Assessment Order Takes Legal Effect from Date of Signing, Not Preparation: Bombay High Court Quashes Limitation-Barred Order in Milind Dashrath Pawar Case
Overview of the Judgment
In a significant ruling with far-reaching implications for reassessment proceedings, the Bombay High Court delivered a decisive judgment in Milind Dashrath Pawar Vs National Faceless Assessment Centre, holding that an assessment order acquires legal force only from the date it is digitally signed — not from the date it is drafted or typed. The Court quashed an assessment order that had been passed beyond the permissible limitation period under the Income-tax Act, 1961, granting relief to the assessee and setting aside all consequential proceedings.
This ruling is particularly relevant for assessees facing reopened assessments under Section 147 of the Income-tax Act, 1961, where timing and limitation are critical battlegrounds.
Background and Factual Matrix
The assessee, Milind Dashrath Pawar, was served with a notice under Section 148 of the Income-tax Act, 1961 dated 17th July 2019, reopening the assessment for Assessment Year 2014-15. Following this, the Assessing Officer (AO) issued multiple notices under Section 142(1) at various intervals, along with Show Cause Notices dated 11th September 2021 and 31st March 2022.
The AO eventually made a reference on 24th September 2021 to the Assistant Valuation Officer (DVO), Thane, under Section 142A of the Income-tax Act, 1961, for determining the fair market value of the assessee's land as on 1st April 2001.
The DVO finalized and issued the valuation report bearing the date 16th February 2022. According to the Revenue, this report was received in the AO's worklist on 25th February 2022.
Subsequently, the AO drafted the assessment order and assigned it the date of 13th April 2022, with a Document Identification Number (DIN). However, the order was digitally signed only on 26th May 2022, and was served upon the assessee via email on the very same date.
The assessee filed a writ petition before the Bombay High Court, challenging the assessment order solely on the ground of limitation, contending that the order had been passed well beyond the time permitted under Section 153(2) of the Income-tax Act, 1961.
Legal Framework: Computing the Limitation Period
Section 153(2) — The Foundational Time Limit
Under Section 153(2) of the Income-tax Act, 1961, an assessment order under Section 147 must be passed within twelve months from the end of the financial year in which the notice under Section 148 was served upon the assessee.
Since the Section 148 notice was served in the financial year 2019-20 (July 2019), the base deadline for completing the reassessment was 31st March 2021.
Extension Under TOLA
Due to the extraordinary circumstances arising from the COVID-19 pandemic, the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 (TOLA), along with Notification No. 10 of 2021 dated 27th February 2021 issued under Section 3(1) of TOLA, extended this deadline to 30th September 2021.