Clipped from: https://taxguru.in/income-tax/assessment-quashed-due-unsigned-notices-sections-148-148a.html
DCIT Vs Mahalaxmi Light House (ITAT Delhi)
Assessment Quashed Entirely—Notices u/s 148A(b), 148A(d) & 148 Invalid for Want of Digital/Manual Signature; Revenue Appeal Infructuous
Assessee, a partnership firm providing tent & lighting services, faced reassessment on allegation of bogus purchases of ₹68.78 lakh from Zenith Enterprises (entry provider Ankit Karanwal) & under-reported receipts of ₹1.47 crore based on Form 26AS mismatch. AO made additions totalling ₹72,21,918 u/s 69C & difference in receipts. CIT(A) deleted the additions. Revenue appealed; Assessee filed Cross Objection.
Assessee’s CO challenged the validity of reassessment itself, alleging that notice u/s 148A(b), order u/s 148A(d) & notice u/s 148 were unsigned—neither digitally nor manually—rendering them null. The impugned notices were examined by Tribunal & found to contain no signature of any AO.
Tribunal relied on Bombay HC – Prakash Krishnavtar Bhardwaj (2023) 150 taxmann.com 60, which held that an unsigned notice u/s 148A(b)/148 is invalid & without jurisdiction, & all subsequent proceedings automatically fall.
Accordingly:
- Unsigned notices = no valid initiation of reassessment
- Therefore, entire s.147 order is void ab initio
- Cross Objection allowed; assessment quashed
- Revenue’s appeal automatically becomes infructuous
Delay of 234 days in filing CO was also condoned, considering bona fide reasons.
FULL TEXT OF THE ORDER OF ITAT DELHI
The captioned appeal and Cross Objection are filed by the Revenue and the Assessee challenging the orders of Ld. Commissioner of Income Tax (Appeals/National Faceless Appeal Centre (‘Ld. CIT(A)/NFAC’ for short), New Delhi dated 28/06/2024 for the Assessment Year 2018-19.
2. Brief facts as mentioned in the order of the Ld. CIT(A) are as under:-
“1. The appellant is a partnership firm engaged in the business of providing services of erection of tents as well as illumination thereof by arranging for lighting by way of hiring of equipments. This service is provided various Government Departments. It is the allegation of the A.O. that as per information available in the ITBA System and Insight Portal, the assessee has made fictitious purchases totaling to Rs. 68,78,020/-from Shri AnkitKaranwal (PAN: FOPPK8646A) during the financial year 2017-18 (AY: 2018-19). Such finding was based on details and documents gathered during search and seizure operation in the case of K. K. Spun Group of Delhi conducted by DDIT (Inv)-1(1), Delhi.
2. Thereafter, show-cause notice was issued u/s 148A(b) of the Act on 23.02.2022 fixing the date of compliance on 30.03.2022. No reply was furnished by the assessee and sought only adjournments. Thereafter, on 12.04.2022, order u/s 148A(d) of the Act was passed and notice u/s 148 was issued as per DIN: ITBA/AST/S/148_1/2022-23/1042715417(1).
3. On perusal of the Form-3CD and Form 26AS in the course of assessment, it is found that there is a difference between the turnover reported in Form 26AS and the profit and loss account to the tune of Rs. 1,47,56,317/-. This amount has been considered as income which has escaped assessment. Moreover, GST amount involved in the purchase of Rs. 68,78,020/- for Rs. 3,43,898/- has also been considered as doubtful. So, aggregate of these two (68,78,020/- + 3,43,898/-) Rs 72,21,918/-has been considered for addition u/s 69-C of the Act to returned income as the same has escaped assessment.
The total income as per the reassessment order was thus, determined at Rs. 3,72,44,452/- as per the order dated 14/03/2024.”
3. Aggrieved by the assessment order dated 14/03/2024, Assessee preferred an Appeal before the Ld. CIT(A). The Ld. CIT(A) vide order dated 28/06/2024, deleted the additions made by the A.O. Aggrieved by the order of the Ld. CIT(A) dated 28/06/2024, the Department preferred the present Appeal. The Assessee has also filed Cross Objection. The respective grounds of Appeal/Cross Objection of the parties as under:-
ITA No. 3514/DEL/2024 (A.Y. 2018-19)
“1. 1. That on the facts and circumstances of the case, the Ld. CIT(A), NFAC erred in law and on facts in deleting the addition of Rs. 72,21,918/- (Rs.68,78,020/- + GST: Rs.3,43,898/-) as unexplained expenditure on account of bogus purchases done by the assessee from Zenith Enterprises of entry provider Ankit Karanwal.
2. That on the facts and circumstances of the case, the Ld. CIT(A), NFAC erred in law and on facts to treat that bogus expenses of Rs.68,78,020/- and bogus GST of Rs.3.43,898/ as genuine, contrary to the findings of the Investigation wing of the department. The Investigation Wing conducted a search and seizure action on KK Spun Group and gave detailed findings with regard to bogus purchases booked by the assessee from shell company Zenith Enterprises managed by entry provider Ankit Karanwall. The assessee failed to prove the genuineness of transactions done with Zenith Enterprises and failed to give documentary evidences for purchase of 141512MRT of fabric from Zenith Enterprises. Merely, routing the funds through banking channel does not make a transaction to be genuine business transaction, genuine business transaction.
That on the facts and circumstances of the case, the Ld. CIT(A), NFAC erred in law and on facts in deleting the additions of Rs. 1,47,56,317/ made to the business income of the assessee for the relevant assessment year on account of under reporting of business income as evident from the difference between total receipts shown in form 26AS and total income ‘shown in ITR. As per 26AS, total receipts were shown as Rs. 15,63,72,824/-, whereas total turnover as shown in ITR was Rs.14,15,16,507/-, which showed that the assessee declared short income of Rs. 1,47,56,317/-. The assessee failed to provide the reconciliation of the above figures.
C.O No. 109/Del/2024 (in ITA No. 3514/Del/2024)
“1. That the assessment u/s 147 is bad in law and required to be quashed as reassessment proceedings u/s 148 which led to assessment u/s 147 were initiated/completed without following procedure as per amended provision of Income Tax Act, 1961.
The above cross-objection are independent of, and without prejudice to each other.”
4. Since, the Assessee has challenged the assessment order in the Cross Objection on the ground of non-issuance of mandatory notice u/s 143 (2) of the Act, we have heard on the Cross Objection filed by the Assessee.
5. There is a delay of 234 days in filing the C.O and the Assessee in the applications for condonation of delay contended as under:-
‘It is respectfully submitted that the delay in filing the cross-objection was primarily due to bringing correct facts before the Hon’ble Bench as without confirming the service of the notice which was available on the E-filing portal from the assessee or its authorized representative, this cross objection could not be filed. It may be appreciated that non-availability of relevant documents and later on verification of these documents was the cause for filing cross objection late, the delay in filing being reasonable cause may kindly be condoned. The delay was neither deliberate nor intentional but occurred due to the genuine and bona fide circumstances as explained above.’
6. For the reasons stated in the application for condonation of delay, the delay of 234 days in filing the Cross Objection is hereby condoned.
7. The Ld. Counsel for the Assessee addressing on the Cross Objection, vehemently submitted that the assessment order has been passed without issuing notice u/s 148A (b) of the Act, order u/s 148A (d) and notice u/s 148 of the Act has been issued without their being any manual or digital signature. The Ld. Counsel relying on the CBDT Instruction No. 1/2018 dated 12/02/2018 F. No. 225/157/2017-ITA II, and the Judgment of Hon’ble High Court of Bombay in the case of Prakash Krishnavtar Bhardwaj Vs. ITO (2023) 150 Taxmann.com 60 (Bom), sought for allowing the Cross Objection filed by the Assessee.
8. Per contra, the Ld. Ld. Departmental Representative submitted that all the notices have been issued by strictly following the procedures laid down in law and the Assessee has not objected either before the A.O. or before the Ld. CIT(A) regarding defects in the notice and for the first time raising the said issue by way of Cross Objection before this Tribunal which is not permissible. Further submitted that the additions have been made by the A.O. on its merits, which has been erroneously deleted by the Ld. CIT(A), which requires interference at the hands of Tribunal. Therefore, sought for dismissal of the Cross Objection and allowing the Appeal of the Revenue.
9. We have heard both the parties and perused the material available on record. It is the specific case of the Assessee that the notice u/s 148 A (b), or passed u/s 148A(d) and consequent notice u/s 148 of the Act were not digitally or manually signed. The copy of those notices/order are placed at page No. 1 to 5 of the PB. On verifying those documents, it is found that none of the notices or the order bares the signature of the officer either digital or manual.
10. The Hon’ble High Court of Bombay in the case of Prakash Krishnavtar Bhardwaj Vs. ITO (supra), set aside the notice issued u/s 148 of the Act, order passed u/s 148A(b) of the Act and also notice issued u/s 148A(b) of the Act on the ground of no signature affixed on the notices/order either digitally or manually in following manners:-
“We are, therefore, of the considered opinion that in the present case, the notice u/s. 148 dated 2-4-2022 Officer with any further jurisdiction to proceed to reassess the income of the petitioner. Consequently, the notice dated 2-4-2022 u/s. 148 of the Act issued to the petitioner being invalid and sought to be issued after three years from the end of the relevant assessment year 2015-16 with which we are concerned in this petition, any steps taken by the respondents in furtherance of notice dated 21-3-2022 issued under clause (b) of section 148A of the Act and order dated 2-4-2022 issued under clause (d) of section 148A of the Act, would be without jurisdiction, and therefore, arbitrary and contrary to Article 14 of the Constitution of India. Consequently, we quash and set aside the notice dated 2-4-2022 issued by the respondents u/s.148 of the Act, order dated 2-4-2022 under clause (b) of section 148A of the Act and notice dated 21-3-2022 issued under clause (b) of section 148A of the Act.
22. Rule is made absolute in terms of prayer clauses (a) & (b) of the petition.”
11. Considering the above facts and circumstances, since there is no signature on the notice u/s 148A(b) of the Act or u/s 148A (d) of the Act and the notice u/s 148 of the Act, we set aside the same, consequently also quash the assessment order made thereupon. Accordingly, we allow the Cross Objection No. 109/Del/2024 filed by the Assessee.
12. Since we have allowed the Cross Objection and set aside the assessment order, the Appeal of the Revenue renders in-fructuous, accordingly Appeal in ITA No. 3514/Del/2024 filed by the Revenue is dismissed.
Order pronounced in the open court on 05th December, 2025
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