Pashupati Castings Ltd. Vs ITO (ITAT Agra)
Summary: The Income Tax Appellate Tribunal, Agra Bench, in Pashupati Castings Ltd. Vs ITO, ITA No. 19/AGR/2026, for Assessment Year 2017-18, held that reassessment proceedings initiated through a notice under Section 148 of the Income-tax Act, 1961, dated 31 March 2021 but actually issued on 1 April 2021, could not validly proceed under the erstwhile reassessment provisions without compliance with the amended statutory procedure. The Bench comprising Shri Mahavir Singh, Vice President, and Shri M. Balaganesh, Accountant Member, pronounced its order on 17 March 2026. The Tribunal allowed the assessee’s jurisdictional grounds and quashed the entire reassessment proceedings as void ab initio.
The assessee, Pashupati Castings Ltd., had filed its original return of income under Section 139(1) of the Income-tax Act, 1961 on 24 October 2017, declaring nil income. Information received from the Serious Fraud Investigation Office indicated that the assessee had deposited cash amounting to ₹18,72,500 in its Punjab National Bank account at Aligarh during the demonetisation period in Financial Year 2016-17. The Assessing Officer treated the source of these deposits as unexplained and initiated proceedings for reopening the assessment under Section 147. The resulting reassessment order was passed on 30 March 2022 under Section 147 read with Section 144. The National Faceless Appeal Centre dismissed the assessee’s challenge through its appellate order dated 10 November 2025, leading to the appeal before the Tribunal.
The assessee challenged the jurisdiction assumed by the Assessing Officer through Grounds 5 and 6. Its principal argument was that although the reassessment notice bore the date 31 March 2021, the income-tax portal records demonstrated that it was actually issued on 1 April 2021. The relevant screenshot was placed at page 51 of the paper book. The distinction was material because the reassessment framework introduced by the Finance Act, 2021, including the substituted Sections 147 to 151 and newly inserted Section 148A, became operative on 1 April 2021. According to the assessee, once the notice was issued on that date, the Assessing Officer was obliged to follow the amended procedure, including the requirements under Section 148A and the amended sanction provisions under Section 151.
The Tribunal examined the assessee’s reliance on Aseem Sehgal Vs ITO, ITA Nos. 154 to 156/Del/2025, decided by the Delhi Bench of the Tribunal on 30 July 2025. That decision had considered a comparable situation in which a notice dated 31 March 2021 was electronically dispatched on 1 April 2021, but the reassessment had been completed under the old statutory framework. The Delhi Tribunal had relied upon the Supreme Court’s decision in Union of India Vs Ashish Agarwal, reported in 138 taxmann.com 64 (SC), dated 4 May 2022. In that judgment, the Supreme Court directed that specified reassessment notices issued under the unamended Section 148 after the new regime commenced would be treated as show-cause notices under Section 148A(b), with the subsequent procedure governed by the amended law.
The Delhi Tribunal had also considered Rajesh Chopra Vs ITO, W.P.(C) No. 12561/2022, decided by the Delhi High Court on 28 May 2025, which examined the significance of the actual date of dispatch of a reassessment notice. The High Court had referred to Suman Jeet Agarwal Vs ITO, reported in (2022) 449 ITR 517 (Delhi), concerning the legal meaning of issuance of notice. The governing distinction was between merely generating or digitally signing a notice on the Income Tax Business Application portal and actually dispatching it to the assessee. For an electronically communicated notice, the date of email dispatch was relevant for determining when the notice was issued.
The quoted judicial discussion also referred to the distinction between generation and dispatch of reassessment notices, and to CBDT Circular No. 19/2019 dated 14 August 2019 concerning the Document Identification Number (DIN). The circular introduced DIN requirements to maintain an audit trail of departmental communications, but it did not establish that mere generation of a DIN amounted to issuance of a notice. The reasoning therefore distinguished the internal creation of a departmental document from the legally relevant act of communicating it to the intended recipient.
Applying these principles, the Agra Bench found that the notice under Section 148 had been issued to Pashupati Castings Ltd. on 1 April 2021, as established by the income-tax portal screenshot. Consequently, the amended reassessment provisions were applicable. However, the Assessing Officer had admittedly not followed the procedure under Section 148A or the amended Section 151. The Tribunal followed the Delhi Tribunal’s decision in Aseem Sehgal and held that the reassessment proceedings were invalid. Grounds 5 and 6 were allowed, and the reassessment was quashed as void ab initio. As the entire reassessment stood annulled, adjudication of the remaining factual and legal grounds became academic, and those grounds were left open. The assessee’s appeal was accordingly allowed.
Cases Discussed
Aseem Sehgal Vs ITO (ITAT Delhi); ITA Nos. 154 to 156/Del/2025; 30/07/2025. The Agra Bench expressly followed this coordinate-bench decision concerning reassessment notices dated 31 March 2021 but dispatched on 1 April 2021. The Delhi Tribunal had quashed reassessment proceedings completed under the old law without following the amended procedure.
Union of India Vs Ashish Agarwal (Supreme Court); Civil Appeal No. 3005 of 2022; 04/05/2022; 138 taxmann.com 64 (SC); 2022 SCC OnLine SC 543. The Supreme Court’s directions concerning reassessment notices issued under the erstwhile provisions after 1 April 2021 formed a central part of the reasoning reproduced by the Tribunal.
Rajesh Chopra Vs ITO (Delhi High Court); W.P.(C) No. 12561/2022; 28/05/2025; 2025 (6) TMI 83. Discussed in the quoted Delhi Tribunal decision regarding the date of issuance of reassessment notices and the application of the amended statutory procedure. The source subsequently refers to this case as ‘Rajeev Chopra’; that inconsistency is preserved in the full-text reproduction.
Suman Jeet Agarwal Vs Income Tax Officer & Ors. (Delhi High Court); (2022) 449 ITR 517. Relied upon for the proposition that mere generation of a notice on the income-tax portal is not equivalent to issuance and that dispatch is necessary.
FULL TEXT OF THE ORDER OF ITAT AGRA
1. The appeal in ITA No.19/Del/2026 for AY 2017-18, arises out of the order of the ld National Faceless Appeal Centre (NFAC), Delhi [hereinafter referred to as ‘ld. CIT(A)’, in short] dated 10.11.2025 against the order of assessment passed u/s 147 r.w.s. 144 of the Income-tax Act, 1961 (hereinafter referred to as ‘the Act’) dated 30.03.2022 by the Assessing Officer, KNP-W-85(3), (hereinafter referred to as ‘ld. AO’).
2. Though the Assessee has raised several grounds of appeal before us, we deem it first to address the Ground Numbers 5 and 6 raised by the Assessee challenging the validity of assumption of jurisdiction under Section 147 of the Act. The main issue involved in Ground Number 5 and 6 is that the notice issued under Section 148 of the Act dated 31-3-2021 was admittedly issued to the Assessee on 1-4-2021 as evident from the screen shot of Income Tax Portal and hence the procedure prescribed under section 148A of the Act ought to have been followed by the Learned AO which had not been admittedly followed thereby vitiating the entire reassessment proceedings.
3. We have heard the rival submissions and perused the materials available on record. The Assessee is a private limited company and had filed its original return of income under section 139(1) of the Act on 24-10-2017 declaring nil income. In the instant case, Serious Fraud Investigation Office (SFIO) had identified that during the financial year 2016-17, the Assessee deposited cash of Rs 18,72,500 in Punjab National Bank, Aligarh branch during the demonetization period and that the source of cash remained unexplained. Accordingly, based on this information, the case of the Assessee was sought to be reopened by the Learned AO under section 147 of the Act vide notice under section 148 of the Act dated 31-3-2021 which was issued to the Assessee only on 1-4-2021 which is evident from screenshot of the income tax portal. The screenshot of the income tax portal is enclosed in page number 51 of the paper book, from where it is very clear that the notice under section 148 of the Act stood issued to the Assessee only on 1-4-2021. Since the notice is issued on 1-4-2021, the provisions of new section 148A and amended section 151 of the Act kicks in. Admittedly, the Learned AO had not followed any of the procedures prescribed under the new regime and the amended provisions of section 148A and amended provisions of section 151 of the Act. Accordingly, it was submitted that the entire reassessment framed under section 147 of the Act deserves to be quashed. In support of this contention, the Learned AR placed reliance on the decision of Coordinate Bench of Delhi Tribunal in the case of Aseem Sehgal vs ITO in ITA Nos. 154 to 156 / Del / 2025 dated 30-7-2025. Admittedly, in the instant case, the reassessment has been framed under the old provisions of the Act by the Learned AO. For the sake of convenience, the relevant operative portion of the Delhi Tribunal order dated 30-7-2025 is reproduced here under:-
“4. 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.
5. 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.
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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.
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25.18. Additionally, the contention of the counsel for the Department that generation of section 148 notice on the Income Tax Business Application screen amounts to “issued” within the meaning of section 149 of the Act of 1961 is not borne out from the instructions issued by the Directorate of Income-tax (Systems). On the contrary, the said circulars duly recognize that after generation of notice the concerned Income-tax authority is required to take overt steps for issuing the said notice to the assessee. The circulars use the words “generation” and “issuance” distinctively. In this regard reference may be made illustratively to the following instructions :
(a) The Income Tax Business Application Assessment Instruction No. 2 (F. No. System/Income Tax Business Application/Instruction/Assessment/ 16-17/177, dated August 1, 2016) issued by the Directorate of Income-tax (System) mentions that :
“the Assessing Officer Staff/Assessing Officer Inspector will not be able to generate the notice but will be able to view the notices already generated by the Assessing Officer for taking a printout of the same, for issue to the assessee.”
(b) The Income Tax Business Application Assessment Instruction No. 3 (F No. System/Income Tax Business Application/Instruction/Assessment/ 177/16-17/), dated February 3, 2017, also illustrates the same distinction :
“Details of the Authority/party from whom information is requisitioned can be entered along with date for compliance and the notice can then be generated and issued.”
25.19. The counsel for the Department have also sought to argue that generation of a notice with document identification number on Income Tax Business Application screen conclusively indicates that the notice has been irrevocably issued. The submission of the respondent is not borne out from the applicable circular regarding document identification number issued by Central Board of Direct Taxes and is therefore a mere ipse dixit of the counsel.
25.20. As per Circular No. 19 of 2019 (F. No. 225/95/2019-ITA.II), dated August 14, 2019 ([2019] 416 ITR (St.) 140 ) issued by the Central Board of Direct Taxes, the document identification number was introduced to maintain a proper audit of trail of communications issued by the Income-tax authority. The said circular does not state that the generation of document identification number would automatically constitute issuance of the notice. Relevant extract from the aforementioned circular is reproduced as under (page 140 of 416 ITR (St.) :
“.. . However, it has been brought to the notice of the Central Board of Direct Taxes (the Board) that there have been some instances in which the notice, order, summons, letter and any correspondence (hereinafter referred to as ‘communication’) were found to have been issued manually, without maintaining a proper audit trail of such communication.
2. 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 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.”
18. 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.
19. 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).
20. 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).
21. 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).
22. In view of the above, we find it difficult to sustain the petitioner’s challenge in the present petition. The petition is, accordingly, dismissed.”
6. 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.
7. 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.
8. In the result, all the appeals of the assessee are allowed.”
4. In view of the aforesaid facts and respectfully following the decision of Delhi Tribunal supra, we quash the entire reassessment proceedings as void abinitio. Accordingly, the Ground Nos. 5 & 6 raised by the assessee are allowed.
5. Since the entire reassessment is quashed, the adjudication of other factual and legal grounds become academic and hence they are left open.
6. In the result, the appeal of the assessee is allowed.
Order pronounced in the open court on 17/03/2026.
