish its authenticity, creates uncertainty regarding its origin, and deprives the taxpayer of assurance that it has actually been issued by the competent authority.
While arriving at its conclusion, the Tribunal relied upon the Bombay High Court’s decisions in Ambernath City Hospital (P.) Ltd. v. Union of India and Prakash Krishnavtar Bahardwaj v. Assessing Officer.
These decisions held that a notice issued under Section 148 without manual or digital authentication is invalid and does not vest jurisdiction in the Assessing Officer to reopen the assessment. The Tribunal observed that such a defect cannot be cured by invoking Sections 292B or 292BB of the Income Tax Act.
Since the notice under Section 148 itself was held to be invalid, the Tribunal ruled that the entire reassessment proceedings were void ab initio.
The tribunal quashed the reassessment order passed under Section 147. Having set aside the reassessment on jurisdictional grounds, the Tribunal held that the merits of the additions relating to the alleged bogus political donation under Section 80GGC and the disallowance under Section 57 had become purely academic and required no adjudication.
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