Bombay High Court Quashes Tax Reassessment Against Hospital Over Unsigned Reopening Notice

The Bombay High Court has set aside reassessment and penalty proceedings against Ambernath City Hospital Pvt. Ltd., holding that the Income Tax Department lacked jurisdiction to reopen the assessment, as the mandatory notice issued under Section 148 of the Income Tax Act, 1961, was unsigned.

Relying on its own decision in Prakash Krishnavtar Bhardwaj vs. Income Tax Officer,(2023), the court held,

 “the Notice issued under Section 148, having no signature affixed to it, either digitally or manually, is invalid and would not vest the Assessing Officer with any further jurisdiction to proceed to re-assess the income of the Petitioner.”

The bench further observed as per Section 282A of the Act. "there is a statutory mandate that a Notice issued under Section 148 has to be signed by the concerned authority.Failure to do so, would render the Notice invalid."

A Division Bench of Justice B. P. Colabawalla and Justice Firdosh P. Pooniwalla was hearing a writ petition challenging a notice dated 31 March 2021 issued under Section 148, followed by an ex-parte assessment order under Section 147, penalty orders under Sections 271(1)(b) and 271(1)(c), and consequential demand notices under Section 156.

The sole ground of challenge raised by the assessee was that the reassessment notice under Section 148 was neither digitally signed nor manually signed by the Assessing Officer. It was argued that once the foundational notice itself is invalid, all proceedings undertaken pursuant to such notice must necessarily fall.

The Revenue did not dispute that the notice was unsigned. However, it contended that the notice was issued at the fag end of the limitation period, that a large number of notices had to be dispatched before 31 March 2021, and that due to a technical glitch, the notice went unsigned. It was also argued that since the notice carried a Document Identification Number (DIN) and was served upon the assessee, the reassessment proceedings should not be invalidated on a technical ground.

The High Court rejected these submissions and held that the issue was squarely covered by its earlier judgment in Prakash Krishnavtar Bhardwaj v. Income Tax Officer. In that case, the Court had categorically held that a notice issued under Section 148 without any signature is invalid and does not vest jurisdiction in the Assessing Officer to reopen an assessment.

The Bench emphasized that Section 282A of the Income Tax Act statutorily mandates that where the Act requires issuance of a notice or document, such notice must be signed and issued either in paper form or electronically in the prescribed manner. An unsigned notice, the Court held, fails to meet this statutory requirement and is therefore void ab initio.

The court further clarified that the defect of absence of signature cannot be cured by invoking Section 292B or Section 292BB of the Act. While Section 292B cures certain technical mistakes or omissions, it does not validate a notice that is fundamentally invalid. Similarly, Section 292BB, which deals with deemed service of notice, does not revive a notice that is void at its inception due to lack of statutory authentication.

Dealing with the Revenue's reliance on the Delhi High Court decision in Sonia Gandhi v. ACIT, the bench held that the reliance was misplaced, as that judgment did not deal with a situation involving a completely unsigned notice under Section 148.

In view of the above, the Bombay High Court quashed the reassessment notice issued under Section 148, the consequential assessment order passed under Section 147, all penalty orders, and the connected demand notices, holding that the reassessment proceedings were without jurisdiction.

The writ petition was accordingly allowed. It quashed the reassessment notice issued under Section 148 and the assessment order passed under Section 147. It also set aside the penalty orders under Sections 271(1)(b) and 271(1)(c), along with the connected demand notices, holding that the reassessment proceedings were without jurisdiction. The writ petition was accordingly allowed, with no order as to costs.

Case Title: Ambernath City Hospital Pvt.Ltd. vs The Union of India and Ors.

Citation: 2026 LLBiz HC(BOM) 17

Case Number: WRIT PETITION 2713 OF 2024

For Petitioner: Advocate Bharat Raichandani, along with Advocate Bhagrati Sahu, instructed by M/s. UBR Legal Advocates.

For Respondents: Advocate Akhileshwar Sharma.