The Bombay High Court, in Shreenath Finstock Private Ltd. v. Union of India & Others, examined an important issue concerning the date on which a reassessment notice under Section 148 of the Income Tax Act, 1961 can legally be regarded as having been “issued”.
The Court held that where a notice was dated and digitally signed on 31 March 2021 but the Income Tax Department’s electronic system triggered and dispatched the notice only on 1 April 2021, the notice must be treated as having been issued on 1 April 2021. Consequently, the reassessment proceedings were required to comply with the substituted reassessment framework introduced by the Finance Act, 2021.
Case Details
Case: Shreenath Finstock Private Ltd. v. Union of India & Others
Court: High Court of Judicature at Bombay
Jurisdiction: Ordinary Original Civil Jurisdiction
Case No.: Writ Petition No. 3526 of 2022
Bench: Justice B. P. Colabawalla and Justice Firdosh P. Pooniwalla
Date of Judgment: 6 July 2026
Assessment Year: 2013-14
Background of the Dispute
The petitioner challenged a reassessment notice dated 31 March 2021 issued under Section 148 of the Income Tax Act and the consequential assessment order dated 30 March 2022 passed under Section 147 read with Section 144B.
Although the notice was dated and digitally signed on 31 March 2021, it was received by the petitioner through email only on 1 April 2021 at 5:51 a.m.
The petitioner argued that since the notice was actually dispatched and received on 1 April 2021, it could not be governed by the unamended reassessment provisions. According to the petitioner, the Department was required to follow the procedure introduced by the Finance Act, 2021 with effect from 1 April 2021, including the safeguards contained in Section 148A.
The Revenue contended that the notice had been digitally signed and uploaded on the Income Tax Business Application portal on 31 March 2021. It argued that the notice should be considered issued when it left the control of the Assessing Officer, irrespective of the subsequent delay in email transmission.
System Records Confirmed Dispatch on 1 April 2021
During the proceedings, the Court directed the Income Tax Department to clarify when the email dispatching the notice had actually been triggered in its system.
The Department’s system delivery report showed that the “Notice Sent” timestamp was 1 April 2021 at 05:51:42 a.m., while the “Delivered” timestamp was 1 April 2021 at 05:51:47 a.m.
On the basis of these records, the Court found that the email containing the reassessment notice was triggered from the Department’s portal only on 1 April 2021.
Date of Dispatch Determines Date of Issuance
The Court held that the time taken by the Department’s electronic system in triggering and transmitting the email was attributable to the Income Tax Department.
A notice dated and digitally signed on or before 31 March 2021, but electronically dispatched and received on or after 1 April 2021, could not be treated as having been issued on 31 March 2021.
The Court relied upon the Delhi High Court’s decision in Suman Jeet Agarwal v. Income-tax Officer, which classified such notices under “Category C”. That category covered notices dated and digitally signed on or before 31 March 2021 but sent and received on or after 1 April 2021.
The Bombay High Court agreed that the date and time recorded by the Income Tax Department’s portal for dispatch of the email must be treated as the date of issuance.
New Reassessment Procedure Applicable
Since the notice was treated as having been issued on 1 April 2021, the reassessment proceedings could not continue solely under the unamended Section 148.
Following the Supreme Court’s decision in Union of India v. Ashish Agarwal, the Court held that the notice issued under the old law would be deemed to have been issued under the substituted Section 148A and treated as a show-cause notice under Section 148A(b).
The Assessing Officer was therefore required to provide the petitioner with the information and material relied upon by the Revenue and permit the petitioner to submit its reply.
Assessment Order Quashed
The Bombay High Court quashed and set aside the assessment order dated 30 March 2022 passed under Section 147 read with Section 144B, along with all consequential notices and orders.
The Court directed the Assessing Officer to provide the information and material relied upon by the Revenue within thirty days from the date of uploading of the judgment.
The petitioner was permitted to submit its reply within two weeks thereafter. The Assessing Officer was directed to consider every objection raised by the petitioner and pass a fresh order under Section 148A(d) on its own merits.
Limitation and Other Defences Kept Open
The Court expressly preserved all defences available to the petitioner, including those arising under Section 149 of the Income Tax Act.
The rights and contentions of both the petitioner and the Revenue under the Finance Act, 2021 and other applicable legal provisions were also kept open.
Key Legal Principle
For electronically issued reassessment notices, the date on which the Income Tax Department’s system actually triggers and dispatches the notice is material for determining the date of issuance.
Merely dating, digitally signing or uploading a notice on 31 March 2021 is insufficient where the system record establishes that the notice was dispatched only on 1 April 2021.
In such cases, the substituted reassessment procedure effective from 1 April 2021, including Section 148A, becomes applicable.
Why This Judgment Matters
The judgment is significant for taxpayers, advocates, Chartered Accountants and tax professionals dealing with reassessment notices issued around the transition from the old reassessment regime to the framework introduced by the Finance Act, 2021.
It reinforces that administrative or technological delay within the Income Tax Department’s electronic system cannot prejudice the taxpayer. It also confirms that the Department’s own dispatch records can determine whether the mandatory safeguards under Section 148A apply.
The decision further illustrates that the legal validity of an electronic notice depends not merely on the date printed on it or the date of digital signature, but on the date on which it was actually dispatched through the Department’s system.
