AKSHAY KUMAR RUNGTA,BANGALORE vs. INCOME TAX OFFICER, WARD 2(1), INTERNATIONAL TAXATION

Grounds on section 144C: i. The learned assessing officer is not justified in treating the appellant as an ‘eligible assessee’ in terms of section 144C of the Act for the relevant assessment year on the facts and circumstances of the case. ii. Without prejudice, the impugned order passed under section 147r.w.s144C of the Act is barred by limitation as the provisions of section 153 overrides the provisions of section 144C of the Act on the facts and circumstances of the case.

Briefly stated, the facts of the case are that the assessment under section 143(3) of the Act for the Assessment Year 2015-16 was completed on 28.12.2017 accepting the return income of Rs.7,63,040/-. The case was selected for complete scrutiny under CASS to verify any suspicious sale transaction in shares (penny stock). Assessment Order under section 143(3) of the Act was passed on 28.12.2017 by accepting the return income based on the submissions made by the assessee. The AO has issued various notices under section 142(1) of the Act vide notice dated 20.02.2017, 12.09.2017 and 13.10.2017. On 12.09.2017 the following questions were asked to the assessee:

Please furnish sources of investment made in equity shares.

Please state amount of investments made and corresponding modes of payments made.

Aggrieved from the above Order, assessee filed appeal before the Tribunal. The learned AR has raised additional grounds of appeal

The learned DR relied on the Order of the Co-ordinate Bench of the ITAT, Mumbai, in the case of Reuters Transaction Services Ltd., Vs. DCIT in Order dated 20.12.2019 and submitted that identical case has been dealt by the ITAT Mumbai Bench and submitted that the draft copy of the Assessment Order was duly stamped and signed which were available on the office record but copy issued to the assessee was not signed. As per the Income Tax Act, at the stage of draft Assessment Order, neither the tax is computed nor the demand notice issued. Only copy of draft Assessment Order is forwarded to the assessee for enabling him to raise objections before the DRP against any variation proposed to the income or loss which can be prejudicial to the assessee. Only the final Assessment Order which results in enforceable demand against the assessee. Thus, in strict sense, the term draft Assessment Order cannot be treated as Assessment Order passed under section 144(3) r.w.s. 144C(3) or section 144C(13) of the Act. Therefore, the non-signing of the draft Assessment Order forwarded to the assessee would not invalidate the final Assessment Order passed IT(IT)A No.66/Bang/2024 Page 11 of 31 under section 143(3) r.w.s. 144C(13) of the Act. Here in the case on hand, assessee did not challenge his Order within the stipulated time. It implies that the assessee had accepted at the first stage and this issue was also not raised before the learned CIT(A). Therefore, the draft Assessment Order issued by the AO by putting his name is correct and she submitted that the judgment relied on by the learned Counsel is with regard to issue of notice under section 148 of the Act for getting approval. The approval issued by the concerned authority must have been signed. Therefore, the judgment relied on by the learned AR is not applicable in the present facts of the case and the other judgment relied on by the learned Counsel of Hon’ble jurisdictional High Court of Karnataka is also not applicable to the present facts of the case. In that case, the TPO did not send its Order under section 92CA of the Act. The draft Order is a proposed variation as income declared by the assessee in his return of income. Therefore, it cannot be said that it is a final Assessment Order. Further, she submitted that it cannot be said that it is a change of opinion. The AO has not discussed in the very basis for the issue of notice for scrutiny under section 143(2) of the Act has not been discussed in the Assessment Order. The AO has not formed any opinion while completing the Assessment. Therefore, it cannot be said that it is a change of opinion.

Considering the rival submissions, we noted that the case of the assessee has been reopened under section 148 of the Act for examining the involvement of assessee in penny stock case on the basis of information received from the Investigation Wing. It is seen from the copy of reasons recorded that on similar points, the case was selected for scrutiny and notices were issued under section 142(1) of the Act on 20.02.2017, 12.09.2017 and 13.10.2017 to examine on same point and the assessee has also replied in detail which is placed at Paper Book page Nos.11 to 95. The details were submitted before the AO at the time of scrutiny assessment. Assessee had discharged his liability by providing information. The entire documents were available with the AO at the time of IT(IT)A No.66/Bang/2024 Page 12 of 31 completion of assessment under section 143(3) of the Act. He could have examined the same issue. Therefore, it is a complete change of opinion on the basis of information received from ITD to examine on the same points which were main object of notice under section 143(2) of the Act. it is impossible to hold that Assessing Officer was unaware of involvement in transactions of “Penny stock” made with Kolkata company. In support of our view, we are relying on the latest judgement of the hon’ble High Court of Delhi in the case of Maruti Suzuki India Ltd. vs DCIT reported in [2025] 71 taxmann.com 729 [Delhi] dated 21.02.2025 in which it has been held as under:- “35. The Full Bench in Usha International further cleared a misconception which appears to have been harboured with respect to certain observations which appeared in a previous decision of a Full Bench of this Court in CIT v. Kelvinator of India Ltd [2002] 123 Taxman 433/256 ITR 1 (Delhi) (FB)/2002 SCC OnLine Del 441. It held that the decision in Kelvinator cannot possibly be construed as having laid down a principle that even if the AO had not examined a particular subject matter or failed to express an opinion, it must be presumed that such an opinion had in fact been formed. This clarification was rendered in the context of an argument which appears to have been addressed to the effect that as long as material existed on the record, it should be presumed that the AO had duly scrutinized the same and agreed with the stand as taken by the assessee. This becomes apparent from a reading of paragraphs 22 to 25 of the report and which are extracted hereunder: "22. In the last paragraph quoted above, the Full Bench rejected the submission that reassessment proceedings would be justified if the assessment order is silent or does not record reasons or analysis of material on record. This, the Revenue had propounded, would show non-application of mind by the Assessing Officer. It was held that the said submission was fallacious. The Full Bench explained that when an assessment order was passed under section 143(3), a presumption could be raised that the order was passed after application of mind. Reference was made to clause (e) to section 114 of the Indian Evidence Act, 1872. The contention if accepted would give premium to the authority exercising quasi-judicial function to take benefit of its own wrong, i.e., failure to discuss or record reasons in the assessment order. The aforesaid observations have been made in the context and for explaining the principle of "change of opinion". The said principle IT(IT)A No.66/Bang/2024 Page 13 of 31 would apply even when there is no discussion in the assessment order but where the Assessing Officer had applied his mind. A wrong decision, wrong understanding of law or failure to draw proper inferences from the material facts already on record and examined, cannot be rectified or corrected by recourse to reassessment proceedings. The assessee is required to disclose full and true material facts and need not explain and interpret law. Legal inference has to be drawn by the Assessing Officer from the facts disclosed. It is for the Assessing Officer to understand and apply the law. In such cases resort to reassessment proceedings is not permissible but in a given case where an erroneous order prejudicial to the Revenue is passed, option to correct the error is available under section 263 of the Act.

The said observations do not mean that even if the Assessing Officer did not examine a particular subject-matter, entry or claim/deduction and, therefore, had not formed any opinion, it must be presumed that he must have formed an opinion. This is not what was argued by the assessee or held and decided. There cannot be deemed formation of opinion even when the particular subjectmatter, entry or claim/deduction is not examined.

Distinction between disclosure/declaration of material facts made by the assessee and the effect thereof and the principle of change of opinion is apparent and recognized. Failure to make full and true disclosure of material facts is a precondition which should be satisfied if the reopening is after four years of the end of the assessment year. The Explanation stipulates that mere production of books of account and other documents, from which the Assessing Officer could have with due diligence inferred facts does not amount to full and true disclosure. Thus, in cases of reopening after four years as per the proviso, conduct of the assessee and disclosures made by him are relevant. However, when the proviso is not applicable, the said precondition is not applicable. This additional requirement is not to be satisfied when reassessment proceedings are initiated within four years of the end of the assessment year. The sequitur is that when the proviso does not apply, the reassessment proceedings cannot be declared invalid on the ground that the full and true disclosure of material facts was made. In such cases, reassessment proceedings can be declared invalid when there is a change of opinion. As a matter of abundant caution we clarify that failure to state true and correct facts can vitiate and make the principle of change of opinion inapplicable.

Of equal significance are the following principles which the Full Bench culled out from the various precedents rendered by the Supreme Court in the context of Sections 147 and 148: "34. The Supreme Court thereafter referred to the subsequent decision in Indian and Eastern Newspaper Society v. CIT 2 Taxman 197/119 ITR 996 (SC) wherein it was observed that some of the observations made in Kalyanji Mavji (supra) were far too wide and the statute did not permit reappraisal of material considered by the Assessing Officer during the original assessment. The observations in Kalyanji Maviji (supra) that reopening would cover a case "where income has escaped assessment due to the oversight, inadvertence or mistake" was too broadly expressed and did not lay down the correct law. It was clarified and observed at page 1004 in Indian and Eastern Newspaper Society 2 Taxman 197/119 ITR 996 (SC) as: "Now, in the case before us, the Income-tax Officer had, when he made the original assessment, considered the provisions of sections 9 and 10. Any different view taken by him afterwards on the application of those provisions would amount to a change of opinion on material already considered by him. The Revenue contends that it is open to him to do so, and on that basis to reopen the assessment under section 147(b). Reliance is placed on Kalyanji Mavji and Co. v. CIT [1976] 102 ITR 287 (SC), where a Bench of two learned judges of this court observed that a case where income had escaped assessment due to the IT(IT)A No.66/Bang/2024 Page 15 of 31 'oversight, inadvertence or mistake' of the Income-tax Officer must fall within section 34(1)(b) of the Indian Income-tax Act, 1922. It appears to us, with respect, that the proposition is stated too widely and travels farther than the statute warrants in so far as it can be said to lay down that if, on reappraising the material considered by him during the original assessment, the Income-tax Officer discovers that he has committed an error in consequence of which income has escaped assessment it is open to him to reopen the assessment. In our opinion, an error discovered on a reconsideration of the same material (and no more) does not give him that power. That was the view taken by this court in Maharaj Kumar Kamal Singh v. CIT [1959] 35 ITR 1 (SC)(SC), CIT v. A. Raman and Co. [1968] 67 ITR 11 (SC) and Bankipur Club Ltd. v. CIT [1971] 82 ITR 831 (SC), and we do not believe that the law has since taken a different course. Any observations in Kalyanji Mavji and Co. v. CIT [1976] 102 ITR 287 (SC) suggesting the contrary do not, we say with respect, lay down the correct law."

In A. L. A. Firm (supra), the Supreme Court specifically dealt with propositions (2) and (4) quoted in paragraph 34 above and thereafter elucidated and explained that there was no difference between the observations of the Supreme Court in Kalyanji Maviji [1976] 102 ITR 287 (SC) and Indian and Eastern Newspaper Society case 2 Taxman 197/119 ITR 996 (SC), as far as proposition (4) is concerned. It was held that (page 297 of 189 ITR): "We have pointed out earlier that Kalyanji Maviji's case [1976] 102 ITR 287 (SC) outlines four situations in which action under section 34(1)(b) can be validly initiated. The Indian Eastern Newspaper Society's case 2 Taxman 197/119 ITR 996 (SC) has only indicated that proposition (2) outlined in this case and extracted earlier may have been somewhat widely stated ; it has not cast any doubt on the other three propositions set out in Kalyanji Mavji's case. The facts of the present case squarely fall within the scope of propositions 2 and 4 enunciated in Kalyanji Maviji's case [1976] 102 ITR 287 (SC). Proposition (2) may be briefly summarised as permitting action even on a 'mere change of opinion'. This is what has been doubted in the Indian and Eastern Newspaper Society case 2 Taxman 197/119 ITR 996 (SC) and we shall discuss its application to this case a little later. But, even leaving this out of consideration, there can be no doubt that the present case is squarely covered by proposition (4) set out in Kalyanji Maviji's case [1976] 102 ITR 287 (SC). This proposition clearly envisages a formation of opinion by the Income-tax Officer on the basis of material IT(IT)A No.66/Bang/2024 Page 16 of 31 already on record provided the formation of such opinion is consequent on 'information' in the shape of some light thrown on aspects of facts or law which the Income-tax Officer had not earlier been conscious of. To give a couple of illustrations ; suppose an Income-tax Officer, in the original assessment, which is a voluminous one involving several contentions, accepts a plea of the assessee in regard to one of the items that the profits realised on the sale of a house is a capital realisation not chargeable to tax. Subsequently, he finds, in the forest of papers filed in connection with the assessment, several instances of earlier sales of house property by the assessee. That would be a case where the Income-tax Officer derives information from the record on an investigation or enquiry into facts not originally undertaken. Again, suppose the Income-tax Officer accepts the plea of an assessee that a particular receipt is not income liable to tax. But, on further research into law he finds that there was a direct decision holding that category of receipt to be an income receipt. He would be entitled to reopen the assessment under section 147(b) by virtue of proposition (4) of Kalyanji Mavji. The fact that the details of sales of house properties were already in the file or that the decision subsequently come across by him was already there would not affect the position because the information that such facts or decision existed comes to him only much later. What then, is the difference between the situations envisaged in propositions (2) and (4) of Kalyanji Maviji's case [1976] 102 ITR 287 (SC). The difference, if one keeps in mind the trend of the judicial decisions, is this. Proposition (4) refers to a case where the Income- tax Officer initiates reassessment proceedings in the light of 'information' obtained by him by an investigation into material already on record or by research into the law applicable thereto which has brought out an angle or aspect that had been missed earlier, for e.g., as in the two Madras decisions referred to earlier. Proposition (2) no doubt covers this situation also but it is so widely expressed as to include also cases in which the Income-tax Officer, having considered all the facts and law, arrives at a particular conclusion, but reinitiates proceedings because, on a reappraisal of the same material which had been considered earlier and in the light of the same legal aspects to which his attention had been drawn earlier, he comes to a conclusion that an item of income which he had earlier consciously left out from the earlier assessment should have been brought to tax. In other words, as pointed out in Indian and Eastern Newspaper Society's IT(IT)A No.66/Bang/2024 Page 17 of 31 case 2 Taxman 197/119 ITR 996 (SC), it also ropes in cases of a 'bare or mere change of opinion' where the Income-tax Officer (very often a successor officer) attempts to reopen the assessment because the opinion formed earlier by himself (or, more often, by a predecessor Income- tax Officer) was, in his opinion, incorrect. Judicial decisions had consistently held that this could not be done and the Indian and Eastern Newspaper Society's case 2 Taxman 197/119 ITR 996 (SC) has warned that this line of cases cannot be taken to have been overruled by Kalyanji Mavji [1976] 102 ITR 287 (SC). The second paragraph from the judgment in the Indian and Eastern Newspaper Society's case 2 Taxman 197/119 ITR 996 (SC) earlier extracted has also reference only to this situation and insists upon the necessity of some information which make the Income-tax Officer realise that he has committed an error in the earlier assessment. This paragraph does not in any way affect the principle enumerated in the two Madras cases cited with approval in Anandji Haridas 21 STC 326. Even making allowances for this limitation placed on the observations in Kalyanji Mavji, the position as summarised by the High Court in the following words represents, in our view, the correct position in law (at page 629 of 102 ITR): The result of these decisions is that the statute does not require that the information must be extraneous to the record. It is enough if the material, on the basis of which the reassessment proceedings are sought to be initiated, came to the notice of the Income-tax Officer subsequent to the original assessment. If the Income-tax Officer had considered and formed an opinion on the said material in the original assessment itself, then he would be powerless to start the proceedings for the reassessment. Where, however, the Income-tax Officer had not considered the material and subsequently came by the material from the record itself, then such a case would fall within the scope of section 147(b) of the Act'." (emphasis supplied) 36. The aforesaid observations are a complete answer to the submission that if a particular subject-matter, item, deduction or claim is not examined by the Assessing Officer, it will nevertheless be a case of change of opinion and the reassessment proceedings will be barred.

From the guiding principles which came to be expounded by the Full Bench in Usha International, the following position would emerge. A Court would, while examining a challenge to the invocation of Section 148, and where it be asserted that it essentially amounts to a change of opinion, have to bear in mind that the power to reassess would be wholly unjustified in a case where the assessment order itself reflects that an issue was raised and duly examined. Usha International further lays emphasis on the assessment record and the various queries that may have been addressed by the AO for eliciting information. It thus held that if the record of the reassessment proceedings were to evidence a query being specifically addressed and answered by the assessee and the same not being pursued by the AO or leading to an addition being made must necessarily be rendered finality and a quietus. This it observed since it found that even if the view taken by the AO in that respect were erroneous or prejudicial to the interest of the Revenue, it did not stand deprived of a right to adopt corrective measures including those provisioned for in Section 263 of the Act. However, it was held that such a contingency would not justify the power of reassessment being exercised.

That then takes us to the aspect of fresh or new factual information that may come to light pursuant to an order of assessment made subsequently. The Full Bench in Usha International held that if new information comes to the knowledge of the AO in the course of undertaking an assessment for a subsequent period, the same could be validly taken into consideration and IT(IT)A No.66/Bang/2024 Page 20 of 31 would not amount to a change of opinion. It observed that an opinion which may have been formed originally, if established to be based on wrong or incorrect facts, would not stand insulated or rendered immunity from review. It thus held that factual information or material which was either not available at the time of original assessment or which comes to light subsequently may justify the initiation of reassessment proceedings.

However, Usha International pertinently observes that it is equally important to bear in consideration the fact that if material facts are duly disclosed by an assessee, it is for the AO to draw appropriate legal inferences and appreciate the implications of those disclosures. It thus held that a failure on the part of the AO to duly apply a legal provision or give shape to a liability which would arise under the Act despite appropriate disclosures being made, would not justify the invocation of Section 148.

The observations as appearing in the earlier decision of Kelvinator were explained by the Full Bench as being liable to be read as pertaining to the principle of change of opinion only. It was thus observed that it would be wholly incorrect to hold that the AO should be presumed to have formed an opinion even if it had failed to examine a particular item of income or expenditure. It thus laid emphasis on the distinction that must be assumed to exist between a change of opinion and a case where no opinion at all may have been formed by the AO on a particular issue.

The Court in Usha International also affirmed the right to reopen in case the said decision be based on fresh material that may come to the fore. It was thus observed that while it would be open to the AO to base its opinion to reopen on material and facts that may come to its notice subsequently, the same would have to be assessed subject to the caveat that material did not originally exist and the AO was thus powerless to have examined the issues emanating therefrom. The Court in Usha International then also dealt with situations where a query raised and the information elicited may itself be demonstrative of an issue having been examined by the AO and consequently precluding it from resorting to the power to reopen as conferred under the Act.

It is on a balanced application of the aforenoted precepts that the challenge raised in this writ petition would have to be evaluated. However, and before we proceed to do so, we also deem it apposite to notice the following illuminating passages which appear in New Delhi Television Ltd. v. Dy. CIT [2020] 116 taxmann.com 15/271 Taxman 1/424 ITR 607 (SC)/2020 SCC OnLine SC 446 and where the Supreme Court had an occasion to also notice Claggett Brachi Co. Ltd. (supra) and Phool Chand IT(IT)A No.66/Bang/2024 Page 21 of 31 Bajrang Lal (supra), two decisions which had been cited by Mr. Chandra for our consideration.

While dealing with information that may come to light subsequently and post closure of the original assessment proceedings, the Supreme Court in New Delhi Television Ltd.(supra) observed as follows: "22. A perusal of the aforesaid judgments clearly shows that subsequent facts which come to the knowledge of the Assessing Officer can be taken into account to decide whether the assessment proceedings should be re- opened or not. Information which comes to the notice of the Assessing Officer during proceedings for subsequent assessment years can definitely form tangible material to invoke powers vested with the Assessing Officer under section 147 of the Act.”

Respectfully following the above judgement, we allow this issue raised by the assessee. In the case of additional ground raised by the assessee regarding draft Assessment Order is not signed by the AO, we have also gone through the same Order dated 31.03.2022. The AO has put his name and mentioned as (in case the document is digitally signed please refer Digital Signature at the bottom of the page) but at the bottom of the page there is no any digital signature made by him. Further, on going through the notice issued under section 142(1) of the Act dated 19.01.2022 at Paper Book Page No.233, the AO has digitally signed. As per section 144C(3) of the Act, the AO is mandated to complete the assessment on the basis of draft Assessment Order if the Order is not signed as per terms of section 282A of the Act, it has no legal effect as held by the Hon’ble Allahabad High Court in the case of Vikas Vs. UoI (supra). Following the above judgement, we hold that the Draft Assessment order should also have been signed. Resultantly the subsequent proceedings on the basis of Draft Assessment Orders are non-est in the eyes of law as laid down by the hon’ble Allahabad High Court. In the case on hand the draft assessment order has not been signed the said order would not take legal effect. The relevant part of the judgment is as under:

That the aforesaid provisions of law clearly demonstrates that the approval issued by the PCIT in electronic form, without affixing digital signature is also deemed to be authenticated and therefore affixation of digital signature is not a precondition for validation of the document.

Thus, as per provision of section 151 of the Income-tax Act, 1961, an assessing officer gets jurisdiction to issue notice to an assessee under section 148 of the Act, 1961 after Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner of Income-tax is satisfied on the reason recorded by the assessing officer that it is a fit case for issuing such notice. The date and time of the approval granted digitally under section 151 of the Act and the date and time of the notice under section 148 of the Act, shows that the satisfaction was recorded by the PCIT digitally after the notice under section 148 was digitally signed and issued by the Assessing Officer.

Thus, the following questions arise for consideration:- (a) Whether an unsigned content in an electronic record said to be pushed through electronic mode at a particular point of time, can be said to be a valid satisfaction of the PCIT under section 151 for assumption of jurisdiction by the Assessing Officer to issue jurisdictional notice to an assessee under section 148 of the Act, 1961? (b) Whether impugned notices under section 148 of the Act, 1961 issued by the Assessing Officer without satisfaction signed by the PCIT under section 151 of the Act, 1961, is a valid notice? 15. Sub-section (1) of section 282A contains the following necessary conditions: (i) such notice or other document shall be signed by that Authority and (ii) issued in paper form or communicated in electronic form by that authority (iii) in accordance with such procedure as may be prescribed.

The procedure for communication in electronic form has been prescribed under rule 127A of the Rules 1962.

The first and foremost condition under sub-section (1) of section 282A is that notice or other document to be issued by any Income-tax Authority shall be signed by that authority. The word "and" has been used in sub-section (1), in conjunctive sense meaning thereby that such notice or other document has first to be signed by the authority and thereafter it may be issued either in paper form or may be communicated in electronic form by that authority. In the present set of facts, it IT(IT)A No.66/Bang/2024 Page 28 of 31 is the admitted case of the respondents that the PCIT has not recorded satisfaction under his signature prior to the issuance of notice by the Assessing Officer under section 148 of the Act, 1961.

In the case of Maharaja Sir Pateshwari Prasad Singh v. State of U.P. [1963] 50 ITR 731, three judges bench of Hon'ble Supreme Court held that the word "and" should normally be given its ordinary meaning and should be understood in conjunctive sense. Thus, as per provisions of sub-section (1) of section 282A, the notice or other document shall be signed and thereafter it shall be issued in paper form or may be communicated in electronic form then the document or notice so issued or communicated, shall be deemed to be an authenticated notice or document in terms of Rule 127A of the Rules, 1962. Signed - Meaning: 18. The word "signed" has not been defined under the Act, 1961, which is a central Act. However, it has been defined in Section 3(56) of the General Clauses Act, 1897, as under: "3(56) "sign", with its grammatical variations and cognate expressions, shall, with reference to a person who is unable to write his name, include "mark", with its grammatical variations and cognate expressions;"

As per Webster's New World Dictionary, the word 'sign' means 'to write one's name on, as in acknowledging authorship, authorising action etc.' In Rattan Anmol Singh v. Ch. Atma Ram 1955 (1) SCR 481 : AIR 1954 SC 510 (para-6), Hon'ble Supreme Court explained the meaning of the word 'sign' and held as under: "6. The Oxford English Dictionary sets out thirteen shades of meaning to the word "subscribe", most of them either obsolete or now rarely used. The only two which can have any real relation to the present matter are the following: 1. "To write (one's name or mark) on, originally at the bottom of a document, especially as a witness or contesting party; to sign one's name to." This meaning is described as "rare." 2. "To sign one's name to; to signify assent or adhesion to by signing one's name; to attest by signing." This appears to be its modern meaning, and is also one of the meanings given to the word "sign", namely "to attest or confirm by adding one's signature; to affix one's name to (a document) etc."

In Hindustan Construction Co. Ltd. v. Union of India 1967 (1) SCR 543 : AIR 1967 SC 526 (Para-7), Hon'ble Supreme Court held as under:

The first and foremost condition under sub-section (1) of section 282A is that notice or other document to be issued by any Income-tax Authority shall be signed by that authority. The word "and" has been used in sub-section (1), in conjunctive sense, meaning thereby that such notice or other document has first to be signed by the authority and thereafter it may be issued either in paper form or may be communicated in electronic form by that authority. In the present set of facts, it is the admitted case of the respondents that the PCIT has not recorded satisfaction under his signature prior to the issuance of notice by the Assessing Officer under section 148 of the Act, 1961.

Section 282A (1) of the Act, 1961 specifically provides that a notice or other documents issued by any Income-tax Authority shall be signed by that authority in accordance with such procedure as may be prescribed. Section 151 of the Act, 1961 specifically provides recording of satisfaction by the Prescribed Authority, on the reasons recorded by the Assessing Officer that it is a fit case for the issue of notice under section 148 of the Act, 1961. Unless such satisfaction is recorded, the Assessing Officer could not get jurisdiction to issue notice under section 148. A satisfaction, to be a valid satisfaction under section 151 of the Act, 1961, has to be recorded by the Prescribed Authority under his signature on application mind and not mechanically, as also held by the Hon'ble Supreme Court in the case of Chhugamal Rajpal (supra). Unless the Prescribed Authority under IT(IT)A No.66/Bang/2024 Page 30 of 31 section 151 of the Act, 1961 records his satisfaction on application of mind and under his signature, there cannot be a valid satisfaction empowering the Assessing Officer to assume jurisdiction to issue notice under section 148 of the Act, 1961. In other words, an Assessing Officer may issue jurisdictional notice under section 148 only after the Prescribed Authority under section 151 of the Act records his satisfaction that it is fit case for issue of notice under section 148.”

The Hon’ble jurisdictional High Court of Karnataka in the case of Toyota Tausho India Pvt. Ltd., (supra), the Order issued under section 92CA of the Act was also not signed by the TPO, was held invalid in the eyes of law. The judgment relied on by the learned DR is also not applicable because in the office copy of the same Order was signed by the AO but only copy of the draft Order forwarded to the assessee was not signed but in the present case the learned DR failed to produce any signed copy of the draft Assessment Order from the record of the AO. Therefore, the judgment relied on by the learned DR is not applicable. Respectfully following the judgment of the Hon’ble Allahabad High Court and jurisdictional Hon’ble High Court of Karnataka, we hold that the draft Assessment Order issued by the AO is non-est and on the basis of the draft Assessment Order, the final Assessment Order passed by the AO and subsequent proceedings are also is invalid in the eyes of law.

In the result, appeal filed by the assessee is allowed as per above terms.