Income Tax

Digitally signing of notice u/s 148: not amount to issuance of notice

Introduction  

A recent order of the Honourable Allahabad High Court has clarified that mere digitally signing of notice under section 148 of the Income Tax Act, 1961^[1] does not amount to issuance of notice from the end of the Income Tax Department. The notice needs to be dispatched/ sent to the assessee either through paper or electronic device and when the said notice is sent through such means, that day is considered to be the date of issuance of notice.

The divisional bench of the Allahabad High Court consisting of Justice Surya Prakash Kesarwani and Justice Jayant Banerji further held that the dispatch of an electronic record occurs when it enters into computer resources outside the control of the originator.

Facts of the case- Digitally signing of notice u/s 148

DaujeeAbhushanBhandarPvt. Ltd., the assessee filed a petition before the High Court of Allahabad challenging the notice sent by the Income Tax Authority under section 140 of the Income Tax Act, 1961 for the Assessment Year 2013-14 being time barred.

Submissions of the Petitioner

The counsels for the petitioner submitted that though the notice was digitally signed and sent to the assessee through e-mail on 31^st of March, 2021 by the Assessing Authority, the assessee received the mail on 6^th of April, 2021.

The petitioner contended that the notice under section 148 was a time-barred notice where the limitation period for issuing notice under section 148 read with section 149 expired on 3^rd of March, 2021 and therefore the said notice is without jurisdiction as the same was issued on 6^th of April, 2021.

Submissions of the Respondent

On the hand, the Income Tax Department/ Respondent responded that since the notice was digitally signed on 3^rd of March, 2021 and therefore, it was deemed to have been issued within time i.e. 31^st March, 2021.

Observations of the Court

The honourable court explained the difference between section 282 and 282A of the Income Tax Act. It said that digital signing of notice and issuance of notice have been recognised as two separate acts meaning that digital signing of notice and issuance of its communication are two independent acts which need to be executed separately.

The court also referred to Rule 127A(1) of the Income Tax Rules, 1962 [Authentication of notices and other documents] and clarified that the issuance of notice and other documents would take place when the email is issued from the designated email address of the concerned income tax authority.

Taking into account the abovementioned, the court opined that section 149 of the Income Tax Act, 1961 requires that the notice has to be issued by the Income Tax authority to the assesee. The court further added that according to section 282A (1), digitally signing of notice has to be done by the income tax authority and that notice has to be issued in paper form or communicated electronically by that authority in accordance with the prescribed procedure.

According to sub section (1) of section 13 of the Information Technology Act, 2000, dispatch of an electronic record is said to have occurred when it has entered a computer resource outside the control of the originator. This sub section (1) of section 13 of the Information Technology Act indicates the point of time when issuance of notice is said to have taken place.

This means that after digitally signing of notice, when such notice is entered by the income tax authority in a computer resource which is outside the control of originator. This is the point of time of issuance of a notice.

Taking into account the interpretations of the provisions of section 282 and 282A of the Income Tax Act, 1961 and section 13 of the Information Technology Act, 2000 along with meaning of the term ‘issue’, the honourable court came to a conclusion that digitally signing of notice shall be done by the income tax authorities and then such notice shall be issued either in a paper form or communicated electronically by delivering or transmitting the copy of the same to the person concerned.

The court finally concluded that the point of time when a digitally signed notice either in the paper form or electronic record enters in the computer resources outside the control of the originator i.e. the assessing authority, that time shall become the date and time of issuance of notice under section 148 read with section 149 of the Income Tax Act, 1961.

Order of the court

In view of the observations made by the honourable Allahabad High Court, the court ordered that since the impugned notice under section 148 of the Income Tax Act, 1961 was issued to the assessee on the date of 6^th of April, 2021 through email, therefore the impugned notice under section 148 of the Income Tax Act, 1961 was time- barred. Consequently, the court ordered to quash the impugned notice.

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