Unsigned Digital Reassessment Notices Held Void – ITAT Quashes Entire 147 Proceedings

Sunil Sharma Vs ITO (ITAT Delhi)

Unsigned Digital Reassessment Notices Held Void – ITAT Quashes Entire 147 Proceedings

The Delhi ITAT quashed reassessment proceedings against the assessee after holding that notices issued u/s 148A(b), order passed u/s 148A(d) and notice issued u/s 148 were invalid since they were not digitally signed by the Assessing Officer. The Tribunal noted that the reassessment proceedings were conducted through the e-proceedings mechanism, and CBDT Instruction No. 1/2018 specifically mandates that all notices, communications and orders issued through e-proceedings must be digitally signed by the Assessing Officer. Since the notices in the present case carried no digital signatures, the reassessment proceedings were held to be non-est in law.

Relying on earlier Delhi Tribunal rulings including Navyug Technologies Pvt. Ltd. and Outsystems Singapore Pte. Ltd., the Bench observed that when a statute or prescribed procedure requires an act to be done in a particular manner, it must be done only in that manner. The ITAT further held that manual signing of notices/orders in e-proceedings is impermissible and constitutes an incurable defect which vitiates the entire reassessment. Accordingly, the Tribunal declared the notices issued u/s 148A(b), 148A(d) and 148 as invalid and quashed the assessment framed u/s 144 r.w.s. 147 as void ab initio.

FULL TEXT OF THE ORDER OF ITAT DELHI

This appeal is filed by the assessee against the order of Ld. CIT(A)/ NFAC dated 20.05.2025 for the A.Y. 2015-16.

2. The assessee has raised following grounds of appeal :-

1. That on facts and circumstances of the case, the Ld. CIT(A) has grossly erred in upholding the validity of reassessment proceedings u/s 147 in total disregard to the fact that assessment order was passed without issuing valid notice u/s 148A(b), order u/s 148A(d) and notice u/s 148 of the Act.

2. That the notice u/s 1484(b), order u/s 148A(d) and notice u/s 148 are unsigned and non-est in the eyes of law thus rendering the assessment order invalid and void-ab-initio.

3. The Ld. Counsel for the assessee referring to the additional grounds submitted that since these grounds go to the very validity of reassessment framed u/s.147 of the Act and do not require any investigation of the facts they are purely legal in nature and the same be admitted. Reliance was placed on the decision of the Hon’ble Supreme court in the case of NTPC Ltd. Vs. CIT (229 ITR 363).

4. On hearing both the sides and perusing the additional grounds we observed that these additional grounds are purely legal grounds and therefore, respectfully following the decision of the Hon’ble Supreme Court in the case of NTPC Ltd.(supra) these additional grounds are admitted.

5. Coming to the additional grounds, Ld. Counsel for the assessee referring to pages 1 to 7 of the paper book, submitted that the AO issued notice u/s.148 of the Act dated 30.03.2022, order under clause-(d) of section 148 of the Act dated 30.03.2022 and notice under clause-(b) of section 148A of the Act dated 20.03.2022 and none of these notices were digitally signed by the AO. The Ld. Counsel for the assessee submits that since these proceedings are e-proceedings there is no option for the revenue to sign these notices/orders manually. Ld. Counsel submitted that the scheme of e-proceedings does not permit the authorities to sign notices manually. The Ld. Counsel for the assessee placed reliance on the decision of the coordinate Bench in the case Navyug Technologies Private Limited Vs. ITO in ITA No.4579/Del/2024 dated 16.02.2026. Referring to para-4 of this decision, Ld. Counsel submits that the Tribunal considering the CBDT instruction and also the decision of the coordinate Bench in the case of Outsystems Singapore Pte. Ltd. Vs. DCIT held that the assessment made under e-proceedings which were manually signed by the AO is not permissible in law and it vitiates the assessment. Reliance was also placed on the decision of Hon’ble Karnataka High Court in the case of PCIT Vs. Yeshoda Electricals in ITA No.261/2021 order dated 24.09.2025 and the decision of the Delhi Bench in the case of DCIT Vs. Mahalaxmi Light House in ITA No.3514/Del/2024 and Co. No. 109/Del/2024 vide order dated 05.12.2025 and Karan Anand Vs. ITO in ITA No. 3624/Del/2023 vide order dated 15.04.2025.

6.3 In the alternative Ld. Counsel for the assessee submitted that in this case notice u/s.148A(b) of the Act dated 20.03.2022 was issued requiring the Assessee to comply on 28.03.2022. Ld. Counsel submitted that this notice was served on the assessee on 23.03.2022 giving period of less than 7 days for compliance and therefore, the notice issued u/s.148A(b) of the Act is bad in law. Reliance was placed on the decision of the Delhi Bench in the case of Anuj Ghuliani Vs. ITO (172 taxmna.com 224). Reliance was also placed on the decision of the Hon’ble Karnataka High Court in the case of PCIT Vs. Smt. Yogendra Keertana (178 taxmann.com 450).

7. On the other hand the Ld. DR submitted that the notices were manually signed by the AO and therefore, the assessment cannot be held to be bad in law.

8. Heard rival submissions and perused the orders of the authorities below. The copies of notices furnished by the assessee in the paper book suggest that in none of the notices issued u/s.148A(b) of the Act, order passed u/s.148A(d) of the Act and notice issued u/s.148 of the Act were signed digitally by the AO. In such circumstances whether the assessment framed based on such notices is valid or not had came up for consideration before the coordinate Bench of the Tribunal in the case of Navyug Technologies (P) Ltd. vs. ITO in ITA No.4579/Del/2024 dated 16.02.2026 and the Tribunal held as under :-

“4. At the outset, Ld. Counsel for the assessee drew our attention towards the notice issued by the Assessing Officer u/s. 142(1) of the Act dated 26.8.2019 and pointed out that this scrutiny assessment was conducted via online in e-processing facility available through the website of the Income Tax Department. He further drew our attention to the assessment order and particularly pointed out that the assessment order dated 19.12.2019 has been signed and issued manually, which is in violation of CBDT Instruction No. 1/2018 [F.No. 225/157/2017-ITA.II) dated 12.2.2018. Ld. Counsel for the assessee further stated that exactly similar issue has been dealt by the Coordinate Bench of the Delhi Tribunal in the case of Outsystems Singapore Pte. Ltd. vs. DCIT, Circle International Tax 2(2)(2), Delhi in ITA NO. 1601/Del/2025 (AY 2022-23) wherein, it has been held as under:-

“7. We have heard the submissions made by rival sides and have examined the orders of authorities below. We have also considered the decisions on which respective sides have placed reliance in support of their arguments. Before proceeding to decide merits of the addition, the legal issue raised by the assessee in ground of appeal no.3 challenging validity of the Final Assessment Order in signing the order manually is taken up first for adjudication. A perusal of the impugned order reveals that the assessment order has been signed manually by the Assessing Officer. The assessment has been made under ‘E-Proceedings’. The Board vide Notification No. 01/2018 dated 12.02.2018 has notified that all assessment proceedings in scrutiny cases are to be conducted electronically. The said instructions are reproduced herein below:

“SECTION 143, READ WITH SECTIONS
142 & 2(23C), OF THE INCOME-TAX ACT,
1961 – ASSESSMENT – CONDUCT OF
ASSESSMENT PROCEEDINGS IN SCRUTINY
CASES ELECTRONICALLY
INSTRUCTION NO.1/2018
[F.NO.225/157/2017-ITA.II], DATED 12-2-2018

Sub-section (23C) of Section 2 of the Income-tax Act, 1961 (Act), applicable from 1-6­2016, provides that “hearing” includes communication of data and documents through electronic mode. Accordingly to facilitate conduct of assessment proceedings electronically, vide letter dated 23-6-2017, in file of even number, Board had issued a revised format of notice(s) under section 143(2) of the Act. Para 3 of these notice(s) provided that assessment proceedings in cases selected for scrutiny would be conducted electronically in ‘E-Proceeding’ facility through assessee’s account in E-filing website of Income-tax Department.

2. In accordance with the procedure outlined in revised 143(2) notice(s) for conduct of assessment proceedings electronically, it is hereby directed that except for search related assessments, proceedings in other pending scrutiny assessment cases shall be conducted only through the ‘E-Proceeding’ functionality in ITBA/E-filing. However, in cases where the concerned assessee objects to conduct of assessment proceedings electronically through the ‘E-Proceeding’ facility, such cases, for the time-being, may be kept on hold.

3. Further, considering the situation that some of the stations have limited bandwidth, being VSAT stations and stations with limited capacity where bandwidth is in the process of being upgraded, it has been decided that till 31­3-2018, such stations, in accordance with target stipulated in Central Action Plan for financial year 2017-18, may undertake and complete only ten percent scrutiny cases (which are getting barred by limitation on 31-12-2018) having the potential to effect recovery during the current year itself. The list of such stations shall be specified by the Pr. DGIT(Systems). Accordingly, at these stations, till 31-3-2018, the assessment proceedings in cases to be completed as per Central Action Plan target, may be conducted manually if e-assessment is not possible. It is reiterated that at other stations covered under para 2 above, subject to exceptions mentioned therein, the assessments would be conducted electronically only.

4. Some of the important procedural aspects while conducting assessment proceedings through ‘E-Proceeding’ are as under:

4.1 Enquiry before assessment in electronic mode : For enquiries before assessment in terms of section 142(1)(ii) of the Act, notice shall be issued electronically and delivered upon the assessee in his ‘E-Filing’ account. While filing the response electronically in compliance with notice under section 142(1)(ii) of the Act, the concerned assessee shall verify it in the manner prescribed under rule 14 of Income-tax Rules, 1962.

4.2 Use of digital signature by Assessing Officer: All departmental orders/communications/notices being issued to the assessee through the ‘e-Proceeding’ facility are to be signed digitally by the Assessing Officer.

4.3 Time for compliance : Online submissions may be filed till the office hours on the date stipulated for compliance.

4.4 Availability of facility for electronic submission of documents in time barring situation or where case has been finally heard by the Assessing Officer: The facility for electronic submission of documents through ‘E Proceeding’ shall be automatically closed seven days before the time barring date. In other situations, upon completion of proceedings, before passing the final order, concerned Assessing Officer, on his volition, shall close the e-submission facility after mentioning in electronic order sheet that ‘hearing has been concluded’. However, if required, in exceptional circumstances, the concerned Assessing Officer may enable further filing of submissions electronically under intimation to the Range Head in ITBA.

4.5 In assessment proceedings being carried out through the ‘E-Proceeding’ facility, a particular proceeding may take place manually in following situation(s):

i. where manual books of account or original documents have to be examined;

ii. where Assessing Officer invokes provisions of section 131 of the Act or a notice is issued for carrying out third party
enquiries/investigations;

iii. where examination of witness is required to be made by the concerned assessee or the Department;

iv. where a show-cause notice contemplating any adverse view is issued by the Assessing Officer and assessee requests for personal hearing to explain the matter.

4.6 Maintenance of ‘Record’ in the context of ‘E-Proceeding’: In cases being assessed through ‘E-Proceeding’, from now on, as far as possible, case-records as well as note sheet of proceedings shall be maintained electronically.

5. This instruction may be brought to the notice of all concerned for immediate compliance.”

8. A perusal of para 4.2 of the aforesaid instructions would show that communication of all documents including orders, notices, etc. issued to the assessee through ‘E-Proceeding’ facility are to be signed digitally by the Assessing Officer. No exception has been provided in the said instructions for signing the assessment orders manually. During the course of hearing, the ld. DR sought time to furnish copy of the exceptions, if any. The time sought by the DR was allowed. However, on the next date of hearing no such instructions were furnished and the ld. DR expressed her inability to lay hands on any such instructions carving out exceptions. In the absence of any exceptions, all assessment orders in ‘E-Proceedings’ have to be necessary signed digitally. The instructions dated 12.02.2018 issued by the Board would apply to all assessments made electronically. The ld. DR has placed on record the reasons given by the AO for signing the order manually. The relevant excerpts from the same are reproduced herein under:

“In this regard, it is submitted that the date of limitation for passing the assessment order in this case was 31.01.2025 pursuant to the directions of the Hon’ble DRP. The assessment order for AY 2022-23 was passed and sent to CP for final accounting. However, CPC had not closed the accounting of the same and the assessment order along with computation sheet and demand notice had not come back from the CPC for being digitally signed and issued to the assessee ( grievance had been raised on the TBA Helpdesk for the same. Since the charge of Circle 2(2)(2) was being transferred with effect from 13.01.2025 on account of the undersigned proceeding on earned leave and since the new incumbent officer would not be able to sign the order on a later date, the assessment order in this case was passed and signed manually by the undersigned on 10.01.2025 and sent to the assessee on the same date.”

9. Since CBDT Instructions No. 1/2018 (supra) requires the Assessing Officer to sign assessment order digitally where the assessments are completed through ‘E-Proceedings’ facility, the assessment order would stand valid only if it is passed in accordance with the CBDT Instructions. No exception has been provided by the Board to the said conditions.

10. The Hon’ble Supreme Court of India in the case of Cherukuri Mani v. Chief Secretary, Government of Andhra Pradesh (2015) 13 SSC 722 has held that any deviation in the procedure prescribed by the statue renders the action illegal. The Hon’ble Apex Court in the case of Chandra Kishore Jha vs Mahavir Prasad (1999) 8 SCC 266 held that, if statue provides for a thing to be done in a particular manner, then it has to be done in that manner and in no other manner. The CBDT has laid down procedure for completing ‘E-Proceedings’ in a particular manner, the same are binding on the Department. The AO is thus mandatorily required to sign the assessment order digitally where the scrutiny assessments are conducted electronically. Since, in the instant case the assessment has been made under ‘E’-Proceedings and assessment order has been signed manually, the same suffers from incurable defect, if, the assessment order has been served on the assessee. The reliance placed by the Revenue on the decision in the case of Mytheenkunju Muhammed Kunju Kandathil Jewellers vs. DCIT (supra) does not support the cause of Revenue as the same was passed in peculiar set of facts and hence, is distinguishable. Thus, the assessment order is liable to be quashed on this ground alone.”

5. The aforesaid facts were confronted to Ld. Sr. DR, but he could not controvert the above fact situation.

6. After hearing the rival contentions and gone through the facts of the case, we noted that in terms of the e-proceedings procedure laid down by the CBDT, the Assessing Officer is manually required to sign the assessment order digitally where scrutiny assessment is conducted electronically. Since in the instant case the assessment has been made under e-proceedings facility, however, the assessment order has been signed manually, which vitiates the assessment on this ground.

7. In view of the aforesaid factual matrix and respectfully, following the aforesaid Coordinate Bench decision in the case of Out systems Singapore Pte. Ltd. vs. DCIT, Circle International Tax 2(2)(2), Delhi in ITA NO. 1601/Del/2025 (AY 2022-23) dated 10.12.2025, we quash the assessment and allow the additional ground raised by the assessee.

8. Since we have already quashed the assessment on the legal ground, the other grounds have become academic, hence, need not be adjudicated.

9. Respectfully following the said decision we hold that the notices issued u/s.148A(b), 148A(d) and 148 of the Act which were unsigned digitally are bad in law and consequently the assessment framed u/s.144 r.w.s. 147 of the Act is hereby held as invalid and bad in law and void-ab-initio. Hence, the same is quashed.

10 Since we have quashed the assessment on legal issue by allowing additional ground of appeal raised by the assessee, all other ground need not be adjudicated at this stage as they become only academic in nature and they are left open.

11. In the result, the appeal of the assessee is partly allowed as indicated above.

Order pronounced in the open court on 15.05.2026.