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Facts
Two appeals were filed by Ramesh Gandhi and Rajesh Gandhi against CIT(A) orders for AY 2021-22. The core issue concerned penalties levied under Section 272A(1)(d) for alleged non-compliance with notices issued during assessment proceedings under Section 153C, which were initiated following a search under Section 132. The assessees contended that the notices for which penalty was levied were neither digitally nor manually signed and were therefore illegal and inoperative.
Held
The Tribunal held that notices that are not digitally or manually signed are illegal, invalid, and inoperative, and thus amount to no notice in the eyes of law. Consequently, such invalid notices cannot confer jurisdiction upon the Assessing Officer, and any non-compliance with them cannot justify the imposition of a penalty. The argument that the assessee's awareness of proceedings negates prejudice does not validate an invalid notice.
Key Issues
Whether a penalty levied under Section 272A(1)(d) for non-compliance with assessment notices is valid if the said notices were neither digitally nor manually signed by the issuing authority, and if such unsigned notices can vest jurisdiction in the Assessing Officer.
Sections Cited
250(6), 272A(1)(d), 153C, 132, 148A(b), 148A(d), 148, 147, 144, 282A(1), 149, 151, 34, 66(1), 273B, 142(1), 292B, 282, 143(2), 143(1)
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Income Tax Appellate Tribunal, DELHI BENCHES: F : NEW DELHI
Before: SMT. ANNAPURNA GUPTA
Assessment Year: 2021-22 Rajesh Gandhi, DCIT, 67-68, Sector-25, New Delhi. Pocket-2, Rohini, New Delhi – 110 085. PAN: AZFPG7938P (Appellant) (Respondent) Assessee by : Shri Vinod Bindal, CA Shri Anmol Jha, Advocate & Ms Rinky Sharma, ITP Revenue by : Ms Harpreet Kaur Hansra, Sr. DR Date of Hearing : 02.04.2025 Date of Pronouncement : 09.04.2025 ORDER PER ANNAPURNA GUPTA, AM:
Both the appeals pertain to different assessees and arise against different orders of the Commissioner of Income Tax(Appeals)- 29, New Delhi (in short CIT(A)”) passed u/s 250(6) of the Income Tax Act,1961 (hereinafter referred to as “Act”) both dated 08-07-2024 and pertaining to Assessment Year 2021-22.
At the outside itself it was stated that the issue arising in both the appeals was identical relating to the levy of penalty for non compliance of notices issued during assessment proceedings in terms of the provisions of section 272A(1)(d) of the Act. It was pointed out that both the assessees were subjected to assessment proceedings u/s 153 C of the act on account of search action undertaken u/s 132 of the Act on one Shri Manoj Kumar Singh and related entities. The contention of the Ld. Counsel for the assessee was that simultaneously, on the same date notices were issued to both the assessee and the notices allegedly found to be not complied with therefore were similarly dated . That his arguments against the levy of penalty in both the cases was also the same.
Ld. DR fairly agreed with the same.
In the light of the same both the appeals were taken up together for hearing and are being disposed off by this common consolidated order
We shall be dealing with the appeal in D/ 24 in the case of Ramesh Gandhi and our decision rendered therein will apply pari passu to the other appeal in D/24 in the case of Rajesh Gandhi .
The grounds raised
by the assessee read as under:- “1. The CIT(A) erred in law and on facts in confirming a penalty of Rs.70,000/- u/s 272A(l)(d) of the Act though the complete details were on the record of the AO, and the impugned proceedings were illegal ab initio as no cause of action existed to assume jurisdiction to pass the impugned assessment order in respect of which the impugned penalty has been levied. The same must be deleted.
2. The impugned penalty order is otherwise also void ab initio and illegal because the impugned compliance desired by the AO, itself was in an illegal reassessment proceedings-initiated u/s 153C of the Act, without jurisdiction as no incriminating material for this assessment year was found in an income-tax search conducted on some other assessee. This has also been confirmed by the same CIT(A) in the quantum appellate order dated 27/09/2024 in the case of the appellant itself by quashing the assessment order as illegal ab initio. Thus, the entire proceedings were illegal and could result into any legal penalty, needs to be quashed. The appellant craves the leave to add, substitute, modify, delete or amend all or any ground of appeal either before or at the time of hearing.”
We have heard both the parties.
The notices which have remained uncomplied with by the assessee are seven in number issued on 27-05-2022,27-05-2022, 12-09-2022 ,10-10- 2022,29-11-2022,13-12-2022 and 23-12-2022. For each default a penalty of Rs.10,000/- has been levied resulting in a total penalty of Rs.70,000/- being levied.
A perusal of the order of the Ld. CIT(A) reveals that the assessee had contended before him that these notices were neither digitally signed nor manually signed and were therefore illegal and inoperative. Several decisions of 10. But the Ld.CIT(A) has rejected the same saying that the assessee does not deny the receipt of the notice and therefore since he was aware of the proceedings pending before the AO no prejudice has been caused to him. His findings in this regard are recorded at page 18 of his order as under: “….However, it is seen that no submissions/compliance with the notices has been made by the appellant and the proceedings have been completed in an exparte manner by the AO. No reasonable cause within the meaning of section 273B of the Act for failure to comply with the notices issued u/s 142(1) has been brought to my notice during the course of appellate proceedings. Appellant had also not denied the receipt of the notices but had only contested that the notices were not properly signed digitally. But since the appellant was aware of the proceedings pending before AO by way of receipt of multiple notices u/s 142(1) no prejudice has been caused to him. No cause for non-compliance on account of any personal constraint has been brought to my notice. Under these circumstances, I am constrained to agree with the order of AO imposing penalty for non- compliance with the notices u/s 142(1).”
We are not in agreement with the Ld. CIT(A) in this regard. The learned CIT (A) having not disputed the fact of the notices not being digitally/ manually signed there is no iota of doubt at all that the said notices were illegal, invalid and inoperative. They were no notices at all in the eyes of law. Such notices cannot vest the issuing authority with any jurisdiction at all to proceed with the assessment.The reliance placed by the Ld.Counsel for the assessee to various decisions of Hon’ble High Courts & ITAT is apt wherein it has been categorically held that unsigned notices are illegal , invalid and inoperative. For this reason alone we hold that the assessee in the present case has been wrongly charged with the default of non compliance of notices, which admittedly were
Further in the light of various judicial decisions cited before the Ld.CIT(A) by the assessee holding unsigned notices to be illegal and invalid , the reasoning of the Ld.CIT(A) rejecting this contention of the assessee merits no consideration. It is plain and simple . An unsigned notice is illegal and invalid. It therefore tantamounts to no notice issued. And there can be no question of non compliance of such notice at all therefore. The fact of the assessee being aware of the pending proceedings and no prejudice being caused to the assessee is of no consequence at all and in no way gives validity to an invalid notice.
We therefore hold that in the facts and circumstances of the case the assessee could not have been charged with the default of non compliance of notices, which admittedly were unsigned.The levy of penalty therefore for this default u/s 272A(1)(d) of the Act is totally unwarranted.
The order of the Ld. CIT (A) confirming the levy of penalty u/s 272A(1)(d) of the Act of Rs.70,000/- is accordingly set aside.
Appeal of the assessee is allowed in above terms.