The New Delhi Bench of the Income Tax Appellate Tribunal (ITAT) has ruled that where scrutiny assessment proceedings are conducted electronically through the ‘E-Proceeding’ facility as mandated by CBDT Instruction No. 1/2018, the resulting assessment order must be signed digitally by the Assessing Officer.
The ITAT emphasised that the failure to digitally sign the order and the issuance of a manually signed order is a direct violation of the binding procedure laid down by the CBDT. This procedural deviation is an incurable defect that renders the assessment order illegal and invalid, thereby justifying the quashing of the assessment itself.
The Division Bench comprising Mahavir Singh (Vice President) and M. Balaganesh (Accountant Member) observed that the CBDT Instruction No. 1/2018 mandates that assessment proceedings in scrutiny cases be conducted electronically. Specifically, Paragraph 4.2 of the instruction directs that all departmental orders and communications issued through the ‘e-Proceeding’ facility must be digitally signed by the Assessing Officer.
The Bench noted that the instruction provides no exceptions for manually signing assessment orders in ‘E-Proceedings’, and the Department’s representative was unable to produce any circular or instruction that carved out an exception to this rule. The Bench also considered the Supreme Court’s rulings in Cherukuri Mani v. Chief Secretary, Government of Andhra Pradesh [(2015) 13 SSC 722] and Chandra Kishore Jha vs Mahavir Prasad [(1999) 8 SCC 266], which established the principle that if a statute or procedure requires an act to be done in a particular manner, it must be done in that manner alone, and any deviation renders the action illegal.
Applying these principles, the Bench concluded that the CBDT instructions are binding on the department. Therefore, the manual signing of an assessment order, when the proceedings were conducted electronically, is not a mere procedural irregularity but an “incurable defect” that vitiates the entire assessment.
Briefly, after the original assessment was framed under Section 143(3)/147 of the Income Tax Act, the appellant introduced an additional legal ground contending that the assessment order was illegal, because it was passed in violation of CBDT Instruction No. 1/2018 dated February 12, 2018. The core factual issue was that while the scrutiny assessment was conducted electronically through the ‘E-Proceeding’ facility, the final assessment order was signed and issued manually by the Assessing Officer.
Appearances:
Advocates Salil Kapoor, Ananya Kapoor, Sumit Lalchandani, Shivam Yadav, and Sejal Arora, for the Appellant/ Taxpayer
DR Ankush Kalra, for the Respondent/ Revenue
