ITAT Kolkata Quashes Assessment Order as It Was Served After Limitation Deadline

Versuni India Home Solutions Ltd. Vs DCIT (ITAT Kolkata)

The assessee filed an appeal against the order of the DC/ACIT TP-2, Kolkata, dated 11 July 2024 for Assessment Year 2020-21. During the hearing, the assessee pressed a ground challenging the validity of the assessment order passed under Section 143(3) read with Section 144C(13) of the Income-tax Act, contending that the order, though dated 31 July 2024, was served on the assessee only on 21 August 2024 and was therefore barred by limitation.

The assessee outlined the sequence of assessment proceedings. The Transfer Pricing Officer passed an order under Section 92CA(3) on 21 July 2023, followed by a draft assessment order under Section 144C on 27 September 2023. The assessee filed objections before the Dispute Resolution Panel (DRP) on 25 October 2023. The DRP issued directions under Section 144C(5) on 27 June 2024, and the TPO passed an order giving effect to those directions on 11 July 2024. Although the final assessment order was dated 31 July 2024, it was served on the assessee by email only on 21 August 2024.

The assessee argued that since the DRP directions were issued on 27 June 2024, the Assessing Officer was required under Section 144C(13) to complete the final assessment order within one month from the end of that month, i.e., by 31 July 2024. According to the assessee, the order was not effectively passed within the prescribed period because it was first served on 21 August 2024. The assessee further pointed out that the order had been passed manually rather than through the Income Tax Business Application (ITBA), and that the order and intimation were uploaded only after the expiry of the limitation period.

The assessee relied on a report submitted by the Assessing Officer, in which the officer acknowledged that the final assessment order had been manually signed on 31 July 2024 and that the intimation letter was generated on 2 August 2024. However, the report did not specify when the order was served on the assessee. The Assessing Officer maintained that Section 144C(13) required only completion of the assessment within the prescribed period and did not require service or intimation within that period.

The assessee contested this position and referred to judicial precedents, including the Supreme Court’s decision in M.M. Rubber and Co., which discussed when an order becomes operative and effective. Reliance was also placed on Karnataka High Court decisions holding that orders dispatched after the statutory limitation period are invalid if there is no evidence of timely dispatch.

The Tribunal also considered the E-Assessment Scheme, 2019. Rule 10 prescribes the modes through which notices, orders, and electronic communications are to be delivered, including placement in the assessee’s registered account, sending to the registered email address, or uploading on the mobile application followed by a real-time alert. Rule 10 further provides that the time and place of dispatch and receipt are to be determined in accordance with Section 13 of the Information Technology Act, 2000. Rule 9 requires authentication of electronic records through a digital signature.

The assessee submitted that the final assessment order was emailed only on 21 August 2024 and therefore delivered for the first time on that date, which was beyond the limitation period prescribed under Section 144C(13). The assessee also relied on decisions of the Delhi Bench of the Tribunal holding that manually signed assessment orders are invalid where proceedings are governed by the E-Assessment Scheme.

The Revenue relied on a Delhi High Court decision to argue that the assessment order had been validly passed. However, the Tribunal observed that the decision actually supported the assessee’s case. The High Court had held that mere generation or signing of a notice does not amount to its issuance and that dispatch is essential. A notice is considered issued only when it leaves the control of the originator through proper dispatch.

FULL TEXT OF THE ORDER OF ITAT KOLKATA

This is an appeal preferred by the assessee against the order of the DC/ACIT TP 2, Kolkata (hereinafter referred to as the “Ld. CIT(A)”] dated 11.07.2024 for the AY 2020-21.

2. At the time of hearing the Id. Counsel for the assessee pressed ground no.2, which is extracted below:-

“Order under section 143(3) r.w.s. 144C(13) of the Act dated 31 July 2024 (served to appellant on 21 August 2024) is bad in law being time barred (Refer our detailed grounds of appeal on this issue)”

3. The facts in brief are that the Appellant i.e. Versuni India Home Solutions Limited formerly known as Philips Domestic Appliances India Limited (on behalf of Preethi Kitchen Appliances Private Limited) (‘Versuni’) (PAN AAFCP8830K) is engaged in the business of selling consumer household items like mixies, tabletop grinders, coffee makers, chimney, induction cookers, electric rice cookers, electric kettle, electric iron box, electric pressure cooker, vessels for Induction cooker and other related items. Given below is a sequence of events in connection with the assessment proceedings for the year under consideration i.e. AY 2020-21 in a tabular format:

4. On the basis of the above sequence of events, it is argued and submitted that since the Hon’ble DRP had issued its Directions under section 144C(5) on 27 June 2024, the Assessing Officer was required to “Complete” the Final Assessment Order u/s. 143(3) r.w.s 144C(13) of the Income-tax Act, within one month from the end of the month in which the DRP directions are received i.e, the Final Assessment Order ought to have been passed by 31 July 2024. 1961.

5. However, the Final assessment order though is dated 31 July 2024, the same was served on the Appellant for the first time only on 21 August 2024, vide an email communication [Refer Page 22 of the Appeal Set]. It is therefore submitted and it will be appreciated that the Final Assessment Order thereforeis clearly barred by limitation. The Id. AR also submitted that the Ld. AO has passed a “manual order” (not through the Income Tax Business Application i.e. ITBA) dated 31 July 2024. However, the same was “served” on the Appellant only on 21 August 2024. Besides, the Income-Tax e-filing and the Intimation letter were uploaded only on 22 August 2024.

6. The Id. AR submitted that the aforesaid factual position has been also accepted by the Ld. AO in his report dated 04 June 2025 filed before the Hon’ble Bench on 08 October 2025. In the said report, the Ld. AO himself confirmed that the Final Assessment Order was manually signed purportedly on 31 July 2024 and the intimation letter was generated only on 02 August 2024. There is no mention whatsoever as to when was the same served on the Appellant.

7. Then Id. AR submitted that instead, in the said report, the Ld. AO further stated that the provisions of section 144C(13) does not mandate that the Final Assessment order is required to be “served or intimated to the assessee company and only requires that the order be “completed” withing the time limit as per the Act. That completion, it is argued is only “signing” of the Order. The Id. AR submitted and it will be appreciated that it is not in accordance with the law laid down by the Hon’ble Supreme Court in the case of Collector of Central Excise, Madras -vs.-M.M. Rubber and Co [1992] 1992 taxmann.com 555 (SC) wherein it has been as under:

12. It may be seen therefore, that, if an authority is Authorised to exercise a power or do an act affecting the rights of parties, he shall exercise that power within the period of limitation prescribed therefore. The order or decision of such authority comes into force or, becomes operative or becomes an effective order or decision on and from the date when it is signed by him. The date of such order or decision is the date on which the order or decision was passed or made: that is to say when he ceases to have any authority to tear it off and draft a different order and when he ceases to have any locus poenitentiae. Normally that happens when the order or decision is made public or notified in some form or when it can be said to have left his hand. The date of communication of the order to the party whose rights are affected is not the relevant date for purposes of determining whether the power has been exercised within the prescribed time.

8. Further, reliance in this regard is also placed on the following decisions of the Hon’ble Karnataka High Court in the following cases wherein the ratio laid down by the Hon’ble Supreme Court has be applied/followed and it has been duly held that an order if dispatched post the statutory limitation date and if no substantial records are available to prove that they were dispatched before the limitation date, then such orders is invalid and barred by law of limitation.

• Maharaja Shopping Complex v/s. DCIT (ITA No. 832/2008); and
• CIT v/s. BJ N Hotels Ltd [2017] 79 com 336 (Karnataka).

9. Here, it would not be out of place to also refer to the E-Assessment Scheme, 2019, notified by CBDT in terms of the assessment proceedings were carried out. Reference can be made to Rule 10 of the said Scheme which prescribes the manner of delivery of electronic records. The said Rule is reproduced hereunder for ready reference:

“10. Delivery of electronic record.–(1) Every notice or order or any other electronic communication under this Scheme shall be delivered to the addressee, being the assessee, by way of-

(a) placing an authenticated copy thereof in the assessee’s registered account; or

(b) sending an authenticated copy thereof to the registered email address of the assessee or his authorised representative; or

(c) uploading an authenticated copy on the assessee’s Mobile App; and followed by a real time alert.

(2) Every notice or order or any other electronic communication under this Scheme shall be delivered to the addressee, being any other person, by sending an authenticated copy thereof to the registered email address of such person, followed by a real time alert.

(3) The Assessee shall file his response to any notice or order or any other electronic communication, under this Scheme, through his registered account, and once an acknowledgement is sent by the National e-assessment Centre containing the hash result generated upon successful submission of response, the response shall be deemed to be authenticated.

(4) The time and place of dispatch and receipt of electronic record shall be determined in accordance with the provisions of section 13 of the Information Technology Act, 2000 (21 of 2000).”

10. In the instant case, the said Final Assessment Order dated 31 July 2024 was emailed to the Appellant only 21 August 2024 (albeit without a real time alert) and hence for the first time the same was delivered to the Appellant only that date which is clearly and admittedly beyond the due date prescribed in section 144C (13) of the Act thereby rendering the same barred by limitation.

11. Further, Rule 9 of the said Scheme prescribes for authentication of electronic record, the same is reproduced hereunder for ready reference:

“9. Authentication of electronic record. — For the purposes of this Scheme, an electronic record shall be authenticated by the originator by affixing his digital signature in accordance with the provisions of sub-section (2) of section 3 of the Information Technology Act, 2000 (21 of 2000):

12. Reliance in this regard is also placed on the decisions of the Delhi Bench of the ITAT wherein it has been inter-alia held that an Assessment Order which is signed manually is invalid when the proceedings are carried on under the E-assessment Scheme:

• Outsytems Singapore Pte. Ltd. v/s. DCIT [2025] 181 com 743 (dated 10 December 2025)
• Navyug Technologies Private Ltd. v/s. ITO (ITA No. 4579/Del/2024 dated 16 February 2026)

13. During the course of hearing on 25th February 2026, the Ld. DR also relied upon the decision of the Delhi High Court in the case of Suman Jeet Agarwal -vs.- Income Tax Officer [2022] 143 com 11 (Delhi) to contend that the Order is validly passed.

14. We note that said reliance is misconceived and the said decision in fact supports the Appellant’s contention. The said decision was rendered in the context of issuance of notice under section 148 read with section 149, where the expression used is “shall be issued” within the prescribed period of limitation. The Hon’ble Delhi High Court categorically held that mere generation or signing of a notice does not amount to issuance and that “despatch” is sine qua non for issuance. The Hon’ble High Court has further clarified that a notice is said to be issued only when it leaves the control of the originator, i.e., upon due despatch refer paragraph Nos. 25.12 and 26.21 reproduced hereunder for ready reference:

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’.

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26.21 We therefore answer question no. (II) in affirmative and hold that despatch as per Section 13 of the Act of 2000, is a sine qua non and happens when the electronic mall message leaves the ITBA’s servers.

15. Applying the said ratio to the present case, the Assessment Order, though dated 31 July 2024, was admittedly served only on 21 August 2024, hence the same can be said to have been passed only when it is put beyond the control of the Assessing Officer which is (in terms of Rule 10) by way of dispatch /communication and not when it is merely signed or dated. In view of the foregoing facts and discussion, we opine that Assessment Order passed on 31 July is clearly barred by limitation as the same was served on the Appellant for the only on 21 August 2024.

16. In the result, the appeal of the assessee is allowed.

Order pronounced on 20.05.2026.