Unsigned Section 148 Notice and Absence of Non-Disclosure: ITAT Kolkata Annuls Reassessments

The Kolkata Bench of the Income Tax Appellate Tribunal (ITAT) in the case of Jagmag Mercantiles Private Limited Vs ITO (ITAT Kolkata) has delivered an important ruling on the validity of reassessment proceedings initiated under Section 147 read with Section 148 of the Income Tax Act 1961.

For Assessment Years (AY) 2013-14 and 2014-15, the Tribunal set aside the reassessment orders on two fundamental jurisdictional defects:

  1. The Section 148 notice was completely unsigned – neither manually nor digitally.
  2. The reopening was made beyond 4 years from the end of the relevant AY, even though there was no demonstrated failure on the part of the assessee to fully and truly disclose all material facts.

Both these defects were held to be fatal to the jurisdiction of the Assessing Officer (AO), resulting in the entire reassessment proceedings being quashed.

Background of the Dispute

Original Assessment for AY 2013-14

  • The assessee, a company, filed its return of income on 17.10.2013, declaring ₹nil total income.
  • The return was scrutinized and assessment was completed under Section 143(3) via order dated 30.09.2015, accepting the returned income.

Information from Investigation Wing and Initiation of Reassessment

Subsequently, the AO received information from the office of DDIT (Investigation), Unit 1(3), Kolkata through a letter dated 23.03.2017. The information suggested that:

  • The assessee maintained a bank account with Axis Bank, Tollygunge Branch, Kolkata.
  • In this account, credits aggregating ₹53.95 lakh were received by way of transfers from:
    • ETL Infrastructure Finance Ltd. – ₹26 lakh on 10.01.2013, and
    • Continental Fiscal Management Pvt. Ltd. – ₹27,95,000 on 11.01.2013.

On the basis of this information, the AO proceeded to reopen the completed assessment by issuing a notice under Section 148 dated **20.03.2020`.

Reassessment Proceedings

  • In response to the Section 148 notice, the assessee filed a fresh return on 02.07.2020, again declaring nil income.
  • The AO then issued statutory notices under Section 143(2) and Section 142(1) along with a questionnaire.
  • Ultimately, the AO treated the above receipts as bogus share capital/unexplained cash credits under Section 68 and added ₹53,95,000 to the assessee’s income.

The assessee challenged the reassessment before the National Faceless Appeal Centre (NFAC) / ld. CIT(A), which upheld the action of the AO. Aggrieved, the assessee preferred appeals before the ITAT for AY 2013-14 (ITA No. 708/KOL/2025) and AY 2014-15 (ITA No. 709/KOL/2025).

The Tribunal examined two principal jurisdictional grounds:

  1. Whether an unsigned notice issued under Section 148 is valid and capable of conferring jurisdiction on the AO to reassess income.
  2. Whether reassessment after the expiry of 4 years from the end of the relevant AY is permissible when the original assessment was completed under Section 143(3), in the absence of any specific failure on the part of the assessee to fully and truly disclose all material facts.

The resolution of both these issues went in favour of the assessee.

Factual Finding of ITAT on Signature Defect

The ITAT perused the copy of the Section 148 notice dated 28.03.2020 (as placed at page 132 of the Paper Book). The Tribunal recorded a categorical finding that:

  • The notice was not signed by the AO –
    • neither with a manual signature, nor
    • with a digital signature.

This absence of authentication rendered the notice defective at its very inception.

Important Note:
For reassessment proceedings to be legally sustainable, a valid notice under Section 148 is a condition precedent. Any fatal defect in such notice strikes at the root of jurisdiction.

Judicial Precedents Relied Upon

The Tribunal relied heavily on binding and persuasive authorities to conclude that an unsigned Section 148 notice is void ab initio.

1. Prakash Krishnavtar Bhardwaj vs. Income-tax Officer [2023] 451 ITR 27 (Bombay)

The Bombay High Court held that: