ITAT: Reassessment Notice Delivered After April 1, 2021 Invalid Under Old Law

The ITAT held that the reassessment notice under Section 148, even though it was dated March 31, 2021, was invalid, as it was actually served on April 1, 2021 without following the new reassessment procedure introduced from that date.

The present case is the cross–appeal filed by the company, Mubarak Overseas Private Limited and the Income Tax Department against the order passed by the National Faceless Appeal Centre (NFAC).

The main issue of the matter in the case was whether the proceedings of reassessment initiated by the Income Tax Department under sections 147 and 148 of the Income Tax Act were legally valid or not.

The company also raised another legal ground in the hearing that the reassessment proceedings were invalid as the department had not followed the new legal procedure which came into force on April 1, 2021. The company submitted that the notice under Section 148 was issued on 31st March 2021, but was actually sent and delivered through the ITBA portal on 1st April 2021 at 7.17 AM.

The assessee also cited information received under the Right to Information (RTI) Act and also referred to an earlier Tribunal judgement in the case of SVR Creation Pvt. Ltd. In that case, the Tribunal had relied on the Delhi High Court ruling in Suman Jeet Agarwal vs ITO Judgement, which clarified that if a notice under Section 148 was digitally signed before 1st April 2021 but actually dispatched after that date, then it must be treated as a show-cause notice under the new Section 148A(b).

The Tribunal observed that in the present case also, the notice was delivered only on 1 April 2021.
As a result, ITAT stated that, “The appeal of assessee is allowed as the assumption of jurisdiction itself is vitiated and the consequent assessment order becomes null and void”.