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Facts
The assessee filed its return of income for AY 2015-16. Subsequently, the AO reopened the assessment under Section 148 of the Income Tax Act, 1961, based on information suggesting a bogus loan from Granth Exim Pvt. Ltd. The AO treated the loan as unexplained under Section 68 and disallowed related interest.
Held
The Tribunal held that the notice under Section 148, though digitally signed on March 31, 2021, was actually dispatched and served on April 1, 2021. Therefore, it was not issued within the prescribed time limit and the mandatory procedure under Section 148A should have been followed.
Key Issues
Whether the notice under Section 148 was validly issued on March 31, 2021, or April 1, 2021, and if it was time-barred due to non-compliance with the procedure laid down by the Supreme Court.
Sections Cited
148, 68, 143(1), 151, 133A, 148A, 147, 149
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, “G” BENCH, MUMBAI
Before: SHRI SAKTIJIT DEY, VP &
(Assessment Year: 2015-16) Gupta Builders and Developers, ACIT, CC-4(3), Room No. 1921, 19th Floor, 1201 & 1202, Bhumiraj Costarica, Plot No. 1 & 2, Near Moraj Circle, Air India Building, Nariman Point, Vs. Sector-18, Sanpada, Mumbai-400021. Navi Mumbai-400705. PAN: AAJFG3066H Appellant) : Respondent) Appellant /Assessee by : Ms. Ritika Agarwal, Advocate : Shri Swapnil Choudhary, Sr. DR Revenue / Respondent by Date of Hearing : 25.08.2025 Date of Pronouncement : 03.09.2025 O R D E R
Per Padmavathy S, AM:
This appeal by the assessee is against the order of the Commissioner of Income Tax (Appeals)-52, Mumbai [In short 'CIT(A)'] passed under section 250 of the Income Tax Act, 1961 (the Act) dated 08.10.2024 for Assessment Year (AY) 2015-16. The assessee has raised the following the grounds of appeal:
“1. BECAUSE, the CIT(A) has erred in law in treating the impugned assessment order as valid since the notice dated 31/03/2021 u/s. 148 was 2 ITA 4361/Mum/2025 Gupta Builders and Developers digitally signed on the same date ignoring the fact that the notice was issued and served only on 01/04/2021 through email and thus, the AO was required undertake the subsequent proceedings u/s. 148A as per the order of Supreme Court in the case of Ashish Agarwal (2022) 444 ITR 1 (SC). The CIT(A) failed to deal with the decisions filed by the Appellant in support of its contention.
BECAUSE, the approval of PCIT (Central), Mumbai-2 u/s. 151 of the Income Tax Act, 1961 is invalid as it is not the competent authority as per section 151 of the Act. Without Prejudice, 3. BECAUSE, the impugned assessment order is bad in law since the reasons for reopening of assessment are recorded solely on "suspicion" without bringing on record any tangible material.
4. BECAUSE the CIT(A) has erred upholding that the reopening of the assessment was not based on "borrowed satisfaction," despite the fact that the AO has merely relied on the information provided by the survey party without conducting any independent verification, applying due diligence, or making preliminary inquiries.
5. BECAUSE the CIT(A) has erred in law by upholding that the AO is not required to establish any failure on the part of the Appellant, in a case where the return was processed u/s. 143(1) of the Act.
BECAUSE the CIT(A) has erred in law by upholding that the approval u/s. 151 is valid and not mechanically on the erroneous ground that the Appellant failed to provide evidence to the contrary, while also disregarding the judgments submitted by the Appellant in support.
7. BECAUSE, the CIT(A) has erred in law and on facts in confirming the loan from Granth Exim Pvt. Ltd. amounting to Rs.98,00,000/-as unexplained u/s. 68 and disallowing interest of Rs.3,49,677/- on erroneous ground that the Appellant has failed to discharge its initial onus ignoring the plethora of documents filed by the Appellant to prove the identity and creditworthiness of the lender and genuineness of the loan transaction.”
2. The assessee is a partnership firm and filed the return of income for AY 2015-16 on 28.09.2015 declaring total income of Rs. 26,68,670/-. A survey was conducted under section 133A on 26.11.2019 in the case of M/s Greenscape
3 ITA 4361/Mum/2025 Gupta Builders and Developers Developers Group and M/s Proviso Builders & Developers Group. From the survey operations it is noticed that the assessee has taken loan to the tune of Rs. 98,00,000/- from one M/s Granth Exim Pvt. Ltd. which as per survey report was found to be a bogus party. Accordingly, the Assessing Officer (AO) reopened the assessment vide notice dated 31.03.2021 under section 148 of the Act. After perusal of details furnished by the assessee, the AO treated the loan as unexplained under section 68 of the Act. The AO also disallowed the interest to the tune of Rs. 3,49,677/- on said loan. Aggrieved the assessee filed further appeal before the CIT(A) who dismissed the appeal of the assessee. Before the CIT(A) the assessee raised a legal contention stating that the notice under section 148 dated 31.03.2021 was issued on 01.04.2021 and that the AO did not follow the procedure as per the directions of the Hon'ble Supreme Court in the case of UOI vs Ashish Aggarwal [[2022] 138 taxmann.com 64]. The CIT(A) dismissed the said contention of the assessee by holding that “7.19. One of the contentions of the appellant is that the notice was issued on 01.04.2021 which is evident from the e-mail dated 01.04.2021. In this regard, I find that as per appellant’s own submission, the notice is digitally signed on 31.03.2021 at 10:07 PM. Since the notice was issued by an Officer of Central Charge, is it fair to assume that once the same has been digitally signed, the notice has actually been issued, the subsequent mail is merely service and cannot be equated with issue of notice. The case law cited by the appellant cannot be equated to the issuance of the notice by an Officer of Central Charge.”
There is a delay of 183 days in filing the appeal before the Tribunal and the assessee has filed a petition for condonation of delay along with an affidavit. It is submitted that the partner who is managing the tax matters of the assessee is a senior citizen and had to undergo surgery due to age related complications. It is further submitted that due to this reason, he could not attend office regularly and the order of the CIT(A) was inadvertently omitted to be noticed. It is also 4 ITA 4361/Mum/2025 Gupta Builders and Developers submitted that once the partners came to know of CIT(A)'s order the appeal was filed immediately. The assessee has furnished the documentary evidences with regard to the submissions made in the affidavit and prayed that the delay which is unintentional and attributable to circumstances beyond assessee's control deserves to be condoned. The ld DR on the other hand vehementaly argued that the other partners could have taken note of CIT(A)'s order and filed the appeal on time. The ld DR accordingly submitted that the reasonable cause in the present case for the delay is not well substantiated and hence the delay should not be condoned.
Having heard both the parties and perused the material on record, we are of the view that there is a reasonable and sufficient cause for the delay in filing the appeal before the Tribunal. Therefore following the Hon’ble Supreme Court decision in the case of Collector, Land Acquisition Vs. MST.Katiji & Ors., (167 ITR 471) (SC) we condone the delay of 183 days in filing the appeal and admit the appeal for adjudication.
The ld. AR submitted that the notice under section 148 dated 31.03.2021 was actually served on the assessee through email only on 01.04.2021. In this regard the ld. AR drew our attention to the relevant notice under section 148 and the email received from the ITBA Portal as extracted below:
5 ITA 4361/Mum/2025 Gupta Builders and Developers
6 ITA 4361/Mum/2025 Gupta Builders and Developers 6. The ld. AR accordingly submitted that the procedure as laid down by the Hon'ble Supreme Court in the case of Ashish Aggarwal (supra) should have been followed since the notice is issued on 01.04.2021. The ld. AR submitted that the AO did not follow the procedure and completed the assessment by making the impugned additions. The ld. AR further submitted that the CIT(A) has not properly adjudicated the said legal contention raised by the assessee. The ld. AR also submitted that the notice is deemed to be issued only when the same leaves the control of the issuing authority and in assessee's case from the perusal of the above email it is clear that the notice under section 148 left to the mail box of ITBA portal only on 01.04.2021 which would mean that the notice is issued on the assessee only on 01.04.2021. The ld. AR relied on the order of the Hon'ble Supreme Court in the case of ACIT vs. Anantha Reddy Pannala [2025] 476 ITR 6 (SC)] where the Apex Court had dismissed the SLP filed against the order of Hon'ble Telangana High Court in the case of Kalyan Chillara vs DCIT [2024] 167 taxmann.com 500 (Telangana) and our attention was drawn to the following relevant observations – “31. For the reasons and principles that we have laid down, we dispose of these writ petitions with the following directions: 31.1. Category "A": The notices falling under category "A", which were digitally signed on or after April 1, 2021, are held to bear the date on which the said notices were digitally signed and not March 31,2021. The said petitions are disposed of with the direction that the said notices are to be considered as show-cause notices under section 148A(b) of the Act as per the directions of the apex court in the Ashish Agarwal, (supra) judgment. 31.2. Category "B": The notices falling under category "B" which were sent through the registered e-mail ID of the respective jurisdictional Assessing Officers, though not digitally signed are held to be valid. The said petitions are disposed of with the direction to the jurisdictional Assessing Officers to verify and determine the date and time of its despatch as recorded in the Income Tax Business Application portal in 7 ITA 4361/Mum/2025 Gupta Builders and Developers accordance with the law laid down in this judgment as the date of issuance. If the date and time of despatch recorded is on or after April 1, 2021, the notices are to be considered as show- cause notices under section 148A(b) as per the directions of the apex court in the Ashish Agarwal (supra) judgment.
31.3. Category "C": The petitions challenging notices falling under category "C" which were digitally signed on March 31, 2021, are disposed of with the direction to the jurisdictional Assessing Officers to verify and determine the date and time of despatch as recorded in the Income Tax Business Application portal in accordance with the law laid down in this judgment as the date of issuance. If the date and time of despatch recorded is on or after April 1, 2021, the notices are to be considered as show-cause notices under section 148A(b) as per the directions of the apex court in the Ashish Agarwal (supra) judgment.
31.4. Category "D": The petitions challenging notices falling under category "D" which were only uploaded in the e-filing portal of the assessees without any real time alert, are disposed of with the direction to the jurisdictional Assessing Officers to determine the date and time when the assessees viewed the notices in the e-filing portal, as recorded in the Income Tax Business Application portal and conclude such date as the date of issuance in accordance with the law laid down in this judgment. If such date of issuance is determined to be on or after April 1, 2021, the notices will be construed as issued under section 148A(b) of the Act of 1961 as per the Ashish Agarwal (supra) judgment.
31.5. Category "E": The petitions challenging notices falling under category "E" which were manually despatched, are disposed of with the direction to the jurisdictional Assessing Officers to determine in accordance with the law laid down in this judgment, the date and time when the notices were delivered to the post office for despatch and consider the same as date of issuance. If the date and time of despatch recorded is on or after April 1, 2021, the notices are to be construed as show-cause notices under section 148A(b) as per the directions of the apex court in the Ashish Agarwal (supra) judgment.”
The ld AR argued that from the above observations, where various scenarios have been decided, it is clear that wherever the notice is dispatched on 01.04.2021, the Hon'ble Hgh Court has held that the said notice should be construed as issued under section 148A(b) as per the directions of the Apex Court. The ld AR further argued that in assessee's case since it is an established fact that the notice is 8 ITA 4361/Mum/2025 Gupta Builders and Developers dispatched / sent through email on 01.04.2021 and therefore the procedure as laid down by the Hon'ble Supreme Court should have been followed. The ld AR also argued that since the AO has not followed the said procedure, the notice issued on 01.04.2021 is barred by limitation and consequently the assessment should be held as not valid.
The ld. DR on the other hand argued that the notice is dated 31.03.2021 and is digitally signed on the same dated at 10.07 pm which would mean that the notice is issued on 31.03.2021. The ld. DR further argued that once the notice is digitally signed it is deemed to be issued and therefore it cannot be stated that the notices issued on 01.04.2021. Accordingly the ld DR submitted that there is no infirmity in the assessment order passed based on the notice dated 31.03.2021.
We heard the parties and perused the material on record. The assessee's case was reopened by the notice under section 148 of the Act. From the perusal of records, we notice that the notice is dated 31.03.2021 and is digitally signed on the same date at 10.07 p.m. We further notice that the email with the notice under section 148 is triggered from ITBA system on 01.04.2021. The contention of the assessee is that the notice is issued on 01.04.2021 and hence the procedure as laid down by the Hon'ble Supreme Court should be followed. The revenue's argument is that the notice under section 148 is dated 31.03.2021 and digitally signed on the same date which would mean that the same is issued to the assessee on that date and hence the requirement to follow the procedure laid down by the Apex Court is not warranted. In this regard we notice that the similar issue has been considered by the Hon'ble Delhi High Court in the case of Suman Jeet Agarwal v. ITO [(2022) 449 ITR 517] and the relevant findings are extracted below – "25.23. We therefore answer question no. (1) in negative against the Department and hold that the impugned Notices dated 31st March, 2021,
9 ITA 4361/Mum/2025 Gupta Builders and Developers which were despatched on 1st April, 2021, or thereafter, would not meet the test of 'issued' under Section 149 of the Act of 1961 and would be time barred, unless saved by the judgment of the Supreme Court in Ashish Aggarwal (Supra). 26.19. It would also be relevant to note that the time taken by the ITBA e-mail software system on 31st March, 2021, to despatch the e- mails was not due to any software glitch. The time taken by the software system was as per the programming of the system, as admitted in the Compliance Affidavit. The programming to despatch the Notices in a controlled manner and batch mode was a pre-existing fact and to the knowledge of the Department. The time taken in despatch of the e-mail on 31st March, 2021, was therefore as per the controls set in the ITBA system. 26.20. We are in respectful agreement with the law laid down by the various High Courts in Daujee Abhushan (Supra), Santosh Krishna HUF (Supra), Mohan Lal Santwani (Supra), Advance Infradevelopers (P) Ltd. (Supra) and Yuvraj v. Income Tax Officer (Supra), that for determining when Notices were issued, the date and time of when the ITBA e-mail software system is triggered and the Notices leave the last ITBA server would be considered. 26.21. We therefore answer question no. (II) in affirmative and hold that despatch as per Section 13 of the Act of 2000, is a sine qua non and happens when the electronic mail message leaves the ITBA's servers. 26.22. We answer question no. (III) against the Department and hold that the time taken by the ITBA's e-mail software system in triggering the e-mail and transmitting the said e-mails from the IIBA servers is attributable to the Department and therefore for the e-mails despatched on 1st April 2021 or thereafter, the Notices are held not to have been issued on 31st March 2021. 26.23. We also take judicial notice of the fact that the Department from May, 2022, for Notices issued on or after 1st April 2021, has considered the date and time of despatch of the notices as recorded by the ITBA portal as the date of issuance and disregarded the date of generation of notice i.e. 31.03.2021. For notices despatched on or after 1st April 2021, the Department, following the Supreme Court's order in Ashish Agarwal (Supra) considered the notices as issued under Section 148A of the Act of 1961. This shows that the Department itself acknowledges and admits that the date of generation is distinct from date of issuance and the Department considers the despatch by ITBA Portal as the date of issue for the purpose of Section 149 of the Act of 1961. (emphasis supplied)
10 ITA 4361/Mum/2025 Gupta Builders and Developers 10. In the above decision the Hon'ble High Court has given an elaborate finding with regard to the functioning of the ITBA portal and has held that if the mail is triggered and if the e-mails despatched on 01.04.2021 or thereafter then the notices are to be held as not to have been issued on 31.03.2021. We further notice that the Hon'ble Madhya Pradesh High Court in the case of . Yuvraj S/O Late Sukhvir Singh Jain v. ITO (Writ Petition No. 28293 of 2021, order dated 03/03/2022) while considering a similar issue held that that in cases where notices are issued on or after 01.04.2021 it is a mandatory requirement that prior to re-assessment proceedings notice under section 148A of the Act should be issued to assesseee. In this regard it is also relevant to consider the following observations of the Hon'ble Allahabad High Court in the case of Daujee Abhushan Bhandar Pvt. Ltd. (Writ Tax No.78 of 2022, order dated 10/03/2022) – "29. Thus, considering the provisions of sections 282 and 282A of the Act, 1961 and the provisions of section 13 of the Act, 2000 and meaning of the word "issue" we find that firstly notice shall be signed by the assessing authority and then it has to be issued either in paper form or be communicated in electronic form by delivering or transmitting the copy thereof to the person therein named by modes provided in section 282 which includes transmitting in the form of electronic record. Section 13(1) of the Act, 2000 provides that unless otherwise agreed, the despatch of an electronic record occurs when it enters into computer resources outside the control of the originator. Thus, the point of time when a digitally signed notice in the form of electronic record is entered in computer resources outside the control of the originator i.e. the assessing authority that shall the date and time of issuance of notice under section 148 read with section 149 of the Act, 1961.
In view of the discussion made above, we hold that mere digitally signing the notice is not the issuance of notice. Since the impugned notice under section 148 of the Act, 1961 was issued to the petitioner on 6-4-2021 through e-mail, therefore, we hold that the impugned notice under section 148 of the Act, 1961 is time barred. Consequently, the impugned notice is quashed.”
Considering the facts and circumstances of the present case as elaborated herein above and the judicial precedence we are of the view that the notice issued
11 ITA 4361/Mum/2025 Gupta Builders and Developers to the assessee by ITBA vide mail dated 01.04.2021 cannot be held as issued on 31.03.2021 and is to be held as time barred since the AO has not followed the mandatory procedure laid by the Hon'ble Supreme Court in the case of Ashish Agrawal (supra).
In result appeal of the assessee is allowed.