M/S. RANA IRON & POWER LTD.,MUZAFFARNAGAR vs. DCIT, MUZAFFARNAGAR

The assessee has raised an additional ground challenging the validity of reassessment per se as bad in law. This additional ground goes to the root of the matter and facts relevant for its adjudication are already placed on record. Hence the additional ground filed by the assessee is hereby admitted and taken up first for adjudication. We find that the Finance Act 2021 has brought significant amendments to the reassessment scheme by amending sections 147 to 151 of the Act by inserting a new section 148A of the Act with effect from 1-4-2021. The Hon‟ble Supreme Court in the case of Union of India vs Ashish Agarwal reported in 138 taxmann.com 64 (SC) dated 4-5-2022 held that any notice served post 1-4-2021 under the old law is non-est and unenforceable and therefore by invoking the special powers under Article 142 of the Constitution of India, converted all the notices issued under section 148 of the Act on or after 1-4-2021 under the unamended provisions to the show-cause notice under section 148A(b) of the amended provisions. The Hon‟ble Supreme Court further clarified that the learned AO must follow the new procedure prescribed under section 148A of the Act.

In the instant case, the notice under section 148 of the Act was issued to the assessee on 1-4-2021 without resorting to the amended provisions prescribed under section 148A of the Act. The short point that arises for our consideration is as to whether the notice under section 148 of the Act dated 31-3-2021 issued to the assessee on 1-4-2021 by e- mail without following the mandatory provisions under section 148A of the Act would would have to be construed as bad in law and liable to be quashed or not. In this regard, the learned AR placed reliance on the decision of Hon‟ble Jurisdictional High Court in the case of Rajesh Chopra vs ITO reported in 2025 (6) TMI 83 (Del HC) in W.P. (C ) 12561/2022 dated 28-5-2025. In that case, notice under section 148A(b) of the Act was issued on 30-5-2022 calling the petitioner to file a reply on or before 13-06-2022. The petitioner in that case stated that for assessment year 2013-14, the time limit for framing the re-assessment order had expired on 31-03-2022 being the period of 12 months from the date on which the notice under section 148 of the Act was initially issued. The Revenue Authorities in that case claimed that the notice under Section 148 of the Act dated 31-3-2021 was in fact issued on 1-4-2021 and therefore is required to be treated as a show-cause notice under Section 148A(b) of the Act in terms of the decision of the Hon‟ble Supreme Court in the case of Union of India v. Ashish Agarwal referred supra. In that case also, the notice under Section 148 of the Act dated 31-3-2021 was despatched to that petitioner by e-mail on 1-4-2021 at 7:30:47 AM and delivered at 7:30:48 AM. In those facts and circumstances, the Hon‟ble Delhi High Court held as under:- “17. Section 149(1) of the Act proscribes issuance of notice beyond the period as stipulated in the said section. In Suman Jeet Agarwal v. Income Tax Officer and Ors.: (2022) 449 ITR 517, the Coordinate Bench of this Court had considered the question regarding as to the date of issue of a notice under Section 148 of the Act for ascertaining the period of limitation for issuance of such a notice. We consider it apposite to refer to the following extracts of the said decision: "25. Question No. (I) : Whether the jurisdictional Assessing Officer's act of generating notice in the Income Tax Business Application portal on March 31, 2021, without despatching the notice meets the test of the expression "shall be issued" in section 149 of the Act of 1961, and saves the notices from being time barred? 25.1. It has emerged as an admitted position on facts, that the e- mails attaching the impugned notices dated March 31, 2021, were despatched by the Income Tax Business Application servers on April 1, 2021, or thereafter. 25.2. Faced with the aforesaid factual position, it has been contended by the Department that since generation of impugned notices on the Income Tax Business Application portal on March 31, 2021, is undisputed, the singular act of generation of notice by the jurisdictional Assessing Officer satisfies the requirement of "issued" for the purpose of section 149 of the Act of 1961 and despatch of the notice on March 31, 2021 is not a mandatory requirement. ***** 25.12. The review of the aforesaid judgments of the Supreme Court and the several High Courts shows that all courts have consistently held that the expression "issue" in its common parlance and its legal interpretation means that the issuer of the notice must after drawing up the notice and signing the notice, make an overt act to ensure due despatch of the notice to the addressee. It is only upon due despatch, that the notice can be said to have been "issued". 25.13. Further, a perusal of the compliance affidavit reveals that while the function of generation of notice on Income Tax Business Application portal and digital signing of the notice is executed by the jurisdictional Assessing Officer, the function of drafting of the e-mail to which the notice is attached and triggering the e-mail to the assessee is performed by the Income Tax Business Application e-mail software system. Thus, mere generation of notice on the Income Tax Business Application screen cannot in fact or in law constitute issue of notice, whether the notice is issued in paper form or electronic form. In case of paper form, the notice must be despatched by post on or before March 31, 2021 and for communication in electronic form the e- mail should have been despatched on or before March 31, 2021. In the present writ petitions, the despatch by post and e- mail was carried out on or after April 1, 2021 and therefore, we hold that, the impugned notices were not issued on March 31, 2021.

In order to prevent such instances and to maintain proper audit trail of all communication, the Board in exercise of power under section 119 of the Income-tax Act, 1961 (hereinafter referred to as 'the Act'), has decided that no communication shall be issued by any Income-tax authority relating to assessment, appeals, orders, statutory or otherwise, exemptions, enquiry, investigation, verification of information, penalty, prosecution, rectification, approval etc. to the assessee or any other person, on or after October 1, 2019 unless a computer-generated document identification number (DIN) has been allotted and is duly quoted in the body of' such communication." (emphasis supplied) In fact, in several cases, we take judicial notice that even as on date the jurisdictional Assessing Officers issue notices which do Page | 6 not have document identification number and in those cases the Department contends that the absence of the document identification number does not make those notices invalid."

Clearly, the date of notice is vital for determining the rights of the parties and there can be no uncertainty regarding the date of issuance of notice. It is, thus necessary that the date of issue of notice be ascertained on completion of the precise steps for issuance of the notice. In terms of the decision of this Court in Suman Jeet Agarwal v. Income Tax Officer and Ors. (supra), as noted above, where the notice is sent electronically, the date of dispatch of the e-mail is to be considered as the date of issue of the notice. Thus, in this case the date of issue of notice would have to be taken as 01.04.2021.

As stated at the outset, if there is no dispute that the date of issuance of notice is considered as 01.04.2021, then the said notice was required to be treated as a notice under Section 148A(b) of the Act in terms of the decision of the Supreme Court in Union of India and Ors. v. Ashish Agarwal (supra).

It is material to note that a notice under Section 148 of the Act is a jurisdictional notice and issuance of such notice is necessary for the AO to assume jurisdiction to assess/re-assess the income under Section 147 of the Act. If the notice under Section 148 is found to be invalid, it would vitiate the proceedings commenced pursuant thereto. Thus, merely because the parties had laboured under a misconception at the initial stage that the initial notice issued under Section 148 of the Act was valid, would not invalidate the subsequent steps taken by the Revenue in conformity with the decision of the Supreme Court in Union of India and Ors. v. Ashish Agarwal (supra) as well as the decision of this Court in Suman Jeet Agarwal v. Income Tax Officer and Ors. (supra).

Viewed from another perspective, if an adverse re-assessment order was passed pursuant to the notice dated 31.03.2021 (issued on 01.04.2021), the same would be vulnerable to a challenge by the Assessee on the ground that the proceedings were not in compliance with the directions issued by the Supreme Court in Union of India and Ors. v. Ashish Agarwal (supra).

In view of the above, we find it difficult to sustain the petitioner's challenge in the present petition. The petition is, accordingly, dismissed.”

The case before us i.e. in the case of Mr Aseem Sehgal is exactly the reverse case. In the instant case before us, the notice under Section 148 of the Act dated 31-3-2021 was despatched to the assessee by e- mail on 1-4-2021 at 7.20 AM and the reassessment was framed under the old provisions of Section 147 and 148 of the Act by the Learned AO. The Hon‟ble Supreme Court in the case of Ashish Agarwal supra had clearly clarified that once a notice under Section 148 of the Act is issued on or after 1-4-2021, the only recourse available to the assessing officer is to frame the re-assessment in accordance with the amended provisions and procedures laid down in Section 148A of the Act. In the instant case, the reassessment has been framed under the old provisions of the Act by the Learned AO on 28-3-2022. Respectively following the aforesaid decision of Hon‟ble Delhi High Court in the case of Rajeev Chopra referred supra and Hon‟ble Supreme Court in the case of Ashish Agarwal supra, we have no hesitation to quash the reassessment order dated 28-3-2022 as bad in law and void ab initio.

Since the reassessment is quashed as bad in law, the other grounds raised by the assessee need not be adjudicated as it would be academic in nature and hence they are left open.

In the result, all the appeals of the assessee are allowed.