Reopening Notice Sent on April 1 Must Follow Amended Section 148A Procedure: ITAT

The Revenue had filed an appeal while the assessee filed a cross-objection challenging the validity of the reopening notice issued under Section 148 of the Income-tax Act.

Background of the case

The major issue before the Tribunal was whether the reassessment notice issued to the company was legally valid. The assessee argued that although the notice was digitally signed on March 31, 2021, it was actually sent by email on April 1, 2021. This date is important because new reassessment provisions under the Finance Act, 2021, came into effect from April 1, 2021.

The assessee argued that since the notice was issued on April 1, 2021, the AO should have followed the new procedure introduced under Sections 148 and 148A. However, the Department followed the old procedure, which was no longer applicable from that date.

During the hearing, the DR could not dispute the fact that the notice was issued on April 1, 2021, as reflected in the official system records.

After considering all the cases, the Tribunal held that the date of issuance is the date when the notice is actually sent, not when it is digitally signed. Since the notice was issued on April 1, 2021, the amended provisions of law applied. The AO failed to follow the mandatory steps under the new law.

As these procedures were not followed, the Tribunal held that the reassessment notice was invalid and bad in law.

Since the reassessment itself was quashed on legal grounds, the Revenue’s appeal on merits became irrelevant and was dismissed.

As a result, the appeal of the revenue is dismissed, and the cross-objection of the assessee is allowed.