ITAT Delhi: Reassessment Notices Dispatched on or After 1 April 2021 Governed by Amended Provisions; Absence of Section 143(2) Notice Fatal to Jurisdiction

Background and Overview

The Income Tax Appellate Tribunal, Delhi Bench, recently pronounced a common order disposing of a set of cross-appeals involving both the assessee and the Revenue for Assessment Years 2015-16, 2016-17, and 2017-18. The appeals arose from orders passed by the Commissioner of Income Tax (Appeals)-3, Noida, dated 27 June 2024, in the case of Mukesh Khurana Vs DCIT/ACIT (ITAT Delhi).

At the core of all three assessment years lay a common thread — reassessments initiated on the basis of a Suspicious Transaction Report (STR) linked to AR Landcraft LLP. The Tribunal, however, did not reach the merits of the additions in any of the three years, because the reassessment proceedings themselves were found to be jurisdictionally defective — on different but equally fundamental grounds for AY 2015-16 on one hand, and AYs 2016-17 and 2017-18 on the other.

The common order was pronounced in open court on 21 March 2025.

Factual Matrix

Origin of Reassessment Proceedings

A search and seizure operation under Section 132 of the Income Tax Act, 1961 had been conducted on 09.10.2013 on the premises of the assessee's group, comprising Shubhkamna Buildtech Private Limited and connected cases. The assessee filed his original return of income for AY 2015-16 on 31.10.2015, declaring a total income of Rs. 16,76,160/-.

The Assessing Officer subsequently received an STR bearing reference number STR-10264275 in the case of AR Landcraft LLP from the office of DDIT (Investigation), Unit-II, Noida. Acting on this information, the Assessing Officer recorded satisfaction and sought approval from the competent authority before issuing a notice under Section 148.

The Assessing Officer observed from the bank account records that the total credit entries across all the assessee's bank accounts aggregated to Rs. 159,32,96,364/-. Despite multiple notices under Section 142(1) dated 14.01.2022, 24.02.2022, and 21.03.2022, the assessee's compliance was found to be partial and unsatisfactory. Consequently, the Assessing Officer proceeded to treat the unexplained credits as income under Section 69A of the Act.

CIT(A) Proceedings

The assessee appealed before the CIT(A), submitting that he had filed the relevant information through the ITBA portal before the closure date of 29.03.2022, having sought a one-day adjournment from the 4:00 PM deadline of 26.03.2022. The CIT(A) sought a remand report from the Assessing Officer, who rejected the additional submissions as an afterthought filed post-assessment. After considering all material, the CIT(A) admitted the additional evidence, granted partial relief, and sustained the addition to the extent of Rs. 5,54,50,000/- for AY 2015-16. The CIT(A), however, did not adjudicate upon the specific issue of whether the notice under Section 148 had been issued on 01.04.2021.

Issue 1 — AY 2015-16: Was the Reassessment Notice Issued on 31 March 2021 or 1 April 2021?

The Assessee's Jurisdictional Challenge

Before the Tribunal, the assessee's representative pressed Ground No. 2, which challenged the very validity of the reassessment. The ground read:

"That the assessment framed under section 147 is bad in law as the notice under section 148 was issued on 01.04.2021 without adhering to the new procedure applicable from 01.04.2021, specifically without complying with the provisions of section 148A."

The crux of the submission was this: although the notice bore the date 31.03.2021, the actual dispatch of the notice occurred on 1 April 2021 at 8:27 AM, as evidenced by the communication reference ID 100033652101 generated from the e-proceedings platform and the email delivery record.

The assessee's representative placed extensive reliance on the interplay between Section 282, Section 282A of the Income Tax Act, 1961 and Section 13 of the Information Technology Act, 2000.

The submission was structured as follows:

  • Section 282 mandates that a notice must either be served in paper form or communicated in electronic form by delivering or transmitting a copy to the named person.
  • Section 13(1) of the Information Technology Act, 2000 provides that, unless otherwise agreed, dispatch of an electronic record occurs when it enters a computer resource outside the control of the originator.
  • Mere digital signing of a notice, without dispatch, cannot constitute "issuance" under Section 149.

Judicial Authorities Relied Upon