Income Tax Notice Dispatch Date Prevails Over Digital Signature Date: Delhi HC upholds Notice issued on Basis of SC Judgment [Read Order]

In a recent ruling, the Delhi High Court has held that the date of dispatch of an income tax notice is determinative, not the date of its digital signature. The bench upheld the notice issued on the basis of the Supreme Court judgment in Union of India v. Ashish Agarwal.

The case revolved around the validity of a reassessment notice dated March 31, 2021, issued under Section 148 of the Act for the Assessment Year (AY) 2013-14 against Rajesh Chopra.

The petitioner contended that the notice was time-barred and issued beyond the permissible period under Section 149(1). It was undisputed that while the notice bore the date March 31, 2021, and was digitally signed on that date at 7:44 PM, it was actually dispatched to the petitioner via email and speed post only on April 1, 2021.

The petitioner responded to the said notice on 03.06.2022, inter alia, claiming that the notice issued under Section 148A(b) of the Act was invalid, as it was issued after the time for completing the assessment had expired. Further contended that the reference to the decision of the Supreme Court in Union of India and Ors. v. Ashish Agarwal was misplaced, as it was applicable only to notices that were issued under Section 148 of the Act during the period from 01.04.2021 to 30.06.2021.

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The petitioner challenged the validity of the reassessment proceedings on the ground that the notice, though digitally signed before midnight on March 31, was only served thereafter, thus falling afoul of the limitation prescribed.

In defense, the Revenue relied on the Supreme Court’s decision in Union of India v. Ashish Agarwal, where the apex court, invoking Article 142 of the Constitution, had ruled that notices issued under the unamended Section 148 between April 1, 2021, and June 30, 2021, would be deemed as notices under the new Section 148A(b). It rightly issued the notice on 1st April 2021 even though it was signed on 31st March 2021.

Central to the High Court’s decision was its interpretation of the term “issued” under Section 149. Relying on its earlier judgment in Suman Jeet Agarwal v. Income Tax Officer, the Court reiterated that a notice is considered “issued” only upon its dispatch, not merely upon its digital signing. Therefore, the notice in question, though signed on March 31, 2021, was deemed issued on April 1, 2021 the date of its actual dispatch via ITBA email and speed post.

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According to this classification, the notice was declared lawful under Section 148A(b) because it was covered by the Ashish Agarwal ruling of the Supreme Court. The Court explained that the notification and the actions that followed were legally tenable since the Assessing Officer's actions and procedural safeguards were compliant with the new reassessment regime.

A Division Bench comprising Justice Vibhu Bakhru and Justice Tejas Karia rejected the petitioner’s plea to quash the reassessment proceedings, observing that mere initial misconception over the notice’s validity would not invalidate proceedings that subsequently complied with Supreme Court-mandated procedures.

It ruled that “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.”

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