Facts of the Case

The Petitioner, Cluster Overseas Private Limited, filed a writ petition challenging the legality of notices dated 31st March 2021 issued under Section 148 of the Income Tax Act, 1961 for Assessment Year 2013–14.

Two separate notices bearing different Document Identification Numbers (DINs) were issued:

  • One via speed post, received on 3rd April 2021
  • Another via email/ITBA portal, received later

The Petitioner contended that:

  • The notices were issued beyond limitation under Section 149 as amended by the Finance Act, 2021
  • One notice uploaded on the portal was unsigned, violating Section 282A(1)
  • There was inconsistency in DINs, raising doubts about authenticity

Further, an assessment order dated 26th March 2022 was passed despite a stay order dated 24th March 2022, and without providing relevant material such as the Suspicious Transaction Report (STR).

Issues Involved

  1. Whether the date of issuance of notice under Section 148 should be considered as:
    • Date of generation, or
    • Date of dispatch/service
  2. Whether notices with different DINs are valid in law
  3. Whether reassessment proceedings were barred by limitation under Section 149
  4. Whether the assessment order passed during subsistence of a stay order is valid
  5. Whether failure to provide STR and proper opportunity violates principles laid down in GKN Driveshafts (India) Ltd. v. ITO

Petitioner’s Arguments

  • The date of issuance must be the actual date of dispatch/service, not mere generation.
  • Notices were time-barred under amended Section 149.
  • One notice lacked mandatory signature, violating Section 282A(1).
  • Two DINs indicated procedural irregularity and lack of authenticity.
  • The assessment order dated 26.03.2022:
    • Violated the stay order dated 24.03.2022
    • Was passed mechanically without disposing objections properly
    • Relied on STR which was not provided, denying fair opportunity

Respondent’s Arguments

  • Notice was generated and handed over to postal authorities on 31st March 2021, hence validly issued within limitation.
  • Technical issues in the ITBA system caused generation of two DINs, but both notices were genuine and identical.
  • “Issue” of notice under Sections 148/149 refers to sending out, not service.
  • Relied on precedents:
    • R.K. Upadhyaya v. Shanabhai P. Patel
    • Mayawati v. CIT
  • Assessment order was passed without knowledge of stay, and no recovery proceedings were initiated.

Court’s Findings / Order

  • The assessment order dated 26th March 2022 was held:
    • Passed in contravention of stay order
    • Passed without following principles of natural justice
    • Hence, declared null and void and set aside
  • The Court observed:
    • There exists a disputed question of fact regarding the actual date of issuance (31 March vs 2 April).
    • The matter requires verification of records by the Assessing Officer (AO)
  • Directions issued:
    1. AO to determine the actual date of issuance of notice
    2. AO to provide STR to assessee and allow reply
    3. Proceedings to continue as per law after determination
  • Conditional outcomes:
    • If issued on 31 March 2021 → Old reassessment regime applies
    • If issued after 1 April 2021 → Treated as notice under Section 148A(b) and Union of India v. Ashish Aggarwal applies

Important Clarifications by Court

  • “Issue” of notice depends on factual determination of dispatch, not merely generation
  • Assessment orders passed during subsistence of stay orders are void
  • Natural justice requires furnishing of relied documents (like STR)
  • Multiple DINs due to technical glitches do not automatically invalidate notice if explained

Sections Involved

  • Section 148 – Reassessment Notice
  • Section 149 – Time Limit for Notice
  • Section 148A – Procedure (Post Amendment)
  • Section 282A(1) – Authentication of Notices
  • Section 340 CrPC – False Evidence (Application filed)

Link to download the order -https://delhihighcourt.nic.in/app/showFileJudgment/58909112022CW45112022_211708.pdf

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