SAGAR SHANKARRAO CHIKA,JALNA vs. THE INCOME TAX OFFICER, WARD-1, JALNA

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ITA 1959/PUN/2024Status: DisposedITAT Pune21 August 2026AY 2017-189 pages
AI SummaryPartly Allowed

What did the Tribunal hold?

The Tribunal held that the assessment order is bad in law due to the non-service of notice under Section 143(2) of the Act, following precedents from the Patna and Delhi High Courts. This rendered the assessment invalid.

What were the facts?

The assessee filed returns for AYs 2016-17 and 2017-18. Notices under Section 148 were issued, and the assessee filed returns in response, but the Assessing Officer treated these returns as invalid. The Assessing Officer then proceeded with the assessment without issuing a notice under Section 143(2).

What were the issues?

The primary issue was whether the assessment order is invalid due to the non-issuance of a notice under Section 143(2) after a return was filed in response to a Section 148 notice. Another issue concerned the validity of the Section 148 notice issuance and service.

Which sections of the Income-tax Act were involved?

Section 148,Section 143(2),Section 250,Section 282,Section 292BB

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, PUNE BENCH “B”, PUNE

Before: SHRI PAVAN KUMAR GADALE & SHRI Dr. DIPAK P. RIPOTE

For Appellant: Shri Pratik Sandbhor
For Respondent: Ms. Bhavya I.V., Jt. CIT

आदेश /ORDER

PER Dr. DIPAK P. RIPOTE, A.M : These two appeals are filed by the assessee against the order of the Learned Commissioner of Income Tax (Appeals), NFAC, Delhi [Ld.CIT(A)], passed u/s. 250 of the Income Tax Act, 1961 (‘the Act’) for AYs 2016-17 and 2017-18 on 24.07.2024 and 25.07.2024.

2.

We have heard both the parties and perused the records. For the sake of convenience and since issue involved is same, these two appeals were heard together and are disposed of by this common order.

3.

First, we shall take up the appeal in ITA No. 1958/PUN/2024.

ITA Nos.1958 & 1959/PUN/2024

4.

We have heard both the parties and perused the records.

4.1 In this case, the Ld. AR filed paper book and factual paper book. The relevant paragraph of Ld. AR’s submission are reproduced here as under : “1. Vide Ground No. 1 & 2 the appellant challenges the validity of Assessment Order in as much as the notice u/s 148 has been issued on 01/04/2021 however the assessment proceedings have been completed as per unamended provisions of law. In the present case the notice u/s 148 though dated 31/03/2021, it has been issued only on 01/04/2021 or thereafter. The said fact is evident from the 'Date of Issue' appearing on the Income Tax Portal of the appellant. (Refer page No. 13 to 15). The appellant also made an application to confirm the date of issue of notice u/ 148 as the same appears to be issued on 01/04/2021 as per the Income Tax Portal The Id. Assessing Officer in response has confirmed that the notice was issued manually and provided the copy of acknowledgment dated 16/12/2021. Copy of said reply of the Assessing Officer is enclosed herewith at page No. 13 to 14 of the paper book. It is evident from the acknowledgments that the notice has been hand served on 16/12/2021.”

4.1 In this case, the Ld. AR submitted that notice u/s 143(2) of the Act was not served on the assessee. The Ld. AR read out the relevant paragraph of the assessment order to demonstrate that notice u/s 143(2) of the Act was not served on the assessee.

5.

The Ld. AR relied on the following case laws :

ITA Nos.1958 & 1959/PUN/2024

ITA Nos.1958 & 1959/PUN/2024

6.

In this case, the assessee had filed return of income for AY 2016-17 on 29.03.2018 declaring total income at Rs.3,06,110/-. Notice u/s 148 of the Act was issued to the assessee on 31.03.2021. The assessee filed return of income in response to notice u/s 148 of the Act on 28.02.2022. This fact is mentioned in the assessment order. The Assessing Officer (AO) treated the said return of income filed on 28.02.2022 as invalid return as it was not filed within the time allowed by notice u/s 148. The relevant paragraph of the assessment order reproduced here as under : “Further, in the reply, assessee submitted that he has filed return of income on 28.02.2022 in compliance to notice u/s 148. However, the return was not filed within the stipulated time as given in the notice u/s 148 hence; the return of income is not a valid return.”

7.

In the assessment order, the AO has started computation of income as per retuned income. Thus, on one hand the AO treated return of income filed on 28.02.2022 as invalid but started computation of income, taking into consideration the income shown in the return of income.

8.

The Ld. DR filed written submissions which is as under : “2. In the case of the assessee Shri. Sagar Shankarrao Chilka for AY 2016-17 and AY 2017-18, the assessee has taken ground (Ground no 2) that the notices under section 148 of the Act, even though signed on 31.03.2021 was delivered on 01.04.2021 as per the e-filing portal and hence, the assessment has been completed without following the procedure under the amended law. 3. In this regard, it is humbly submitted that it is a matter of record that the notices under section 148 of the Income-tax Act, 1961 for both Assessment Year 2016-17 and Assessment Year 2017-18 were digitally signed by the Assessing Officer on 31.03.2021. This fact is borne out by the Digital Signature Certificate (DSC) and the ITBA generated notices placed on record. The Copies of the notices issued under section 148 of the Act dated 31.03.2021 for AY 2016-17 and AY 2017-18 is placed as Annexure 1 and 2 to this written submission.

ITA Nos.1958 & 1959/PUN/2024

4.

It is submitted that the moment the DSC is affixed, the notice attains finality in the hands of the Assessing Officer it is thereafter incapable of alteration, recall or withholding by him/her. No independent act of 'issue' survives to be performed. Once the notice is digitally signed, it passes out of the hands of the Assessing Officer. The only step that follows is transmission to the assessee, which is an automated function of the ITBA / e-filing system and is not within the control or discretion of the Assessing Officer.

5.

The Hon'ble High Court of Madras in Subramaniam Rohini v. Income Tax Officer, NFAC, Delhi considered an identical question and held that where the notice was digitally signed on 31.03.2021, it must be treated as having been issued on that date. A copy of the order is enclosed as Annexure 3 to this written submission for kind reference.

6.

Delivery in the registered e-filing account constitutes valid service.

6.1 The assessee has contended that the notice under section 148 was never received in the assessee's e-mail. The contention is misconceived, for the reasons set out below.

6.2 Section 282(1) of the Act provides that a notice may be served on the person by delivering or transmitting a copy to the person. Rule 127 of the Income-tax Rules, 1962 prescribes the manner of such communication.

6.3 The Rule 127(3) empowers the Principal Director General of Income-tax (Systems) to specify the procedure, formats and standards for ensuring secured transmission of electronic communication. In exercise of this power, Notification No. 2/2016 dated 03.02.2016 was issued, a copy of which is enclosed as Annexure 4 to this written submission. The said Notification expressly recognises delivery of communications in the assessee's registered e-filing account as a valid mode of electronic service.

6.4 In the present case, the notices under section 148 were duly delivered in the assessee's registered account on the e-filing portal, as evidenced by the portal delivery log placed on record. Such delivery is service in the eye of law. The assessee's assertion regarding non- receipt in e-mail, even if accepted, does not detract from the validity of service effected through the portal, the two being independent and alternative modes recognised under Rule 127 of the Income tax Rules, 1962.

6.5 It is further submitted that the e-mail address to which communications are transmitted is the one furnished by the assessee in the return of income or in the e- filing profile. The obligation to keep this address current, functional and monitored rests upon the

ITA Nos.1958 & 1959/PUN/2024

assessee. A default in this regard cannot be converted into a jurisdictional infirmity in the Department's proceedings.

6.6. Without prejudice to the above, it is submitted that the assessee has in fact participated in the reassessment proceedings. Section 292BB of the Act therefore operates as a bar, and the assessee is precluded from contending that the notice was not served upon him, was not served in time, or was served in an improper manner.

7.

On the grounds raised by the assessee regarding GKN Driveshaft- 259 ITR 19 and notice under section 143(2) of the Act.

7.1 Further, as ground No 3, the assessee has stated that the Assessing Officer failed to follow the procedures laid in the case law of the Hon'ble Supreme Court in the case of GKN Driveshaft-259 ITR 19. Further, vide ground no 6, the assessee raised contention that the Assessing Officer failed to issue notice under section 143(2) of the Act.

7.2 In this regard, it is submitted that the assessee did not file the return of income in response to the notice under section 148 of the Act within the time stipulated on the notice under section 148 of the Act. It is for this reason that the notice under section 143(2) of the Act was also not issued in the case of the assessee. In this regard, kind attention is invited to the paragraph 8.2 to 9.1 of the order of the Ld. CIT(A) under section 250 of the Act dated 24.07.2024 for AY 2016-17 and paragraph 9.2 to 10.1 of the order of the Ld. CIT(A) under section 250 of the Act dated 25.07.2024 for AY 2017-18 wherein the Ld. CIT(A) has dismissed the grounds raised by the assessee.

8.

Regarding 153C Vs. 148 of the Act

8.1 The assessee, vide ground no 4, has raised contention that the case should have been completed under section 153C of the Act and not 147 of the Act. In this regard, it is submitted that, in the present case, the assessment has rightly been reopened under section 147 of the Act. Section 153C applies where, during a search, books of account, documents, money, jewellery or other valuable articles are actually seized or requisitioned and such material relates to a person other than the person searched. In the present case, no such material was seized from the assessee. The Assessing Officer only received information indicating that income have escaped assessment. Therefore, the case is based on information received by the Assessing Officer and not on any material seized during a search. Hence, the appropriate provision for reopening the assessment is section 147 of the Act.

ITA Nos.1958 & 1959/PUN/2024

9.

The assessee has failed to explain the transactions in the account maintained with M/s Shree Renuka Mata Multi State Urban Cooperative Credit Society 9.1 On the merits of the addition, it is respectfully submitted that the assessee has, at no stage of the proceedings, explained the manner in which the transactions appearing in the account maintained with M/s Shree Renuka Mata Multi State Urban Cooperative Credit Society stand accounted for in the books of account. Neither the assessment proceedings nor the present appellate proceedings have elicited any reconciliation of the said transactions with the books. 9.2 More significantly, the said account does not find place at all in the list of bank accounts disclosed in the financial statements of the assessee. It is not reflected in the Balance Sheet submitted by the assessee. The account is thus, on the assessee's own financials, an undisclosed account. 9.3 The onus of explaining the nature and source of the credits appearing in the said account, and of demonstrating that the same stand duly recorded in the books, rests squarely upon the assessee, who alone is in possession of the relevant particulars. That onus has not been discharged. In the absence of any explanation the transactions in the said account remain wholly unexplained and the addition made by the Assessing Officer calls for no interference. 10. In view of the above, it is respectfully submitted that the notices under section 148 of the Act for Assessment Years 2016-17 and 2017- 18 were validly issued on 31.03.2021, within the period of limitation, and were validly served upon the assessee in accordance with section 282 read with Rule 127 and Notification No. 2/2016 dated 03.02.2016. Further, in these cases the notices under section 148 of the Act were served to the assessee manually through speed post also. (Kindly refer to page 15 of the paper book submitted by the assessee for AY 2016-17 and 2017-18). 11. Thus, the objections raised by the assessee on non-service are therefore liable to be rejected. It is further submitted that, on merits, the transactions in the account maintained with M/s Shree Renuka Mata Multi State Urban Cooperative Credit Society remain unexplained and undisclosed in the financials of the assessee, and the addition made on that count deserves to be sustained.”

9.

The question before us is whether non-service of notice u/s 143(2) is fatal for the assessment order or not. This issue has been decided by the Hon’ble High Court of Patna in the case

ITA Nos.1958 & 1959/PUN/2024

of CIT Vs. Nagendra Prasad (2023) 156 taxmann.com 19 (Patna). The relevant paragraphs of the said order are as under: Quote, “5. Admittedly, the notice was issued by the Assessing Officer under section 148 of the Act on 14-7-2008 requiring the assessee to file a return within thirty days. A return was filed much later on 31-3- 2009, after eight and a half months. 6. On identical facts, in M.A. No. 239 of 2011 titled as Chand Bihari Agrawal v. Commissioner Of Incom85 Tax, Central, Patna decided on 25-7-2023, this Court considered the issue and held against the revenue. 7. We find that the question of law has to be answered in favour of the assesee and against the revenue. Hotel Blue Moon (supra) governs the issue which has been followed in Chand Bihari Agrawal (supra).”unquote. 10. Similarly, the Hon’ble Delhi High Court in the case of Pr. CIT Vs. Shri Jai Shiv Shankar Traders (P.) Ltd., (2015) 64 taxmann.com 220 (Delhi) has held as under : Quote, “19. The resultant position is that as far as the present case is concerned the failure by the AO to issue a notice to the Assessee under Section 143(2) of the Act subsequent to 16th December 2010 when the Assessee made a statement before the AO to the effect that the original return filed should be treated as a return pursuant to a notice under Section 148 of the Act, is fatal to the order of re- assessment.”Unquote.

11.

No contrary decision has been brought to our notice by the Ld. DR. In these facts and circumstances of the case, respectfully following Hon’ble High Courts (supra), since notice u/s 143(2) of the Act was not served on the assessee though the assessee had filed return of income the assessment order is bad in law. Accordingly, Ground Number 6 raised by the assessee is allowed.

12.

Since, we have allowed Ground No. 6, all other grounds are dismissed un-adjudicated.

ITA Nos.1958 & 1959/PUN/2024

ITA No. 1959/PUN/2024, AY 2017-18

13.

Similarly, for AY 2017-18, the assessee had filed return of income on 29.03.2018 declaring total income of Rs.3,14,040/-. Notice u/s 148 of the Act was issued on 31.03.2021. In response to notice u/s 148 of the Act the assessee filed return of income on 28.02.2022. No notice u/s 143(2) of the Act was issued. Since, we have already held that if notice u/s 143(2) is not issued then assessment order is bad in law. The findings of appeal in ITA No. 1958/PUN/2024 will mutatis mutandis apply to ITA No. 1959/PUN/2024 also. Accordingly, grounds raised by the assessee are partly allowed.

14.

In the result, both the appeals of the assessee are partly allowed.

Order pronounced in the open Court on 21st August, 2026

Sd/- Sd/- (PAVAN KUMAR GADALE) (Dr. DIPAK P. RIPOTE) JUDICIAL MEMBER ACCOUNTANT MEMBER पुणे/Pune; दिन ांक/Dated : 21-08-2026 Ravi Kumar Digitally signed by Ravi Kumar Date: 2026.08.21 18:19:42 Ravi Kumar +05'30' आदेश की प्रतितिति अग्रेतिि/Copy of the Order is forwarded to: 1. अपील र्थी / The Appellant 2. प्रत्यर्थी / The Respondent 3. The concerned Pr. CIT, Pune 4. DR, ITAT, ‘B’ Bench, Pune 5. ग र्ड फ ईल / Guard file. आदेशानुसार/ BY ORDER, // True Copy // Assistant Registrar आयकर अपीलीय अदिकरण,पुणे / ITAT, Pune

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