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

Per Laxmi Prasad Sahu, Accountant Member : This appeal filed by the assessee is against the Order passed by the CIT(A) vide DIN and Order No.ITBA/APL/S/250/2023-24/1058289780(1) dated 29.11.2023, on the following grounds of appeal: 1. The order passed by the learned Commissioner of Income Tax (Appeals), Bengaluru-12, under section 250 of the Act in so far as it is against the Appellant is opposed to law, weight of evidence, probabilities, facts and circumstances of the Appellant’s case. 2. The appellant denies himself to be assessed at Rs. 83,17,454/- as against the returned income of Rs. 7,63,060/- for the assessment year 2015-16 on the facts and circumstances of the case.

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3. Grounds on reopening:
a.
Grounds on notice issued under section 148:
i.
The notice issued under section 148 of the Act is bad in law.
ii.
The reopening of assessment is void ab initio as the reasons recorded by the learned assessing officer is based on borrowed satisfaction and that there is no independent application of mind on the facts and circumstances of the case.
iii.
The notice issued under section 148 of the Act is bad in law as the reasons recorded is based on change of opinion and the power to reassess is not akin to power to review on the facts and circumstances of the case.
iv.
The authorities below failed to appreciate that, no notice under section 148 of the Act could be issued after a period of four years, where an assessment U/s 143(3) has been passed, unless there is a failure to disclose fully and truly all material facts, by the appellant, on the facts and circumstances of the case.
v.
The provision of sections 147, 148, 149 and 151 has been substituted by the Finance Act, 2021 and there is no saving clause envisaged under the new provision to continue with the proceedings initiated under the erstwhile provisions of the Act, thus the order passed is bad in law, on the facts and circumstances of the case b.
Grounds on sanction accorded under section 151 of the Act:
i.
The learned assessing officer has failed to obtain proper sanction under section 151 of the Act. Without prejudice, the sanction accorded, if any, is mechanical and without application of mind on the facts and circumstances of the case.
ii.
The sanction accorded by the learned Additional Commissioner of Income Tax is without juri iction as the notice issued under section 148 of the Act is beyond the period of four years from the end of the assessment year, on the facts and circumstances of the case.
c.
Grounds on Legal Issues:
i.
153C: The reopening is based on information gathered during search conducted by the Investigation Wing and the learned assessing officer is not justified in passing the order under section 147 r.w.s144C of the Act and ought to have passed the order under section 153C of the Act.
ii.
Failure to Dispose Objections: The order of reassessment is further bad in law as the learned assessing officer failed to IT(IT)A No.66/Bang/2024
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dispose the legal objections raised by the appellant dated
10.11.2021 on the facts and circumstances of the case.
iii.
Cross Examination not provided: The order of reassessment is vitiated on account of violation of principles of natural justice in as much as the appellant was not afforded opportunity of cross- examination of the person relying on whose statement the case of the appellant was re-opened and the additions were sought to be made in the reassessment.
iv.
Documents not provided: The order of reassessment is vitiated on account of violation of principles of natural justice in as much as the appellant was not provided the seized documents, information and the report of the regulatory authorities on the basis of which the case of the appellant was re-opened on the facts and circumstances of the case.
4. 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.
5. Grounds on merits of the matter:
a.
Disallowance of exemption claimed under section 10(38),Rs.28,65,882/-:
i.
The authorities below were not justified in disallowing the claim of exemption claimed under section 10(38) of the Act with respect to the capital gains on the long term equity shares and have failed to take cognizance of the DEMAT statement, contract notes, etc submitted during the course of assessment proceedings on the facts and circumstances.
ii.
The authorities below have erred in treating the long term capital gains as unexplained in terms of section 69A of the Act without appreciating the fact that the nature and source of such transaction stands explained on the facts and circumstances of the case.
iii.
Without prejudice and not conceding that the sale of shares were in order, the learned assessing officer ought to have allowed the purchase cost incurred by the appellant

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against the sale consideration of Rs.29,85,882/- brought to tax on the facts and circumstances of the case.
b.
The authorities below were not justified in invoking the provisions of section 69A of the Act with respect to the short term capital loss of Rs.11,90,359/- made on the scrip sale of Unno Industries Limited on the facts and circumstances of the case.
b.
The authorities below were not justified in invoking the provisions of section 69A of the Act with respect to the short term capital gain of Rs.23,18,153/- made on the scrip sale of Pearl Electric Limited on the facts and circumstances of the case.
b.
The authorities below were not justified in invoking the provisions of section 69A of the Act with respect to the purchase of shares of Mahaveer Advanced Rem for Rs.10,60,000/- on the facts and circumstances of the case.
b.
The authorities below have failed to appreciate that the provisions of section 69A of the Act is not mandatory but discretionary in nature on the facts and circumstances of the case.
b.
The authorities below have failed to appreciate that the provisions of section 69A could be invoked only when the money / Bullion /
Jewellery etc is not recorded in the books of accounts of the assessee which is not the case in hand on the facts and circumstances of the case.
6. The appellant denies the liability to pay interest under section 234A,
234B and 234C of the Act in view of the fact that there is no liability to additional tax as determined by the learned assessing officer.
Without prejudice the rate, period and on what quantum the interest has been levied are not in accordance with law and further are not discernible from the order and hence deserves to be cancelled on the facts and circumstances of the case.
7. The appellant craves leave to add, alter, delete or substitute any of the grounds urged above.
8. In view of the above and other grounds that may be urged at the time of the hearing of the appeal, the appellant prays that the appeal may be allowed and appropriate relief be granted in the interest of justice and equity.
2. Assessee has also filed additional grounds of appeal vide its application dated 07.10.2024. The additional grounds of appeal raised by the assessee is as under:

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1. The draft assessment order dated 31/03/2022 passed u/s 144C of the Act is not valid in the eye of law and is non-est as it is not signed at all and consequently there is no valid order passed within the period of limitation on the facts and circumstances of the case.
2. The appellant craves leave to add, alter, modify, delete or substitute any or all of the grounds at the time of hearing the appeal.
3. In the view of the above and other grounds that may be urged at the time of the hearing of the appeal, the Appellant prays that the appeal may be allowed and appropriate relief may be granted in the interest of justice and equity.
3. 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:
1. Please furnish sources of investment made in equity shares.
2. Please state amount of investments made and corresponding modes of payments made.
3. Pease state the business profile of the investor/assessee.
4. Please furnish copies of bank account statements reflecting payilierits zinc! receipts of sale of investments.
5. Please state your regularity of investment in shares.
6. Please state date of opening of Demat account, status of Demat account and through whom it was opened.
4. Assessee furnished reply dated 13.11.2017 where all the questions as stated above were replied which is placed at Paper Book Page Nos.11 to 95. After submissions the AO did not ask any further question on the aforesaid point and passed order accepting the return income. The AO received information from DDIT (Investigation Wing) that the assessee has earned capital gain on sale of its IT(IT)A No.66/Bang/2024
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shares which is exempt under section 10(38) of the Act and this capital gain has been earned by sale of share as penny stock. After recording of reasons and taking necessary approval from the competent authorities as per extended date by the CBDT, the approval was granted and notice under section 148 of the Act was issued to the assessee. The assessee furnished reply on 30.10.2023 and the assessee also furnished reply from time to time in response to notice placed on record and AO has considered while completing the reassessment. Accordingly, the AO prepared draft Assessment Order under section 144C of the Act vide
Order dated 31.03.2022 and issued to the assessee. Since assessee is a non- resident, therefore, the case was taken up by the International Taxation
Department. The assessee did not challenge the draft Assessment Order passed under section 144C of the Act before the DRP and he filed appeal before the learned CIT(A) after raising various grounds. The learned CIT(A) dismissed the appeal of the assessee.
5. Aggrieved from the above Order, assessee filed appeal before the Tribunal. The learned AR has raised additional grounds of appeal quoted supra.
We have gone through the additional grounds raised by assessee and this issue was not raised before the learned CIT(A). We are of the view that the additional grounds raised by the assessee goes to the root of the matter to decide the issue of the assessee. Further, this issue was not raised before the learned CIT(A).
Therefore, relying on the judgment of the National Thermal Power Co. Ltd. Vs.
CIT reported in 229 ITR 383 and decision of the juri ictional High Court in the case of Gundathur Thimmappa & Sons Vs. CIT reported in 70 ITR 70. Accordingly, the additional ground is admitted for adjudication. The learned
Counsel for the assessee reiterated the submissions made before the lower authorities and further submitted that this is a complete change of opinion. The case was selected for complete scrutiny and AO issued notices on various dates under section 142(1) of the Act on 20.02.2017, 12.11.2017 and 13.10.2017 and the reason or selection for scrutiny is to verify any suspicious sale transactions in IT(IT)A No.66/Bang/2024
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shares (penny stock) and AO has issued notices under section 142(1) of the Act on different dates which is placed at Paper Book Page Nos.7 to 10 on the same specific points were raised by the AO for examination and assessee has filed detailed submissions which is placed at Paper Book Page Nos.11 to 95 and the assessee had replied pointwise of entire questions and answers were filed by the assessee and after satisfying himself, the AO accepted the return of income filed by the assessee and no any adverse inference was drawn. Merely not discussing in the Assessment Order the reasons for accepting the submissions of the assessee will not affect since the entire details as asked by the AO were submitted.
Subsequently, notice issued under section 148 of the Act on similar points is a complete “change of opinion” which is not permitted in the Act and various hon’ble courts have decided this issue in favour of the assessee. Further, the learned Counsel vehemently objected that the draft Assessment Order dated
31.03.2022 passed by Kannaiyan Krishna Sagayanath, International Taxation,
Ward – 2(1), Bangalore, is not signed, therefore, it is non-est in the eyes of law.
The Assessment Order passed on the basis of draft Assessment Order has no value. He also referred to section 282A of the Act. In this regard, he relied on the Order of the Hon’ble Allahabad High Court in the case of Vikas Gupta Vs.
UoI reported in (2012) 142 taxmann.com 253. He submitted that however the judgment is related to section 151 of the Act but as per section 282A of the Act, the AO has to sign each and every notices/order/document. He also referred to para Nos.10, 13, 16, 18, 20, 26, 27, 28 and 29 of the said judgment. He also referred to judgment of the juri ictional High Court of Karnataka in the case of Toyota Tausho India (P) Ltd., Vs. DCIT reported in (2024) 164 taxmann.com 85
(Karnataka). He submitted that the Order must have been digitally signed.
Section 282A(1) of the Act requires authentication of notices and other documents. He also referred to page 229 along with 233 of the paper Book and submitted that the notice issued under section 142(1) of the Act dated 19.01.2022
is digitally singed as mentioned below the name of the officer (in case the document is digitally signed please refer Digital Signature at the bottom of the IT(IT)A No.66/Bang/2024
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page). However, at page No.229 is a draft order, the same wordings are given but, on the page, it is not digitally signed. Therefore, the draft Assessment Order issued under section 144C of the Act is non-est. On the other hand, the learned
DR relied on the Order of the lower authorities and submitted that the learned DR objected to the additional grounds raised by the assessee and she submitted that this issue was not raised before the CIT(A) and the assessee also did not approach the learned DRP and therefore assessee had no objection on the draft Assessment
Order issued by the AO after issuance of draft Assessment Order. She further reiterated the comments received from the Income Tax Officer (International
Taxation) which was submitted on 16.10.2014 before the ITAT in which it has been observed as under :
“ Comment of the AO:
The Directorate of Investigation had made a comprehensive investigation based on search and seizure action u/s 132 of the I.T. Act, 1961. Based on Investigation report, the necessary information was forwarded to the concerned juri ictional Assessing Officer to take necessary action as per the provisions of Income Tax Act, 1961. On receipt of credible information from the Directorate ofInvestigation, the reasons to believe had been properly understood by the authorities and there was material on the basis of which, reason for reopening of assessment was recorded and the case was reopened after obtaining necessary approval from the competent
Authority and accordingly notice under section 148 of the I.T. Act, 1961
was issued.
The Directorate of Investigation, Kolkata carried out a country wideinvestigation to unearth the organized racket of generating bogus entries of Long Term Capital Gain (LTCG) which is exempt from tax. The modus operandi adopted by the operators was to make the beneficiary buy some shares of a predetermined Penny stock company controlled by them.
These shares aretransferred to the beneficiary at the very nominal price mostly off-line through preferential allotment or off-line sale. The beneficiary (an individual) holds the shares for one year, the statutory period after which LTCG is exempt u/8 10(38) of the Income tax Act,
1961.11 the meantime the operatorsrig the price of the stock and gradually raise its price many times, often 500 to 1000 times. This is done through low volume transactions indulged in by the dummies of the operator at a predetermined price. When the price reaches the desired level the IT(IT)A No.66/Bang/2024
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beneficiary who bought the shares at a nominal price, is made tosell itto adummy paper company of the operator. For this, unaccounted cash is provided by the beneficiary which is routed through a few layers of paper companies by the operator and finally is parked with the ciPninv paper company that-will buy the shares.
The Directorate of Investigation, Kolkata has found a list of such paper companies who indulge in bogus transactions to avail an artificial loss or gain of transaction. Out of such a paper company, M/s GCM
Securities Limited, M/s Unno Industries, M/s Pearl Electric Limited, M/s
Mahaveer Advanced Rem are one of them whose listed penny stocks are one among the list with whom the assesses has traded the share.
In the instant case, the assessee earned long term capital gain of Rs.28,65,882/-in the financial year 2014-15 in the scrip of M/s GCM
Securities Limited, M/s Unno Industries, M/s Pearl Electric Limited, M/s
Mahaveer Advanced Rem and claimed the same as exempt u/s 10(38) of the act. During the course of search and seizure proceedings u/s 132 of the Act, it was found that the key persons/entity involved in bogus transactions of penny stock through the various paper companies such as the M/s GCM Securities Limited & others. Since, the assesses has traded with the penny scrips of the M/s GCM Securities Limited
&others,( the information was shared with the field offices to initiate necessary action to ascertain the genuineness of the transactions. In the instant case, the assessee case was not directly involved in the search and seizure proceedings, the u/s 132 of the Act, the assessment proceedings in the instant case does not fall u/s 1530 of the Ate. The provisionof section 153C of the Act is reproduced below:
Assessment of income of any other person.
153C.(1) Notwithstanding anything contained in section 139, section 147, section 148, section. 149, section 151 and section 153, where the Assessing Officer is satisfied that,—
(a) any money, bullion, jewellery or other valuable article or thing, seized orrequisitioned, belongs to; or (b) any books of account or documents, seized or requisitioned, pertains or pertain to, or any information. contained therein, relates to, a person other than th.e person referred to in section 153A, then, the books of account or documents or assets, seized or requisitioned shall be handed over to the Assessing Officer having juri iction over such other person. and that Assessing Officer shall proceed against each such. other person and issue notice and assess or reassess the income

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of the other person in accordance with the provisions of section 153A, if, that Assessing Officer is satisfied that the books of account or documents or assets seized or requisitioned have a bearing on the determination of the total income of such other person. for six assessment years immediately preceding the assessment year relevant to the previous year in which search is conducted or requisition is made and for the relevant assessment year or years referred to in sub-section (1) of section 153A:
In view of the above, during the search any money, bullion, jewellery, other valuable article, books of account, documents were not seized in the case of assessee, hence the proceedings u/s 163C of the Act is not applicable in the instant case. During the search and seizure action, it was noticed that the searched person/entity was involved in bogus transactions of penny stock of various paper company such as M/s
(ACM Securities Limited & others. Since, the assessee was one of the beneficiary of the penny stocks of M/s CCM Securities Limited & others paper company, the information was shared with the field offices and based on the satisfaction of the credible information, the case of the assessee was reopened after obtaining necessary approval from-the 'Competent Authority and accordingly notice u/s 148 of the I.T. Act,
1961 was issued.”
6. The learned DR relied on the Order of the Co-ordinate Bench of the ITAT,
No.512/Mum/2017, 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

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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 juri ictional 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.
7. 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
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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

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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.
23. 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.
24. 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.

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This does not require reference to and the proviso is not invoked. The difference is this ; when the proviso applies the condition stated therein must be satisfied and in other cases it is not a prerequisite or condition precedent but the defence/plea of change of opinion shall not be available and will be rejected.
25. Thus, if a subject-matter, entry or claim/deduction is not examined by an Assessing Officer, it cannot be presumed that he must have examined the claim/deduction or the entry, and, therefore, it is the case of "change of opinion". When at the first instance, in the original assessment proceedings, no opinion is formed, the principle of "change of opinion" cannot and does not apply. There is a difference between change of opinion and failure or omission of the Assessing
Officer to form an opinion on a subject-matter, entry, claim, deduction. When the Assessing Officer fails to examine a subject- matter, entry, claim or deduction, he forms no opinion. It is a case of no opinion."
36. 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
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'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."
35. 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

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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

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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.
37. We are conscious of the fact that the aforesaid observations have been made in the context of section 147(b) with reference to the term
"information" and conceptually there is difference in scope and ambit of reopening provisions incorporated with effect from April 1, 1989. However,

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it was observed by the Supreme Court in Kelvinator of India Ltd. [2010]
320ITR 561 (SC) that the amended provisions are wider. What is important and relevant is that the principle of "change of opinion" was equally applicable under the unamended provisions. The Supreme Court was, therefore, conscious of the said principle, when the observations mentioned above in A. L. A. Firm 55 Taxman 497/189 ITR 285 (SC) were made.
38. It will be appropriate to reproduce the succeeding passage from A. L.
A. Firm 55 Taxman 497/189 ITR 285 (SC) (page 299):
"We think there is force in the argument on behalf of the assessee that, in the face of all the details and statement placed before the Income-tax
Officer at the time of the original assessment, it is difficult to take the view that the Income-tax Officer had not at all applied his mind to the question whether the surplus is taxable or not. It is true that the return was filed and the assessment was completed on the same date.
Nevertheless, it is opposed to normal human conduct that an officer would complete the assessment without looking at the material placed before him. It is not as if the assessment record contained a large number of documents or the case raised complicated issues rendering it probable that the Income-tax Officer had missed these facts. It is a case where there is only one contention raised before the Income-tax Officer and it is, we think, impossible to hold that the Income-tax Officer did not at all look at the return filed by the assessee or the statements accompanying it. The more reasonable view to take would, in our opinion, be that the Income-tax Officer looked at the facts and accepted the assessee's contention that the surplus was not taxable. But, in doing so, he obviously missed to take note of the law laid down in G.
R. Ramachari and Co. [1961] 41 ITR 142 (Madras) which there is nothing to show, had been brought to his notice. When he subsequently became aware of the decision, he initiated proceedings under section 147(b). The material which constituted information and on the basis of which the assessment was reopened was the decision in G. R. Ramachari and Co. [1961] 41 ITR 142 (Madras). This material was not considered at the time of the original assessment. Though it was a decision of 1961
and the Income-tax Officer could have known of it had he been diligent, the obvious fact is that he was not aware of the existence of the decision then and, when he came to know about it, he rightly initiated proceedings for reassessment."
39. In view of the above observations we must add one caveat. There may be cases where the Assessing Officer does not and may not raise any written query but still the Assessing Officer in the first round/original proceedings may have examined the subject-matter, claim, etc., because the aspect or question may be too apparent and obvious. To hold that the Assessing

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Officer in the first round did not examine the question or subject-matter and form an opinion, would be contrary and opposed to normal human conduct.
Such cases have to be examined individually. Some matters may require examination of the assessment order or queries raised by the Assessing
Officer and answers given by the assessee but in others cases, a deeper scrutiny or examination may be necessary. The stand of the Revenue and the assessee would be relevant. Several aspects including papers filed and submitted with the return and during the original proceedings are relevant and material. Sometimes application of mind and formation of opinion can be ascertained and gathered even when no specific question or query in writing had been raised by the Assessing Officer. The aspects and questions examined during the course of assessment proceedings itself may indicate that the Assessing Officer must have applied his mind on the entry, claim or deduction, etc. It may be apparent and obvious to hold that the Assessing
Officer would not have gone into the said question or applied his mind.
However, this would depend upon the facts and circumstances of each case."
37. 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.
38. 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
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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.
39. 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. 40. 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.
41. 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.
42. 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

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Bajrang Lal (supra), two decisions which had been cited by Mr. Chandra for our consideration.
43. 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.”
8. 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
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:

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“9. Learned counsel for the petitioners submitted that the impugned notices under section 148 of the Act, 1961 are wholly without juri iction, inasmuch as, it was issued without prior satisfaction/approval of the competent authority under section 151 of the Act, 1961. Since at the point of time when notices under section 148 of the Act, 1961 were issued, there was no valid satisfaction/approval of the competent authority, therefore, the Assessing Officer could not assume juri iction to issue notice under section 148 of the Act, 1961. Hence, the notices under section 148 of the Act, 1961 are without juri iction and thus invalid. Consequently, the subsequent proceedings including reassessment orders are also without juri iction. Section 282A of the Act, 1961 has no relevance with respect to the recording of satisfaction or prior permission by the PCIT under section 151 of the Act, 1961. Submissions on behalf of the respondents:-
10. Learned Additional Solicitor General of India has submitted that the unsigned satisfaction of the PCIT stands validated in view of section 282A of the Act, 1961 inasmuch as the digital or physical unsigned satisfaction recorded by the PCIT shall be deemed to be authenticated under section 282A of the Act, 1961 read with rule 127A of the Income-tax Rules, 1962
and section 2(d), 2(p) and 2(t) of the Information Technology Act, 2000
inasmuch as satisfaction bears the name and office of a designated income tax authority, i.e. PCIT. He submits that the moment the PCIT has pushed in "Generate Tap in ITBA System" his satisfaction under section 151 of the Act, 1961, would be deemed to be an authenticated document in terms of section 282A and thus is a valid satisfaction under section 151 of the Act,
1961. The digital signature affixed by the PCIT on his aforesaid satisfaction under section 151 of the Act, 1961, subsequent to issuance of the notice by the Assessing Officer under section 148, would not invalidate the notices under section 148 of the Act, 1961. He referred to paragraphs 17, 18 and 19 of the supplementary counter affidavit dated 2-5-2022 sworn by Nisha Gupta, Income-tax officer, Ward-5(2)(5), NOIDA, which read as under:
"17. That a perusal of the aforesaid provisions demonstrates that if a notice or other document is issued served or given for the purpose of the Act by any income tax authority, the same shall be deemed to be authenticated, if the name and office of a designated income tax authority is printed, stamp or otherwise written thereon.
18. 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.

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19. That it is respectfully submitted that in view of the above, the approval granted by PCIT is valid approval even if the digital signature was affixed later in point of time."
Discussion and Findings:
11. We have carefully considered the submissions of the learned counsels for the parties and perused the records of the writ petitions. Before we proceed to examine the rival contentions of learned counsels for the parties, it would be appropriate to reproduce below the relevant provisions of the Act, 1961, the Income-tax Rules, 1962 and Information and Technology Act,
2000:—
"A. Income-tax Act, 1961
" Section 148. Issue of notice where income has escaped assessment.—(1)
Before making the assessment, reassessment or recomputation under section 147, the Assessing Officer shall serve on the assessee a notice requiring him to furnish within such period, as may be specified in the notice, a return of his income or the income of any other person in respect of which he is assessable under this Act during the previous year corresponding to the relevant assessment year, in the prescribed form and verified in the prescribed manner and setting forth such other particulars as may be prescribed; and the provisions of this Act shall, so far as may be, apply accordingly as if such return were a return required to be furnished under section 139 :
Provided that in a case—
(a) where a return has been furnished during the period commencing on the 1st day of October, 1991 and ending on the 30th day of September, 2005 in response to a notice served under this section, and (b) subsequently a notice has been served under sub- section (2) of section 143 after the expiry of twelve months specified in the proviso to sub-section (2) of section 143, as it stood immediately before the amendment of said sub-section by the Finance Act,
2002 (20 of 2002) but before the expiry of the time limit for making the assessment, re-assessment or recomputation as specified in sub-section (2) of section 153, every such notice referred to in this clause shall be deemed to be a valid notice:
Provided further that in a case—

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(a) where a return has been furnished during the period commencing on the 1st day of October, 1991 and ending on the 30th day of September, 2005, in response to a notice served under this section, and (b) subsequently a notice has been served under clause
(ii) of sub-section (2) of section 143 after the expiry of twelve months specified in the proviso to clause
(ii) of sub-section (2) of section 143, but before the expiry of the time limit for making the assessment, reassessment or recomputation as specified in sub- section (2) of section 153, every such notice referred to in this clause shall be deemed to be a valid notice.
Explanation.—For the removal of doubts, it is hereby declared that nothing contained in the first proviso or the second proviso shall apply to any return which has been furnished on or after the 1st day of October, 2005 in response to a notice served under this section.
(2) The Assessing Officer shall, before issuing any notice under this section, record his reasons for doing so.
Section 151. Sanction for issue of notice.—(1) No notice shall be issued under section 148 by an Assessing Officer, after the expiry of a period of four years from the end of the relevant assessment year, unless the Principal
Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner is satisfied, on the reasons recorded by the Assessing Officer, that it is a fit case for the issue of such notice.
(2) In a case other than a case falling under sub-section (1), no notice shall be issued under section 148 by an Assessing Officer, who is below the rank of Joint Commissioner, unless the Joint Commissioner is satisfied, on the reasons recorded by such Assessing Officer, that it is a fit case for the issue of such notice.
(3) For the purposes of sub-section (1) and sub-section (2), the Principal
Chief Commissioner or the Chief Commissioner or the Principal
Commissioner or the Commissioner or the Joint Commissioner, as the case may be, being satisfied on the reasons recorded by the Assessing Officer about fitness of a case for the issue of notice under section 148, need not issue such notice himself.
282A. Authentication of notices and other documents.—(1) Where this Act requires a notice or other document to be issued by any income-tax authority, such notice or other document shall be signed and issued in paper form or communicated in electronic form by that authority in accordance with such procedure as may be prescribed.

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(2) Every notice or other document to be issued, served or given for the purposes of this Act by any income-tax authority, shall be deemed to be authenticated if the name and office of a designated income-tax authority is printed, stamped or otherwise written thereon.
(3) For the purposes of this section, a designated income-tax authority shall mean any income-tax authority authorised by the Board to issue, serve or give such notice or other document after authentication in the manner as provided in sub-section (2)."
B. Income Tax Rules, 1962:—
Authentication of notices and other documents.
Rule 127A. —(1) Every notice or other document communicated in electronic form by an income-tax authority under the Act shall be deemed to be authenticated,-
(a) in case of electronic mail or electronic mail message (hereinafter referred to as the e-mail), if the name and office of such income-tax authority-
(i) is printed on the e-mail body, if the notice or other document is in the e-mail body itself; or (ii) is printed on the attachment to the e-mail, if the notice or other document is in the attachment, and the e-mail is issued from the designated e-mail address of such income-tax authority;
(b) in case of an electronic record, if the name and office of the income-tax authority-
(i) is displayed as a part of the electronic record, if the notice or other document is contained as text or remark in the electronic record itself; or (ii) is printed on the attachment in the electronic record, if the notice or other document is in the attachment, and such electronic record is displayed on the designated website.
(2) The Principal Director General of Income-tax (Systems) or the Director
General of Income-tax (Systems) shall specify the designated e-mail

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address of the income-tax authority, the designated website and the procedure, formats and standards for ensuring authenticity of the communication.
Explanation.—For the purposes of this rule, the expressions-
(i)
"electronic mail" and "electronic mail message"
shall have the same meanings respectively assigned to them in Explanation to section 66A of the Information Technology Act, 2000 (21 of 2000);
(ii)
"electronic record" shall have the same meaning as assigned to it in clause (t) of sub-section (1) of section 2 of the Information Technology Act,
2000 (21 of 2000).
C. Information Technology Act, 2000:—
Section 2(d) ?affixing electronic signature with its grammatical variations and cognate expressions means adoption of any methodology or procedure by a person for the purpose of authenticating an electronic record by means of digital signature;
Section 2(p) ?digital signature means authentication of any electronic record by a subscriber by means of an electronic method or procedure in accordance with the provisions of section 3;
Section 2(t) ?electronic record means data, record or data generated, image or sound stored, received or sent in an electronic form or micro film or computer generated micro fiche;
Explanation to Section 66-A-- For the purposes of this section, terms
"electronic mail" and "electronic mail message" means a message or information created or transmitted or received on a computer, computer system, computer resource or communication device including attachments in text, image, audio, video and any other electronic record, which may be transmitted with the message.'
12. Annexure-4 to the writ petition is the alleged approval, under section 151 of the Act, 1961 for the Assessment Year 2013-14 which was granted by the PCIT on 31-3-2021 at 7:05 P.M. i.e. 19:05 hours by digitally signing the approval. Notice under section 148 of the Income-tax Act, 1961 was digitally signed by the respondent no. 3 on 31-3-2021 at 5:43
P.M. i.e. 17:43 hours, which is prior to the satisfaction recorded by the PCIT. Section 151 of the Act, 1961 as stood at the relevant time provides that no notice shall be issued under section 148 of the Act by Assessing
Officer after expiry of period of 4 years from the end of assessment year unless Principal Chief Commissioner or Chief Commissioner or Principal

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Commissioner or Commissioner is satisfied, on the reason recorded by the assessing officer that it is a fit case for issuing such notice.
13. Thus, as per provision of section 151 of the Income-tax Act, 1961, an assessing officer gets juri iction 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.
14. 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 juri iction by the Assessing Officer to issue juri ictional 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.
15. The procedure for communication in electronic form has been prescribed under rule 127A of the Rules 1962. 16. 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
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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. 17. 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;"
19. 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."
20. 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:

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"7. This brings us to the meaning of the word "sign" as used in the expression
"signed copy". In Webster's New World Dictionary, the word "sign" means "to write one's name on, as in acknowledging authorship, authorising action etc." To write one's name is signature. Section 3(56) of the General Clauses Act, No. 10
of 1897, has not defined the word "sign" but has extended its meaning with reference to a person who is unable to write his name to include "mark" with its grammatical variations and cognate expressions. This provision indicates that signing means writing one's name on some document or paper. In Mohesh
Lal v. Busunt Kumaree, (1881) ILR 6 Cal 340, a question arose as to what
"signature" meant in connection with S.20 of the Limitation Act, No. IX of 1871. It was observed that "where a party to a contract signs his name in any part of it in such a way as to acknowledge that he is the party contracting, that is a sufficient signature". It was further observed that the document must be signed in such a way as to make it appear that the person signing it is the author of it, and if that appears it does not matter what the form of the instrument is, or in what part of it the signature occurs."
21…
22…
23…
24….
25. 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. 26. 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 juri iction 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
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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 juri iction to issue notice under section 148 of the Act, 1961. In other words, an Assessing Officer may issue juri ictional 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.”
9. The Hon’ble juri ictional 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 juri ictional 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.
10. In the result, appeal filed by the assessee is allowed as per above terms.
Pronounced in the court on the date mentioned on the caption page. (KESHAV DUBEY)
Accountant Member
Bangalore,
Dated : 07.05.2025. /NS/*

IT(IT)A No.66/Bang/2024
Page 31 of 31
Copy to:
1. Appellant 2. Respondent 3. Pr.CIT4.CIT(A)
5. DR, ITAT, Bangalore.
By order