H.L. Financiers Pvt.Ltd. Vs ITO (ITAT Delhi)
Delhi ITAT Quashes Reassessment: Unsigned and Unauthenticated ‘Reasons to Believe’ Cannot Sustain Notice under Section 148
The Delhi ITAT quashed a reassessment holding that the reasons recorded for reopening were unsigned, unauthenticated, and did not disclose the name or designation of the Assessing Officer, rendering the notice issued under section 148 invalid. The Tribunal held that compliance with sections 147 to 152 is mandatory and cannot be diluted.
The assessee contended that the reasons for reopening were never properly furnished. The only document supplied was an annexure to the approval under section 151, which neither bore the name, designation, seal nor signature of the Assessing Officer. The Revenue argued that the reasons were generated through the ITBA system and therefore did not require a physical signature.
Rejecting the Revenue’s stand, the Tribunal found that the annexure to the approval under section 151 did not identify the Assessing Officer who had recorded the reasons. It held that, in view of section 282A of the Act read with Rule 127A of the Income-tax Rules, every notice or document must be duly authenticated by the issuing authority. Since the alleged reasons lacked the name, designation, seal and signature of the Assessing Officer, they could not be regarded as validly recorded reasons in the eyes of law.
The Tribunal further observed that section 148(2) mandates that the Assessing Officer must record reasons before issuing a notice under section 148. Failure to comply with this statutory requirement renders the notice and the consequential reassessment void ab initio. Merely furnishing the Joint Commissioner’s approval under section 151 could not substitute the mandatory recording and authentication of reasons by the Assessing Officer.
Relying on its earlier decision in ITO v. Ashish Gupta and the Bombay High Court judgment in CIT v. Trend Electronics (379 ITR 456), the Tribunal held that failure to furnish validly recorded reasons is fatal to the reassessment proceedings. Accordingly, it allowed the appeal and quashed the reassessment order.
Cases Discussed
- Income Tax Officer Vs. Ashish Gupta, ITA No. 560/Del/2024, order dated 30.06.2025
- CIT Vs. Trend Electronics (Bombay High Court), 379 ITR 456 (Bom)
FULL TEXT OF THE ORDER OF ITAT DELHI
This appeal is preferred by the Assessee against the order dated 29.08.2025 of the Ld. National Faceless Appeal Centre (NFAC) Delhi (hereinafter referred to as the First Appellate Authority or ‘the ld. FAA’ for short) in DIN & Order No: ITBA/NFAC/S/250/2025-26/1080173276(1) arising out of the assessment order dated 29.03.2022 u/s 147 r.w.s 144B of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) passed by National Faceless Assessment Centre, Delhi for AY: 2017-18.
2. On hearing both sides we find that primarily on behalf of assesse a ground is raised that there was non-compliance of the mandatory conditions of Section 147 to 152 of the Act as assesse was not provided the reasons recorded by the Assessing Officer and further that if at all, being part of the approval u/s 151 is considered to be reasons recorded by the assesse as the same are unsigned and had been reflect the name and designation of the authority who is scribed the reasons are not reason in the eyes of law. Ld. DR has heavily defended this ground and relied the order of ld. CIT(A) as mentioned in para 5.10 and for completeness we reproduce para 5.10:
“5.10 The appellant submitted that the approval u/s 151 of the IT Act given by the JCIT is vague and mechanical in nature. On perusal of the approval granted the JCIT it is seen that the approval has been granted based on the reasons recorded by the AO. The validity of the reasons recorded by the AO has been discussed in the preceding paragraphs and has been held to be reasonable and based on bonafide material. Therefore, the submission of the appellant that the approval u/s 151 of the IT Act has been granted in a mechanical way is not acceptable and the said ground is rejected. Further the appellant submitted that the reasons recorded by the AO which is annexed to the approval granted u/s 151 does not bear the name, designation and signature of the AO and therefore, the re-opening is invalid. It is pertinent to mention that the reasons recorded by the AO is submitted to the JCIT for approval u/s 151 through the departmental ITBA system and the approval is also granted through the ITBA system based on unique login ID. Therefore, the submission of the appellant that the reasons recorded does not bear the name, designation and signature of the AO is not acceptable as the same has been done as per the procedure followed in the ITBA system.”
3. After taking into consideration the aforesaid we find that at page No. 80-82 assessee has provided copy of approval u/s 151 of the Act and the same mentions that reasons to believe are as per annexure. This annexures is at page No. 81-82. Now, without doubt this income is not signed nor does it reflect as to which authority has scribed it. In this context, we find that the Annexure to the Approval u/s 151 reason recorded by the AO does not contain name, designation, seal and signature of AO. Therefore, by virtue of section 282A of the Act read with Rule 127A of the Income Tax Rules, 1962, the Annexure cannot be said to be validly issued by the 40, because section 282A provides that where Income Tax Act, 1961 requires any notice or other document to be issued by any income-tax authority, such notice or other document must be signed by that authority, and shall be deemed to be authenticated if the name and office of such authority is printed, stamped or otherwise written thereon.
3.1 That the AO has not fulfilled the mandatory condition of recording of mandatory reasons by the AO bearing his signature, name, seal and office stamp before issuance of the notice u/s 148 of the Act.
3.2 According to section 148(2) of the Act, no Assessing Officer can issue the notice u/s 148 without recording reasons for doing so. Any notice u/s 148 issued by the assessing officer without prior recording reasons for doing so is per se illegal and invalid and consequently, the assessment order made in pursuance to such illegal notice is void ab initio and patently illegal. For the sake of ready reference, section 148(2) of the Act is reproduced here below:
“S. 148(2) – The Assessing Officer shall, before issuing any notice under this section, record his reasons for doing so.”
3.3 Kind attention is further drawn to section 282A of the Act read with Rule 127A of the Income Tax Rules, 1962. Section 282A lays down that where this Act requires any notice or other document to be issued, served or given by any income-tax authority, such document shall be deemed to be authenticated only if it the name and office of such income-tax authority is printed, stamped or otherwise written thereon. The section further mandates that such document must be signed and issued by such income-tax authority in paper form or communicated in electronic form to the assessee. For the sake of ready reference, section 282A and related Rule 127A are reproduced here below:
“Sec. 282A. AUTHENTICATION OF NOTICES AND OTHER DOCUMENTS.
(1) Where this Act requires a notice or other document to be issued by any income-tax authority, such notice or other document shall be signed and issued in paper form or communicated in electronic form by that authority in accordance with such procedure as may be prescribed.
(2) Every notice or other document to be issued, served or given for the purposes of this Act by any income-tax authority, shall be deemed to be authenticated if the name and office of a designated income-tax authority is printed, stamped or otherwise written thereon.
(3) For the purposes of this section, a designated income-tax authority shall mean any income-tax authority authorised by the Board to issue, serve or give such notice or other document after authentication in the manner as provided in sub-section (2).”
“Rule 127A – AUTHENTICATION OF NOTICES AND OTHER DOCUMENTS.
(1) Every notice or other document communicated in electronic form by an income-tax authority under the Act shall be deemed to be authenticated,-
(a) in case of electronic mail or electronic mail message hereinafter referred to as the e-mail), if the name and office of such income-tax authority-
i. is printed on the e-mail body, if the notice or other document is in the email body itself; or
ii. is printed on the attachment to the e-mail, if the notice or other document is in the attachment, and the e-mail is issued from the designated e-mail address of such income-tax authority;
(b) in case of an electronic record, if the name and office of the income-tax authority-
(i) is displayed as a part of the electronic record, if the notice or other document is contained as text or remark in the electronic record itself;
Or
(ii) is printed on the attachment in the electronic record, if the notice or other document is in the attachment, and such electronic record is displayed on the designated website.
(2) The Principal Director General of Income-tax (Systems) or the Director General of Income-tax (Systems) shall specify the designated email address of the income-tax authority, the designated website and the procedure, formats and standards for ensuring authenticity of the communication.
Explanation.- For the purposes of this rule, the expressions – (i) “electronic mail” and “electronic mail message” shall have the same meanings respectively assigned to them in Explanation to section 66A of the Information Technology Act, 2000(21 of 2000); (ii) “electronic record” shall have the same meaning as assigned to it in clause (t) of sub-section (1) of section 2 of the Information Technology Act, 2000 (21 of 2000).”
3.4 Thus, a bare perusal of the above reproduced sections makes it amply clear that the AO must record reasons containing his signature, name, seal, and office stamp before the issuance of notice u/s 148. However, a bare perusal of the Annexure to the Approval u/s 151 (or the alleged reasons recorded by the AO) supplied by the AO along with the Notice issued u/s 143(2) dt. 25/06/2021 does not contain his name, designation, seal and signature. That the AO has failed to provide the reasons recorded by him containing his signature, seal, name and stamp.
3.5 In the instant matter, what has been provided to the assessee is the Approval and its annexure u/s 151 granted by the JCIT containing the name, designation, seal and signature of JCIT (not of AO). Obviously, such approval not containing name, designation, seal and signature of AO cannot, by any stretch of imagination, be said to be reason recorded by AO. Hence, issuance of notice u/s 148, without compliance with the mandatory provisions of section 148(2), is illegal and void ab initio.
4. We further placed reliance on the decision of Coordinate Bench in Income Tax Officer Vs. Ashish Gupta vide 560/Del/2024 order dated 30.06.2025 wherein decision of Hon’ble Bombay High Court in the case of CIT Vs. Trend Electronics reported in 379 ITR 456 (Bom) has been relied wherein it has been categorically held that no reason for reopening of assessment were furnished to the assesse, it became fatal to the entire reassessment proceedings per se and accordingly, the reassessment proceedings are required to be quashed.
5. Thus, we sustain this ground as raised, the appeal of assesse is allowed and the impugned assessment order is quashed.
Order pronounced in the open court on 05.08.2026
