High Court Quashes Time-Barred Assessment Signed After Limitation Period

The assessee filed its return for AY 2023–24, which was taken up for scrutiny. During the process, a show cause notice was issued, replied to, and even a personal hearing was granted. However, no assessment order or demand notice was served at that stage. Despite this, a demand of Rs. 16.27 crore appeared on the income-tax portal.

The assessee raised repeated objections, highlighting that no formal order had been communicated. The department later admitted this lapse. Subsequently, in February 2026, the assessee received an assessment order dated 21 March 2025 along with a computation sheet and a demand notice. Notably, all these documents were digitally signed only in December 2025, well after the limitation period.

Issue Raised: Whether an assessment order can be considered validly made within the limitation if it is digitally signed after the statutory deadline.

HC Held: The High Court allowed the petition and set aside both the assessment order and the demand notice. It held that merely mentioning a date within the limitation is not enough what matters is when the order is actually signed. An order becomes effective only upon signing, as that is when the authority finalises its decision. Since the order was digitally signed after the limitation deadline, it was held to be time-barred.

The Court also noted similar defects in the computation sheet and demand notice, which were signed late and showed procedural inconsistency. Emphasising that signing is a mandatory requirement and not a formality, the Court held that such an order is legally non-existent. Accordingly, the entire assessment and demand were quashed.

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