Prakash Krishnavtar Bhardwaj v. Income Tax Officer, Ward 2(1

WP.9835.2022.doc IN THE HIGH COURT OF JUDICATURE AT BOMBAY CIVIL APPELLATE JURISDICTION WRIT PETITION NO.9835 OF 2022 Prakash Krishnavtar Bhardwaj Versus 1. Income Tax Officer, Ward 2(1) 2. National Faceless Assessment Centre Delhi (NFAC) 3. Pr. Chief Commissioner of Income Tax, Pune 4. The Union of India ….Petitioner …. Respondents Mr. Vasudev Ginde a/w. Mr. Kumar Kale for the Petitioner.Mr. Ajeet Manwani a/w. Ms. Samiksha Kanani for the Respondents. CORAM:DHIRAJ SINGH THAKUR AND VALMIKI SA MENEZES, JJ. RESERVED ON :9[th] DECEMBER, 2022 PRONOUNCED ON : 9[th] JANUARY, 2023 JUDGMENT :- (PER VALMIKI SA MENEZES, J) 1.Rule. Rule made returnable forthwith by consent of the learnedcounsel for the parties. 2.This Writ Petition filed under Article 226 of the Constitution of Indiaseeks from this Court, a Writ of Certiorari to quash and set aside theimpugned notice under clause (b) of section 148A dated 21.03.2022, orderunder clause (d) of section 148A dated 02.04.2022 and notice u/s.148 dated 02.04.2022 passed by the respondents under the Income Tax Act,1961 (the Act). The case pertains to the financial year 2014-15 relevant tothe assessment year 2015-16. 3.It is the petitioner’s contention that he is a non-resident Indian,residing in Dubai, UAE and since his total income for the relevant financialyear was below the maximum amount chargeable to tax, he was notrequired to file his return of income for the relevant assessment year 2015-16. It was further his case that he received a notice dated 21.03.2022under clause (b) of section 148A of the Act from Respondent No.1 statingthat he had information that the income chargeable to tax for the relevantassessment year had escaped assessment, within the meaning of section147 of the Act and called upon the petitioner to show-cause why a noticeu/s.148 of the Act should not be issued. Details of the informationreceived was enclosed as Annexure ‘A’ to the said notice. 4.The petitioner filed his response to the said notice electronically on28.03.2022, pursuant to which, Respondent No.1 addressed an orderunder clause (d) of section 148A of the Act on 02.04.2022. It is thepetitioner’s case that this order was never received by him through e-mail;however, he has subsequently received a copy of this order on 16.04.2022by speed post. 5.The petitioner further contends that Respondent No.1 issued noticeu/s.148 of the Act dated 02.04.2022 stating that he had informationsuggesting that income chargeable to tax for the assessment year 2015-16had escaped assessment within the meaning of section 147 of the Act anddirected the petitioner to furnish return of income within 30 days from the service of the notice. It is the petitioner’s categorical case that this noticewas never received by the petitioner by e-mail. It is his further categoricalaverment in the petition that this notice u/s.148 has not been signed byRespondent No.1. It is further averred that this unsigned notice alongwiththe copy of order under clause (d) of section 148A of the Act was receivedby him by speed post on 16.04.2022. 5.The petitioner further contends that Respondent No.1 issued noticeu/s.148 of the Act dated 02.04.2022 stating that he had informationsuggesting that income chargeable to tax for the assessment year 2015-16had escaped assessment within the meaning of section 147 of the Act anddirected the petitioner to furnish return of income within 30 days from the service of the notice. It is the petitioner’s categorical case that this noticewas never received by the petitioner by e-mail. It is his further categoricalaverment in the petition that this notice u/s.148 has not been signed byRespondent No.1. It is further averred that this unsigned notice alongwiththe copy of order under clause (d) of section 148A of the Act was receivedby him by speed post on 16.04.2022. 6.Based upon these facts, it is the petitioner’s contention that since thenotice dated 02.04.2022 issued u/s.148 of the Act was unsigned and neversent to the petitioner, the same is invalid, bad-in-law and deserves to bequashed and set aside; that since the purported unsigned notice issuedu/s.148 of the Act itself was never issued in the eyes of law and three yearshave been elapsed from the end of the relevant assessment year, in thiscase Assessment Year 2015-16, as prescribed u/s.149(1)(b) of the Act, theaction is beyond limitation. It is the petitioner’s case that on this count,the entire proceedings are barred and on that basis he invokes thejurisdiction of this Court under Article 226 of the Constitution of India,stating that the entire process is arbitrary and contrary to the provisions ofArticle 14 of the Constitution of India requiring this Court to quash and setside the impugned notice dated 21.03.2022 and notice dated 02.04.2022. 7.The respondents have filed an affidavit-in-reply dated 21.07.2022,wherein there is no substantial denial to the fact that the notice dated02.04.2022 passed u/s.148 of the Act was not signed by the assessingofficer digitally or manually. The affidavit also appears to be silent on thefact as to whether the unsigned notice was sent or received by thepetitioner through e-mail. At this juncture, it may be also noted that by an order dated06.12.2022 of this Court, the respondents were directed to produce theoriginal records containing the notice u/s.148 dated 02.04.2022 for theinspection of this Court. The original file was infact produced on09.12.2022 at the time of hearing of the petition and we took note of thefact that the original notice infact did not contain manual signature, norwas it digitally signed on the file. 8.We have heard the learned counsel for the parties and perused therecord of the petition. 9.It is the submission of the learned counsel for the petitioner that onperusal of the affidavit-in-reply of the respondents, there appears to be nocategorical denial to the statements made by the petitioner that he has notreceived an order dated 02.04.2022 passed under clause (d) of Section148A of the Act, rejecting the petitioner’s submission and holding thepetitioner’s case to be one fit for issuing notice u/s.148 of the Act.Similarly, there is no substantial denial to the fact that the notice issued u/s.148 dated 02.04.2022 was unsigned both digitally and manually and wasnever received by the petitioner by e-mail or for that matter even uploadedonto the system via e-mail. Further, a copy of the said unsigned notice wasreceived by the petitioner by speed post only on 16.04.2022. 10. It is, therefore, the contention of the petitioner that the notice u/s.148being an unsigned notice, the same is invalid and consequently proceedingon the basis of an invalid notice vitiates the entire reassessmentproceedings as the same is without any jurisdiction. It is further theargument of learned counsel for the petitioner that proceeding on the basis of an invalid notice, which in any case, has been issued after three yearsfrom the end of the relevant assessment year, as required under theprovisions of section 149(1)(b) of the Act, constitutes a jurisdictional erroron the part of the respondents. 10. It is, therefore, the contention of the petitioner that the notice u/s.148being an unsigned notice, the same is invalid and consequently proceedingon the basis of an invalid notice vitiates the entire reassessmentproceedings as the same is without any jurisdiction. It is further theargument of learned counsel for the petitioner that proceeding on the basis of an invalid notice, which in any case, has been issued after three yearsfrom the end of the relevant assessment year, as required under theprovisions of section 149(1)(b) of the Act, constitutes a jurisdictional erroron the part of the respondents. 11. Learned counsel for the petitioner makes a reference to a DivisionBench judgment of the High Court of Calcutta in Commissioner of Income-Tax v. Aparna Agency (P.) Ltd.1tocontend that the provisions of section192(B) of the Act do not provide for a cure when the notice under the Actis invalid by virtue of it not having a signature affixed as is required underthe relevant provisions. He further refers to another judgment of the HighCourt of Calcutta in B.K. Gooyee v. Commissioner of Income-tax2 and ajudgment of a Division Bench of the Madhya Pradesh High Court inUmashankar Mishra v. Commissioner of Income-tax3 for the propositionthat absence of a signature on notice is an invalid notice in the eyes of lawand such an infirmity amounts to no notice at all. 12. Per contra, Mr. Ajeet Manwani, learned counsel for the respondentssubmits that assuming the notice u/s.148 of the Act was unsignedmanually or digitally as is clear from the original record, this fact wouldnot, by itself vitiate further proceedings in the matter, as according to him,provisions of Section 292B of the Act could cure this defect or mistake. Heargues that applying the provisions of section 292B of the Act, the noticewhich is mistakenly not signed, would not be vitiated; since in any eventthe unsigned notice, at a later point of time, was sent to the petitioner bycourier. 1(2004) 139 Taxman 132 2(1966) 62 IT 109 3(1982) 11 Taxman 75 13. Learned counsel for the respondents refers to a judgment of the DelhiHigh Court in Sky Light Hospitality LLP v. Assistant Commissioner ofIncome-Tax4 and that of the Calcutta High Court in Commissioner ofIncome-Tax v. Anand And Co.5in aid of his argument that even if thesignatures were not applied on the notice, the authenticity of the noticewas not denied; he argues that if the petitioner does not deny theauthenticity of the notice, he has waived his right to raise an objection toits validity. 14. The High Court of Calcutta in B.K. Gooyee (supra)was consideringthe legal impact of an unsigned notice issued u/s.34 of the Income Tax Act,1922 and whether there can be a waiver of a right of an assesse tochallenge the same on the ground that the notice was unsigned. Whilstholding that a lack of signature on a notice invalidates the same, it hasfurther gone on to hold that there can be no waiver to the right of anassessee to raise this objection where the condition precedent for assumingjurisdiction by the Assessing Officer is not fulfilled. To quote from thejudgment it holds:- In the present case there was more than a mereirregularity or a clerical mistake for, in my view, anotice without the signature lacks an essential and/oran integral and/or an inseparable vital part orrequirement of a notice under section 34, a notice interms of which is a condition precedent to theassumption of jurisdiction by the Income-tax Officer. Itis notice with a body but without a soul. Hence, it isan invalid notice and consequently equivalent to nonotice. 4[2018] 405 ITR 296 (Delhi)51994 Vol.27 ITR 418 51994 Vol.27 ITR 418 Hence, these cases do not militate against the principlethat there can be no waiver where the conditionprecedent for assumption of jurisdiction is not fulfilled. In the present case there was more than a mereirregularity or a clerical mistake for, in my view, anotice without the signature lacks an essential and/oran integral and/or an inseparable vital part orrequirement of a notice under section 34, a notice interms of which is a condition precedent to theassumption of jurisdiction by the Income-tax Officer. Itis notice with a body but without a soul. Hence, it isan invalid notice and consequently equivalent to nonotice. 4[2018] 405 ITR 296 (Delhi)51994 Vol.27 ITR 418 51994 Vol.27 ITR 418 Hence, these cases do not militate against the principlethat there can be no waiver where the conditionprecedent for assumption of jurisdiction is not fulfilled. Accordingly, my opinion is that the notice undersection 34 of the Income-tax Act, 1922, to be a proper,valid and legal notice, requires to be signed by theIncome-tax Officer, non-compliance of which wouldmake it bad and all the proceedings started thereafterwould be without jurisdiction. Mr. Meyer, however, inthe last resort contended that in the facts of this case,the assessee in any event, waived the notice. Theexpression "wavier" has a professional meaning. It istrue that the notice was duly served and was said tohave been received by the assessee, but it isdetermined on high authority, that the notice undersection 34 (I mean a valid notice) is a conditionprecedent for the assumption of jurisdiction. A noticeunder section 34 is therefore, not merely a proceduralrequirement. In its absence, it does not become a caseof procedural defect. The difference between the casesof want of jurisdiction and those of irregular exerciseof jurisdiction, is to be remembered in this context. 15. Following the ratio laid down in B.K. Gooyee (supra) and another, aDivision Bench of the High Court of Calcutta in Aparna Agency (P.) Ltd.(supra) whilst considering the validity of an unsigned penalty order issuedu/s.271B of the Income Tax Act, 1961 and whether such a defect wascurable in terms of provisions of section 292B of the Act, held thus :- 6. A close scrutiny of B.K. Gooyee's case (supra) couldshow that the question for consideration wasregarding the irregularity in the issuing of a noticeunder section 34 of the Indian Income-tax Act, 1922.The notice did not contain the signature of theIncome-tax Officer who issued it. It was held thatservice of a valid notice is a condition precedent to theassumption of jurisdiction by the Income-tax Officer to WP.9835.2022.doc take further proceedings and that all proceedingstaken in pursuance of a notice which does not containthe signature of the Income-tax Officer are invalid. Itwas further held that such irregularity cannot bewaived and the question of its validity can be taken atany stage of the proceedings. Their Lordships of theMadhya Pradesh High Court have taken notice of theprovisions contained in section 292B which provisionwas incorporated subsequent to the judgment in B.K.Gooyee's case (supra) and have specifically dealt withthis question in the light of the provisions in section292B. We are in respectful agreement with the view oftheir Lordships in Umashankar Mishra's case (supra)based on which the Tribunal in the case on handreversed the order of the Commissioner of Income-tax(Appeals). 7. The observations in B.K. Gooyee's case (supra),which, in our view, have material bearing on thequestions raised before us are extracted hereunder : "In the present case, there was more than a mereirregularity or a clerical mistake, for, in my view,a notice without the signature lacks an essentialand/or an integral and/or an inseparable vitalpart or requirement of a notice under section 34,a notice in terms of which is a conditionprecedent to the assumption of jurisdiction by theIncome-tax Officer. It is notice with a body butwithout a soul. Hence, it is an invalid notice andconsequently, equivalent to no notice." 7. The observations in B.K. Gooyee's case (supra),which, in our view, have material bearing on thequestions raised before us are extracted hereunder : "In the present case, there was more than a mereirregularity or a clerical mistake, for, in my view,a notice without the signature lacks an essentialand/or an integral and/or an inseparable vitalpart or requirement of a notice under section 34,a notice in terms of which is a conditionprecedent to the assumption of jurisdiction by theIncome-tax Officer. It is notice with a body butwithout a soul. Hence, it is an invalid notice andconsequently, equivalent to no notice." 8. The service of a valid notice, as already noticed, is acondition precedent to the assumption of jurisdictionby the Assessing Officer. The existence of a valid noticeis, therefore, a jurisdictional fact. The question,therefore, is not to be looked at from the perspectivethat the decision to issue notice was by an authoritycompetent in that behalf under the Act and, therefore,submitting to his jurisdiction without objection, the inference of waiver arises. The question being one ofjurisdiction, to be more specific the conditionprecedent to the assumption of jurisdiction what hasto be seen is that the person that purported to exercisethe jurisdiction vested in him had in fact exercised thatjurisdiction and signed the said notice. The said testhas not been satisfied in the case on hand. Unlike thejudgment of this court in Anand and Co. [1994] 207ITR 418 relied upon by the Revenue the case on handis not one where the authenticity of the show-causenotice is in question. In the case on hand as held bythe fact-finding authority the show-cause notice hasnot been signed by any person and the place intendedfor signature was kept blank. 16. The Madhya Pradesh High Court has taken a similar view inUmashankar Mishra (supra) whilst following the same line of thinking asthe Calcutta High Court in B.K. Goyee (supra) and has held as under:- 4. The first question for consideration is whether theTribunal was right in holding that the notice issued tothe assessee under section 271(1)(a) of the Act was avalid notice. Now, the Tribunal has found that thatnotice was not signed by the ITO. Section 282 of theAct provides that a notice under the Act may be servedon the person named therein as if it were a summonsissued by a court under the Code of Civil Procedure,1908. Sub-rule (3) of Rule 1 of O.5, CPC, provides thatevery summons shall be signed by the judge or suchofficer, as he appoints. In view of this provision, itmust be held that the notice to show cause whypenalty should hot be levied issued by the ITO shouldhave been signed by the ITO and the omission to do soinvalidated the notice. In B.K. Gooyee v. CIT [1966]62 ITR 109 (Cal), the question for consideration waswhether the absence of the signature of the ITO on thenotice under section 34 of the Indian I.T. Act, 1922,was a mere irregularity or a clerical mistake. Dealing WP.9835.2022.doc with this question, Datta J. Observed as follows (p. 119): "In the present case, there was more than a mereirregularity or a clerical mistake, for, in my view,a notice without the signature lacks an essentialand/or an integral and/or an inseparable vitalpart or requirement of a notice under section 34,a notice the terms of which are a conditionprecedent to the assumption of jurisdiction by theIncome-tax Officer. It is notice with a body butwithout a soul. Hence, it is an invalid notice andconsequently, equivalent to no notice." WP.9835.2022.doc with this question, Datta J. Observed as follows (p. 119): "In the present case, there was more than a mereirregularity or a clerical mistake, for, in my view,a notice without the signature lacks an essentialand/or an integral and/or an inseparable vitalpart or requirement of a notice under section 34,a notice the terms of which are a conditionprecedent to the assumption of jurisdiction by theIncome-tax Officer. It is notice with a body butwithout a soul. Hence, it is an invalid notice andconsequently, equivalent to no notice." 5. We respectfully agree with the aforesaidobservations. The Tribunal distinguished the decisionin [1966] 62 ITR 109 on the ground that theprovisions of section 292B of the Act were introducedafter that decision. But, that provision, in our opinion,is intended to ensure that an inconsequentialtechnicality does not defeat justice. But, the signing ofa notice under section 271(1)(a) of the Act is notmerely an inconsequential technicality. It is arequirement of the provisions of O.5, rule 1(3) of theCPC, which are applicable by virtue of section 282 ofthe Act. Under the circumstances, the provisions ofsection 292B of the Act would not be attracted in theinstant case and the Tribunal in our opinion, was notright in holding that the notice issued under section271(1)(a) of the Act was a valid notice in the eye oflaw. 6. In view of our answer to the first question, ouranswer to the second question is that the Tribunal wasnot right in holding that the absence of the signatureon the notice simply constituted a mistake or omissionwithin the meaning of section 292B of the Act. 7. In view of the fact that no valid notice was servedon the assessee before levying penalty, our answer tothe third question is that, on the facts and in thecircumstances of the case, the penalty levied undersection 271(1)(a) of the Act was not valid. Thus, our answers to all the three questions referred to this courtare in the negative and in favour of the assessee. 17. Anand And Co. (supra) cited by the Revenue, proceeds on the basisthat the notice issued u/s.148 of the Act did contain a signature, but thequestion before the Calcutta High Court was whether the signature wasauthenticated or not. In that case, the signature was affixed in the form ofa curved line, which the assessee claimed was not an authentic signature.It is in that context that the High Court of Calcutta in Anand And Co.(supra) has held that the notice was proper, Anand and Co. (supra) wasnot a where there was no signature at all on the notice, but in view of thefact that the only challenge was to the doubtful authenticity of the curvedline purporting to be his signature, the assessee could not raise anobjection that the notice was infact invalid. In the facts of that case, theratio laid down therein does not aid the argument of the respondents inany manner. 18. Sky Light Hospitality (supra) cited by the respondents was also not acase where the notice issued to the assessee was unsigned. That was acase where the notice u/s.148 was issued with a signature, but the addressof the assessee was only partly correct. It was in that context that theDelhi High Court has held that the provisions of section 292B of the Act,where there was a mistake, defect or an omission in the complete addresson which the notice was issued to the assessee, would cure such defect,and an objection to the validity of the notice could not be raised. In thatfact of the matter, the judgment in Sky Light Hospitality (supra) would notbe applicable to the facts of the present case, which is one where thesignature of the Assessing Officer was not affixed on the notice. 18. Sky Light Hospitality (supra) cited by the respondents was also not acase where the notice issued to the assessee was unsigned. That was acase where the notice u/s.148 was issued with a signature, but the addressof the assessee was only partly correct. It was in that context that theDelhi High Court has held that the provisions of section 292B of the Act,where there was a mistake, defect or an omission in the complete addresson which the notice was issued to the assessee, would cure such defect,and an objection to the validity of the notice could not be raised. In thatfact of the matter, the judgment in Sky Light Hospitality (supra) would notbe applicable to the facts of the present case, which is one where thesignature of the Assessing Officer was not affixed on the notice. 19. Applying the ratio of the judgment of the Calcutta High Court in B.K.Gooyee andAparna Agency (P.) Ltd. (supra) to the facts of the presentcase, the signature of the Assessing Officer admittedly not having beenaffixed on the notice issued u/s.148 of the Act, the notice itself would beinvalid and consequently, the Assessing Officer could not assumejurisdiction to proceed in the matter in terms of section 148 of the Act. TheMadhya Pradesh High Court in Umashankar Mishra (supra) has dealt witha similar fact situation where the first substantial question of law dealtwith in that case had considered the effect of whether an unsigned noticecan be considered as an irregularity or clerical mistake. The MadhyaPradesh High Court after making reference to the conclusions drawn inB.K.Gooyee (supra) by the Calcutta High Court, has taken the view, that anotice without a signature affixed on it is an invalid notice and iseffectively no notice in the eyes of law. 20. The Madhya Pradesh High Court in Umashankar (supra) has furtherdealt with the second substantial question of law as to whether theTribunal was right in holding that the absence of a signature on the noticeconstitutes a mistake or omission within the meaning of section 292B ofthe Act and while addressing itself to that question, has concluded that inthe absence of a signature on the notice, the same would not constitute amistake or omission and would not be curable under the provisions ofsection 292B of the Act. 21. We are, therefore, of the considered opinion that in the present case,the notice u/s.148 dated 02.04.2022 having no signature affixed on it,digitally or manually, the same is invalid and would not vest the AssessingOfficer with any further jurisdiction to proceed to reassess the income of Aarti Palkar 12 the petitioner. Consequently, the notice dated 02.04.2022 u/s.148 of theAct issued to the petitioner being invalid and sought to be issued afterthree years from the end of the relevant assessment year 2015-16 withwhich we are concerned in this petition, any steps taken by therespondents in furtherance of notice dated 21.03.2022 issued under clause(b) of section 148A of the Act and order dated 02.04.2022 issued underclause (d) of section 148A of the Act, would be without jurisdiction, andtherefore, arbitrary and contrary to Article 14 of the Constitution of India.Consequently, we quash and set aside the notice dated 02.04.2022 issuedby the respondents u/s.148 of the Act, order dated 02.04.2022 underclause (b) of section 148A of the Act and notice dated 21.03.2022 issuedunder clause (b) of section 148A of the Act. 22. Rule is made absolute in terms of prayer clauses (a) & (b) of thepetition. [VALMIKI SA MENEZES, J.] [ DHIRAJ SINGH THAKUR, J.]