[2022]

138 taxmann.com 42 (Article)

[2022] 138 taxmann.com 42 (Article)

Date of Publishing: May 3, 2022

Issues relating to ‘Issue of Notice’ through E-mail

CA. SRI HARSHA CA. NARENDRA

Partner, SBS and Company LLP Senior Associate, SBS and Company LLP

Introduction

Issue of notice under Section 148 of Income Tax Act, 1961 (for brevity
'ITA') after 31.03.2021 under old provisions has created lot of litigation
at various High Courts and currently the Supreme Court has reserved
its judgement on such controversy.

As the above controversy is settling down, a new issue has been come
up for discussion at various High Courts. Earlier, assessments under
section 143(3) or reassessments under section 147 are used to be
completed in physical mode. However, after the introduction of
Faceless Assessment Scheme (for brevity 'FAS'), the concept of
assessment procedure has been changed totally to digital mode.

Section 149 (old provisions as well as amended provisions) states that

notice under section 148 shall not be 'issued' after the expiry of time
limit specified in section 149 for making the reassessment under
section 147.
After the introduction of FAS, as stated earlier, assessments are being
completed done digitally wherein issue of notice and submission of
reply to such notice are to be performed digitally.

As such notices are to be issued digitally, the question that arose was,
what is the date of issue of notice, whether it is signing of notice
by using digital signature certificate or sending of such notice
through email?

Issue of Notice:

The term 'issue' has not been specifically defined under ITA. The
Black's Law Dictionary defines the term 'issue' to mean 'To send forth;
to emit; to promulgate; as, an officer issues orders, process issues from
court. To put into circulation; as, the treasury issues notes. To send out,
to send out officially; to deliver, for use, or authoritatively; to go forth
as authoritative or binding. When used with reference to writs, process,
and the like, the term is ordinarily construed as importing delivery to
the proper person, or to the proper officer for service etc.'

To be precise, sending from the origin may be considered as 'issue' for

the purposes of the Act.

Further, section 282A states that where any notice or document to be

issued by any income tax authority, such notice or document shall be
signed and issued in paper form or communicated in electronic form, to
mean that signing of notice may not be considered as issue of notice.

The Hon'ble Gujarat High Court in the case of Kanubhai M. Patel (HUF)
v. Hiren Bhatt1 has held that mere signing of notice cannot be equated
with issuing of notice and the date on which the same were handed
over for service to the proper officer would be considered as date of
issue. When the notice is issued in paper form, the date on which the
said notices were actually handed over to the post office for the
purpose of booking for the purpose of effecting service on the
petitioners has to be considered as date of issue.
The issue of notice in paper form is covered by the above judgement.
However, after the introduction of FAS, income tax authority is issuing
notices in digital form.

When the notice is issued in digital form, how to determine date

of issue of notice? High Courts have interpreted the term issue
of notice in digital form in recent times, which is detailed
hereunder.

In the matter of Daujee - Allahabad High Court:

The Hon'ble Allahabad High Court in the case of Daujee Abhushan

Bhandar (P.) Ltd. v. Union of India2 (for brevity 'Daujee') has analyzed
the various provisions of Income Tax Act and Information Technology
Act and delivered its judgement.

♦ The words "issue" or "issuance of notice" have not been

defined under the Act. However, the point of time of issuance
of notice may be gathered from the provisions of the Act and
the Rules and the Information Technology Act, 2000.
♦ Section 282A provides for authentication of notices and other
documents by signing it. Sub- Section 1 of Section 282A uses
the word "signed" and "issued in paper form" or
"communicated in electronic form by that authority in
accordance with such procedure as may be prescribed". Thus,
signing of notice and issuance or communication there of have
been recognised as different acts.
♦ The communication in electronic form has been prescribed in
Rule 127A of the Rules 1962 which provides a procedure for
issuance of every notice or other document and the e-mail in
electronic mail which has to be issued from the designated e-
mail address of such income tax authority.
♦ Rule 127A (1) of the Income Tax Rules states that every
notice/document communicated in electronic form by any
income tax authority shall be deemed to be authenticated in
case of email, if the name and office of such income tax
authority is printed on the email body and is issued from the
designated e-mail address of such income tax authority.

♦ Thus, mere signing of notice using digital signature (for

 brevity 'DSC') cannot be considered as issuance of notice.
After signing the notice by using the DSC, income tax
authority has to issue such notice to the assessee either in
paper form or through email.
♦ Section 13 of Information Technology Act states that the
dispatch of an electronic record occurs when it enters a
computer resource outside the control of the originator'.
♦ Which means that issue of notice through electronic record
completes only when such document enters a computer
resource outside the control of the originator.
♦ Therefore, after a notice is digitally signed and when it is
entered by the income tax authority in computer resource
outside his control i.e., the control of the originator then that
point of time would be the time of issuance of notice.
Considering the above analysis, the High Court has held that firstly
notice shall be signed by the income tax authority and then it has to be
issued either in paper form or be communicated in electronic form by
delivering or transmitting the copy there of to the person therein
named by modes provided in the act which includes transmitting in the
form of electronic record.

Accordingly, the Court has held that the point of time when a digitally
signed notice in the form of electronic record is entered in computer
resources outside the control of the originator i.e., the assessing
authority that shall be the date and time of issuance of notice under
section 148 read with Section 149 of ITA.

In the matter of Malavika Enterprises - Madras High Court:

The Hon'ble Madras High Court in the case of Malavika Enterprises v.

Central Board of Direct Taxes3 has distinguished the decision of Daujee
by Allahabad High Court (supra). Madras High Court as well referred
the same provisions of the ITA but interpreted them in different way:

♦ Section 282(1) of the Act provides that service of notice or

summon or requisition may be made by delivering or
transmitting a copy thereof to the person therein named.
♦ Section282A states that notice/document shall be signed and
issued in paper form or electronic form.
♦ Rule 127A states that every ♦ With due respect to
notice or other document the Division bench of
communicated in electronic the Allahabad High
form by an income tax Court, the issue
authority under the Act threadbare discussed
shall be deemed to be by it refers to the
authenticated in case of date of issuance and
electronic mail/electronic not of receipt, but
mail message, if the name after making
and office of such income- discussion in
tax authority is printed on reference to all the
the email body and if the provisions,
notice or other document is conclusions have
in the email body itself. been drawn referring
to the date of receipt,
without discussion as
to when it enters a
computer resource
outside the control of
the originator.
♦ A perusal of the notice dated 31.3.2021 shows it to have been
sent through email and as per Rule 127A(1), it is deemed to be
authenticated if the name and office of the income tax
authority is printed on the email body or is printed on the
attachment to the email.
♦ The petitioner could not bring any fact on record to
show that notice under Section 148 of the Act of 1961
was not issued by the electronic mode, i.e., by email, on
31.3.2021 and, that too, when the fact regarding digital
signature of the authority could not be disputed.
♦ While discussing the issue, the Division Bench of the
Allahabad High Court has referred to Rule 127A, which deals
with communication in the electronic form and after referring
to Section 13 of the Information Technology Act, 2000, it was
held that despatch of an electronic record occurs when it
enters a computer resource outside the control of the
originator.

♦ Accordingly, the Allahabad High Court has held that if a notice

 is digitally signed by the income tax authority and it is entered
by the income tax authority in computer resource outside the
control, then that point of time would be the time of issuance
of the notice.
♦ Conclusions finally drawn by the Allahabad High Court
on the facts of that case cannot be applied, rather we
cannot change the language of the provision by
changing the word "issuance" to that of "receipt".
Accordingly, Madras High Court has dismissed the writ petition filed by
the appellant stating that as the notice has been signed by using DSC
on 31.03.2021 and same has been issued on 31.03.2021, date of receipt
of email cannot be considered as date of issue of notice.

Our Comments:

After analysing the above two judgments, it can be found that both the
High Courts have referred the provisions of section 282A read with
section 127A for the purpose of interpretation of 'issue of notice'.
However, the outcome of the judgement differs each other.

Two High Courts have expressed two different views in respect of issue
of notice through email. Allahabad High Court has held that mere
signing of notice cannot be equated with issue of notice and date of
sending email has to be taken into account for determining the date of
issue of notice.

However, Madras High Court has held that as the appellant has not
brought anything on record to substantiate that the notice has been
issued after 01.04.2021, as the notice is generated digitally by using
the DSC on 31.03.2021, such date of signing has to be considered as
date of issue of notice for the purpose of section 149.

However, the fact of sending mail on 31.03.2021 is not specifically

mentioned in the order which leaves some doubts regarding the date of
sending email.

The appellant has argued that as the mail was received on 01.04.2021,
such mail would have sent on 01.04.2021. When the email has been
sent, it will be presumed to be delivered instantly to the receipt, unless
there are any technical glitches.

However, High Court without discussing above aspect, taken different

direction that date of receipt of cannot be equated with date of issue of
notice.

Further, when the notice is issued by the income tax authority, it has to
substantiate that the notice has been issued on such date. However, the
Madras High Court has shifted the burden of proof to the appellant and
as the appellant could not substantiate the date of sending email by the
income tax authority, the High Court has held that date of signing of
notice by DSC has to be considered as date of issue.

Further, one more writ has been field before the Hon'ble Delhi High
Court4 wherein the High Court has framed the following question of
laws:

♦ Category A: Is in respect of writ petitions where Notice is

dated 31stMarch 2021 or before, but digitally signed on or
after 1stApril, 2021, however sent and received on or after
1stApril, 2021.
♦ Category B: is in respect of writ petitions where Notice is
dated 31stMarch 2021 or before, digitally not signed, however
sent and received on or after 1stApril 2021.
♦ Category C: is in respect of writ petitions where Notice is
dated 31st March 2021or before, digitally signed on or before
31stMarch 2021, however sent and received on or after
1stApril 2021.
♦ Category D: is in respect of writ petitions where Notice is
dated 31stMarch 2021 or before, digitally signed on or before
31stMarch, 2021, no service either by e-mail or by post or any
other mode and assessee came to know later on through
Portal or receipt of subsequent notice under Section 142(1).
♦ Category E: is in respect of writ petitions where Notice is
dated 31stMarch2021or before, manually signed, no service by
e-mail but dispatched through speed post on or after 1stApril
2021.
As two High Courts has not gone into depth the issue, the decision of
Delhi High Court is much waited for better understanding the 'issue of
notice' digitally.
 ■■

1. [2011] 12 taxmann.com 198 / 202 Taxman 99 (Mag.) / 334

ITR 25 (Guj.)
2. [2022] 136 taxmann.com 246
3. [2022] 137 taxmann.com 398
4. W.P.(C) 4777 of 2022`