Unsigned Assessment Order Invalid, Section 292B Not Applicable: ITAT Mumbai

Reuters Asia Pacific Ltd. Vs DCIT (ITAT Mumbai)

In a landmark ruling that underscores the sanctity of procedural compliance in tax assessments, the Income Tax Appellate Tribunal (ITAT) Mumbai has set a precedent in the case of Reuters Asia Pacific Ltd. Vs DCIT. The tribunal meticulously dissected the implications of serving an unsigned assessment order, holding firm that the absence of a signature from the Assessing Officer (AO) cannot be overlooked or remedied by invoking Section 292B of the Income Tax Act, 1961.

The Crux of the Matter

The appeal lodged by Reuters Asia Pacific Ltd. challenged the legitimacy of an assessment order for the Assessment Year 2015-16, which was unsigned and hence deemed invalid. This pivotal case brings to light the indispensable need for adherence to statutory requirements in the issuance of assessment orders.

Unveiling the Tribunal’s Analysis

The tribunal’s scrutiny revealed that the assessment order, served via email, lacked the mandatory signature of the Assessing Officer—a clear deviation from the prescribed norms outlined in the Income Tax Act and related instructions from the Central Board of Direct Taxes (CBDT).

• Notification and Instructions: Reference was made to CBDT’s Notification No.2/2016 and various instructions emphasizing the necessity for assessment orders to bear the signature of the AO, thereby ensuring their authenticity and legal standing.
• Digital Era, Same Rules: The shift towards e-proceedings and digital assessments has not diluted the significance of this requirement. ITBA Assessment Instruction No.6 and subsequent directives reiterate the process of order generation, highlighting the crucial step of digitally signing the order to conclude the assessment proceedings.
• Legal Mandates and Precedents: The tribunal delved into the legal framework, including Section 282A of the Act, which mandates the signing of notices and documents, distinguishing it from the concept of authentication. The tribunal also resonated with precedents where unsigned orders were held to be invalid, underscoring the non-negotiable nature of this procedural aspect.
• Section 292B’s Limitation: The argument positing that Section 292B could rectify the absence of a signature was robustly countered. The tribunal clarified that this provision could not salvage an unsigned order, as signing is not a mere procedural formality but a statutory requirement integral to the order’s validity.

The Tribunal’s Verdict and Its Implications

By quashing the unsigned assessment order, the ITAT has reaffirmed the legal principle that adherence to procedural formalities is not optional but mandatory. This ruling not only champions the cause of procedural justice but also sets a clear guideline for the AO and the tax authorities, ensuring that the sanctity of the assessment process is maintained.

A Beacon for Future Assessments

This verdict serves as a clarion call to all stakeholders within the taxation ecosystem, emphasizing the criticality of compliance with statutory mandates. The digital transformation of tax procedures, while streamlining processes, does not exempt authorities from adhering to the legal requirements that underpin the integrity of tax assessments.

Conclusion

The ITAT’s ruling in Reuters Asia Pacific Ltd. Vs DCIT is a testament to the judiciary’s commitment to upholding the law in its letter and spirit. It sends a powerful message about the importance of procedural compliance, serving as a precedent for future cases and reinforcing the legal framework governing tax assessments. As the landscape of taxation evolves with technology, this ruling reminds us of the enduring relevance of statutory provisions and the need for their meticulous observance.

FULL TEXT OF THE ORDER OF ITAT MUMBAI

This appeal by the assessee is directed against the assessment order dated 03/02/2021 for Assessment Year 2015-16, passed u/s. 143(3) r.w.s. 144C(13) of the Income Tax Act, 1961 [in short ‘the Act’].

2. The assessee in appeal has inter-alia assailed the validity of assessment order on the legal ground that an unsigned assessment order was served on the assessee. The ground challenging validity of the assessment order raised as ground No.1 of appeal reads as under :

“1. On the facts and in circumstances of the case and in law, the Ld. A.0 erred in passing an order which is invalid in law since it was an unsigned order.”

3. Shri P.J. Pardiwala, Sr. Advocate appearing on behalf of the assessee submitted that the assessment order dated 03/02/2021 served on the assessee is an unsigned order, hence, invalid. The impugned assessment order was received by the assessee on 19/2/2021 at 12.14 a.m. through E-mail from E-mail ID – MUMBALDOT.IT4.1.1@INCOMETAX.GOV.IN. The assessment order was attached to the E-mail along with computation sheet and demand notice. Referring to E-mail, he pointed that a note was given in the E-mail that, “— Signed copy may be sent separately if not already digitally signed”. Except from assessment order received through aforesaid E-mail, no other assessment order for the impugned assessment year was ever communicated to the assessee. The abovesaid order received through E-mail was an unsigned order. The Id. Counsel for the assessee referred to Notification No.2/2016 dated 03/02/2016 issued by the CBDT to contend that the Board had laid down the procedure, format and standards for ensuring secured transmission of electronic communications to the assessee, i.e. communication through e-mail or display of record on the website of the Income Tax Department. ‘Clause-n’ of para -6 of the said notification categorically mentions that the Assessing Officer shall pass the order and attach scanned copy of the order u/s. 143(3) of the Act bearing his/her signature in PDF format to the E-mail sent to the assessee and cause order u/s.143(3) to be served as specified in section 282 of the Act. He asserted that the Board requires that the assessment order sent to the assessee through E-mail should be signed by the Assessing Officer.

3.1. The Id. Counsel for the assessee further referred to ITBA Assessment Instruction No.6 dated 03/10/2017. He pointed that after complete migration to ‘E-Proceedings’, the Board issued the said assessment instructions where the entire process of passing assessment order was explained in a chronological manner. The process of passing the assessment order was divided into six steps, starting from Drafting of the assessment order and culminating with Refund or Demand. The 5^th step in the process is Generation of Order. The generation of order requires the Assessing Officer to digitally sign the order and related documents viz., demand notice, computation sheet, penalty notice, etc. The procedure to digitally sign the assessment order has also been explained in the said instructions.

3.2. Thereafter, the Id.Counsel for the assessee referred to Instruction No.1/18 dated 12/02/2018. He pointed that after the commencement of ‘E-Proceedings’, the Board issued fresh instructions explaining procedural aspects while conducting assessment proceedings. In para 4.2 of the said instructions, it has been again stated that all Department orders/notices/communications issued to the assessee through ‘e-proceedings’ are to be digitally signed by the Assessing Officer.

3.3. He submitted that section 282A of the Act requires that the notice or other documents to be issued by any Income-tax Authority shall be signed. The other documents as referred to in section 282 includes summon or requisitions or order or any other communication under the Act. Thus, the Act and the instructions issued by the Board from time to time has emphasized on signing of the order, notice or any other communication issued by the Assessing Officer or any other Income Tax Authority. Thus, the impugned unsigned assessment order communicated to the assessee is invalid and cannot be considered as an order in the eye of law.

3.4. The Id.Counsel for the assessee in support of his submissions referred to the decision of Tribunal in the case of Vijay Corporation vs. ITO 18 taxmann.com 88 (Mum), where the assessment order without signature of the Assessing Officer was held to be invalid. He further placed reliance on the decision of Hon’ble Supreme Court of India in the case of Smt. Kailasho Devi Burman vs. CIT, 219 ITR 214, wherein the assessment order on the record had no signatures of the Assessing Officer, the Hon’ble Apex Court held that the assessment order to be valid has to be signed by the Assessing Officer. He further placed reliance on the decision by Bangalore Bench of the Tribunal in ITA No.1175/Bang./2016 titled Yeshodha Electricals vs. Asstt. CIT decided on 03/02/2021, wherein unsigned notice issued u/s. 148 of the Act was held to be invalid.

4. The Id. Counsel for the assessee submitted that if assessee succeeds on ground No.1 of appeal, the other grounds of appeal would become academic, hence, at this stage he is confining his submissions to ground No.1 of appeal only

5. Au contraire, Shri Ajay Kumar Sharma representing the Department vehemently defended the assessment order and prayed for dismissing ground No.1 of appeal. The Id. Departmental Representative placed on record an affidavit sworn in by the Assessing Officer stating that the assessment order was duly signed by him manually before the same was uploaded on ITBA portal. The Id. Departmental Representative also placed before the Bench assessment folder to show manually singed copy of the assessment order dated 03/02/2021 in the records of the Department. He submitted that service of unsigned assessment order can be an error or omission which is rectifiable. The Id. Departmental Representative referred to his letter dated 14/07/2023 vide which he had placed on record the submissions of the Assessing Officer, with regard to assessee’s challenge to validity of unsigned assessment order served on the assessee and has also given the gist of submissions of the Revenue on the issue. The relevant extract of same is reproduced herein below:

• “Final order has been sent to the account of the assessee through the account of the AO on the ITBA portal of the Department using RSA token of the A.O. and by generating DIN No. dated 03.02.2021 DIN No. is properly printed on the assessment order sent to the assessee.
• Addition made in the draft order and final orders are same – no prejudice has been caused to the assessee.
• Assessee had accepted that the final order was valid and was passed by the A.O. and that is why it had filed the appeal before the ITAT.
• Therefore final order is in substance and effect in conformity with or according to the intent and purpose of the Act as per Section 2928
• Therefore final order, demand notice and computation sheet are valid even though the final order was not digitally signed.
• Principle of 5.29288 as reproduced below also applicable in the case.

Notice deemed to be valid in certain circumstances.

292BB. Where an assessee has appeared in any proceeding or co-operated in any inquiry relating to an assessment or reassessment, it shall be deemed that any notice under any provision of this Act, which is required to be served upon him, has been duly served upon him in time in accordance with the provisions of this Act and such assessee shall be precluded from taking any objection in any proceeding or inquiry under this Act that the notice was—

(a) not served upon him; or

(b) not served upon him in time; or

(c) served upon him in an improper manner:

Provided that nothing contained in this section shall apply where the assessee has raised such objection before the completion of such assessment or reassessment.

• The assessee had not initially objected that the order was not digitally signed and this ground was taken only as an additional ground.
• Decision of Guwahati bench of ITAT in the case of Haroocharai Tea Co., 35 1TD 590 is in favour of revenue on this account.”

5.1. The Id. Departmental Representative submitted that the additions made in draft assessment order and the final assessment order are the same. Since, the draft assessment order has been duly signed by the Assessing Officer and the additions made therein have been confirmed by the DRP, no prejudice is caused to the assessee if the final assessment order is not signed by the Assessing Officer. The final assessment order passed by the Assessing Officer in substance and effect is in conformity the intent and purpose of the Act. Hence, valid as per section 292B and 292BB of the Act. The Id. Departmental Representative further placed on record order sheet details. Referring to the entries on 03/02/2021, he submitted that the Assessing Officer after generation of the order signed using his token and sent the order through his login ID using his password to the assessee on the E-mail ID furnished by the assessee. It is sufficient to authenticate generation of the order, the assessment order could not have been sent to the assessee using E-mail ID of the Assessing Officer by any third unauthorised person. Thus, the order sent by the Assessing Officer through his E-mail ID itself shows that the order is authentic. He vehemently argued that the case of the Revenue is squarely covered by the provisions of section 292B of the Act. He further referred to Rule-127A of the Income Tax Rules,1962 [ in short ‘the Rules’] to submit that every notice or other documents communicated in electronic form by an Income Tax Authority under the Act shall deemed to be authenticated if, it is sent through electronic mail/message, if the name and office of such Income Tax Authority is printed on the E-mail body or other document is in the E-mail body itself and the E-mail is issued from the designated E-mail address of such Income Tax Authority. As regards case laws cited by the assessee the Id. Departmental Representative submitted that the said case laws are distinguishable on facts, as the said decisions were rendered when there were no E-assessment proceedings, all notices and orders were sent through manual mode.

6. We have heard the submissions made by rival sides and have examined the impugned assessment order. The assessee in ground No.1 of the appeal has challenged the validity of assessment order served on the assessee as the said order does not bear the signature of the Assessing Officer.

7. The assessment order was served on the assessee through designated E-mail ID of the Assessing Officer. Though the order was generated on 03/02/2021, but the same was communicated to the assessee through E-mail as attachment on 19/02/2021 i.e. almost after two weeks from the date of generation of the order.

8. The first Notification that has been referred before us is dated 03/2/2016. Ostensibly, this notification was issued by the CBDT when the Department was in the process of migration from manual mode to E-Assessment procedure. To mitigate immediate problem of the Assessing Officers to digitally sign the assessment order before uploading on ITBA portal, the Assessing Officer were allowed to sign the notice u/s 143(2)/143(1) and the assessment order manually and thereafter upload PDF format of the same before the order is served on to the assessee through e-mail in accordance with Section 282 of the Act. The relevant extract of the said Notification where the requirement to sign assessment order by Assessing Officer and thereafter serving of the same to the assessee is reproduced herein below:

“6. The procedure, formats and standards for ensuring secured transmission of electronic communication is specified as under:

xxxx

xxxx

n. The A.0 shall pass the order and attach the scanned copy of the order u/s. 143(3) bearing his/her signature in PDF format to the email sent to the assessee  and/or cause the order u/s.143(3) to be served as specified in Section 282 of the Income Tax Act,1961.”

9. Section 282A of the Act deals with authentication of notices and other documents. The section mandates that where the Act requires the notice or other documents to be issued by any Income Tax Authority, such notice or other document signed and issued in paper form or communicated in electronic form by the Authority in accordance with procedure as may be prescribed. Section 282 of the Act specifies the mode of service of notice or summon or requisitions or order or any other communication under this Act. A conjoint reading of the above two sections would make it clear that other documents referred to u/s. 282A of the Act would include summon or requisition or order or any other communication. Thus, the requirement of section 282A of the Act is that before any notice or order is communicated to the assessee it should be signed in accordance with the prescribed procedure.

10. The assessee has also placed on record Instruction No. 1/2018 dated 12/2/2018 with respect to conduct of Assessment proceedings in scrutiny cases through `E-Proceedings’. Therein apart from other procedural aspects, the Board once again specifically mentioned the requirement of digital signatures by the Assessing Officer on orders/notices/communications before they are issued to the assessee.

11. Next, the assessee has placed on record ITBA Assessment Instruction No.6 (supra). The said Instruction lists out the entire process of passing the assessment order under ‘6-Assessment’. The process is divided in six steps viz.:

(a) Drafting of assessment order;

(b) Income computation;

(c) Tax computation;

(d) Feed back;

(e) Order generation; and

(f) Refund or demand.

The assessment process is complete with service of assessment order along with notice of demand , tax computation and notice of penalty, if any. In case of refund, a separate process is initiated through CPC-ITR for adjustment of demand, if any. The stage of Order Generation under the ‘E-Assessment’ procedure has been explained in the said instructions, the same is reproduced herein below:

“(E) Order Generation:

(i) AO needs to go back to the Enter Assessment order tab for the final step of generation of assessment order. AOs are advised to verify/ compare the Assessment of income in the draft text order with the Assessed Income as computed thoroughly to ensure that all items are correctly reflected as per the draft order including the draft computation sheet, before clicking Generate button. Once the verification is done, AO can then select the various documents to be generated with the Assessment order, viz Demand Notice;  Computation sheet; penalty notice, if any. Option to select such documents is  available on the order screen. AO can also select the option to digitally sign  the order and related documents.

(ii) Once the aforesaid steps are executed, AO can proceed to generate the complete order by clicking on the Generate Order button. On clicking the same, all the data will be sent for final computation (since there may be a gap between the date of draft order and final order). On completion of accounting. AO will get an alert that final data is received. AO then needs go to View/ Download Notice/ Letter/ Order Screen to view the generated orders, computation sheet, demand notice and other documents. In order to digitally sign the assessment order AO will navigate 40 to View/ Enter Dispatch  details Screen to sign the documents digitally. The workitem pendency will be closed in ITBA and assessment proceedings will conclude”.

As perusal of the stage of order generation as set out in the instructions would show that to sign the assessment order digitally the steps to be followed by Assessing Officer are also meticulously given. The signing of assessment order is an integrated process of order generation in E-Assessment. The assessment proceedings conclude only after the order is digitally signed. Thus, the importance of signing assessment order cannot be undermined.

12. The Revenue has placed on record an affidavit sworn in by the Assessing Officer who had passed the impugned assessment order. A perusal of the affidavit shows that the Assessing Officer stated on oath that the assessment order was duly signed by him manually on the same date i.e. 03/02/2021 before issuance on the ITBA portal. He has further stated that due to some technical issue the assessment order was not digitally signed while uploading in ITBA portal. During the course of proceedings in the open court, the Id.Counsel for the assessee logged into ITBA portal using his password and ID to show that the assessment order for the impugned assessment year in the case of assessee uploaded on ITBA portal is neither signed manually or digitally by the Assessing Officer. The fact of unsigned assessment order on ITBA portal could not be refuted by the Department. Therefore, the veracity of contents of affidavit placed on record is doubtful. Thus, we have no hesitation in holding that the assessment order served on the assessee and available in the public domain is an unsigned order.

13. The Id. Departmental Representative has contended that the addition made in the draft assessment order and the final assessment order are same, the draft assessment order has been duly signed by the Assessing Officer, the additions made in the draft assessment order have been upheld by the DRP, therefore, no prejudice is caused to the assessee. The Revenue is shielding unsigned assessment order citing provisions of section 2928 of the Act and has contended that service of unsigned order to the assessee is merely a procedural defect that can be rectified. We do not concur with the said proposition advanced on behalf of the Department.

14. Signing of an assessment order by the Assessing Officer is a mandatory requirement and not merely a procedural formality. Unless, the order is signed it cannot be said to be complete. Once the order is signed digitally or manually, as required, the order is complete and the date of signature on the order shall be the date of passing of the order. Here we would also like to refer to the relevant provisions from the Code of Civil Procedure, 1908 (CPC) explaining the requirement of signing the judgements. Order-XX Rule-3 of CPC mandates that the judgment shall be dated and signed by the Judge at the time of pronouncing it and when once signed, shall not afterwards be altered. The signing of an order is thus, not a mere formality, it is a mandatory requirement. It is not a curable procedural defect that can be fixed by signing the order after service of the same on the assessee. If an unsigned order or notice is served on the assessee, the same is invalid.

15. The framing of an assessment is a quasi-judicial function. The assessment order passed by the Assessing Officer is subject to judicial scrutiny by higher Appellate Authorities. Therefore, the said order has to be in conformity with the provisions of the Act in every respect, be it limitation, the jurisdiction of the officer passing the said order or signing and service of the order.

16. The Id. Departmental Representative referred to the provisions of Rule- 127A i.e. the Rule framed in pursuance to the provisions of section 282(2) of the Act for service of notice, summons, requisition order and other communications. The Id. Departmental Representative has pointed that since the assessment order communicated to the assessee originated from the designated E-mail ID of the Assessing Officer, therefore, in terms of Rule 127A, the said document shall be deemed to be authenticated. The said argument is desultory and not in unison with the provisions of section 282A of the Act. The relevant provisions of section 282A of the Act are reproduced herein below:

“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”

The aforesaid section is with respect to authentication of notices and other documents i.e. orders/summons/requisitions/communications etc. Sub-section (1) makes it obligatory that where any notice or other document is required to be issued under the provisions of the Act, the same shall be signed and issued by the competent authority in accordance with the procedure prescribed. The section is unambiguous, specifies signing of notice or other documents mandatory and the manner of signing procedural. Therefore, the Board has issued instructions from time to time laying down the procedures inter alia for signing of the notices and the assessment orders. Sub-section (2) of section 282A of the Act explains the connotation of expression “authentication”. Thus, signing of document and authentication of document carry different meaning. Signing of document denotes committing to the document, whereas, authentication of document relates to genuineness of origin of document. If signing and authentication would mean the same, then there was no need for the Legislature to lay down the requirement of signing the documents viz, notices, orders etc in sub-section (1) and explain the purpose of authentication in sub-section (2) of Section 282A of the Act. If argument of the Revenue is accepted, then the provisions of sub-section (1) to section 282A would become redundant.

17. Lastly, the Revenue has tried to take shelter under section 292B of the Act. The said section cures the procedural defects or omissions. The section does not grant immunity from non-compliance of statutory provisions. Non signing of an assessment order is not a procedural flaw that can be cured subsequently. The order is complete only when it is signed and released. The date on which the order is signed by the assessing officer is the date of order. If Revenue’s contention is accepted and the Assessing officer is allowed to sign the assessment order now considering it to be procedural deficiency, still the order would suffer from the defect of limitation and would be without jurisdiction.

18. In the case of Vijay Corporation versus ITO (supra), the Co-ordinate Bench in a case where the assessment order served on the assessee was not signed by the assessing officer, held that requirement of signature of the assessing officer is a legal requirement. The omission to sign the order of assessment cannot be cured by relying on the provisions of section 292B of the Act and held the order invalid.

19. Ergo, in facts of the case and documents on record, we hold the unsigned impugned assessment order served on the assessee invalid and quash the same.

20. Since, we have granted relief to the assessee on the legal ground raised in ground no.1 of appeal, the other grounds raised in appeal on merits have become academic, hence, not deliberated upon.

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

Order pronounced in the open court on Tuesday the  26^th day of December, 2023.