The ITAT Delhi has held that an assessment order issued under e-proceedings but signed manually is legally invalid, irrespective of the substance of the addition. This ruling reinforces the mandatory nature of procedural compliance under CBDT Instruction No. 1/2018 and sets a clear precedent for all electronic income tax assessments.
Background & Facts
The Dispute
The appellant, Suneel Kumar, challenged the assessment order dated 18.12.2019 for Assessment Year 2012-13, issued by the Assessing Officer under the e-proceedings framework. The core grievance was not the quantum of tax addition, but the procedural irregularity: the order was manually signed despite being issued through the Income Tax Department’s electronic system.
Key Facts
- The assessment was conducted entirely through the 'E-Proceeding' facility under Section 143(2) of the Income-tax Act, 1961.
- The notice under Section 142(1) was issued electronically on 26.08.2019.
- All communications, submissions, and evidence were exchanged via the e-filing portal.
- The final assessment order dated 18.12.2019 was printed, manually signed by the Assessing Officer, and physically served on the assessee.
- The Assessing Officer admitted in his explanation that the manual signing occurred because the digital signature process was delayed due to transfer of charge, leave, and non-receipt of the order from the CPC.
- The order was passed on 10.01.2025, within the extended limitation period of 31.01.2025 as directed by the DRP.
Procedural History
- 18.12.2019: Assessment order issued manually by the Assessing Officer.
- 19.12.2025: Order of Ld. Commissioner of Income Tax (Appeals)/National Faceless Appeal Centre (CIT(A)/NFAC) upholding the assessment.
- 13.04.2026: Hearing before ITAT Delhi.
- 15.04.2026: Judgment pronounced by ITAT Delhi.
The Parties' Positions
For the Assessee: The assessment order is void ab initio because it was not digitally signed as mandated by CBDT Instruction No. 1/2018. The reliance on Navneet Technologies Pvt. Ltd. and Outsystems Singapore Pte. Ltd. was emphasized to show binding precedent.
For the Revenue: The Revenue did not dispute the manual signing but argued that the substantive tax demand was valid, and procedural lapses should not invalidate the order if the outcome is correct. The Revenue sought to rely on the hardship faced by the AO due to administrative delays.
Relief Sought
The assessee sought quashing of the assessment order dated 18.12.2019 on the ground of non-compliance with CBDT Instruction No. 1/2018, and restoration of the status quo ante.
The Legal Issue
The central question was whether an assessment order issued under the e-proceedings framework, but manually signed by the Assessing Officer, is legally valid under CBDT Instruction No. 1/2018, or whether such non-compliance renders the order void.
Arguments Presented
For the Appellant
The appellant’s counsel relied on CBDT Instruction No. 1/2018, which explicitly mandates in para 4.2 that "all departmental orders/communications/notices being issued to the assessee through the 'e-Proceeding' facility are to be signed digitally by the Assessing Officer." No exceptions were provided for manual signing, even in cases of administrative delay or transfer of charge. The appellant cited Navneet Technologies Pvt. Ltd. and Outsystems Singapore Pte. Ltd., both decided by coordinate benches of the same Tribunal, which had quashed identical orders on the same ground. The counsel argued that procedural compliance is not optional - it is a statutory mandate under the delegated authority of the Board, and deviation renders the action illegal under Chandra Kishore Jha v. Mahavir Prasad and Cherukuri Mani v. Chief Secretary.
For the Respondent
The Revenue’s counsel conceded that the order was manually signed but contended that the substantive tax demand was correct and that the AO acted under duress of administrative exigencies. He argued that the purpose of the law is to ensure tax collection, not to create technical defenses. He sought time to produce any exceptions to the digital signing rule but failed to produce any such instruction on the next hearing date. The reliance on Mytheenkunju Muhammed Kunju Kandathil Jewellers was rejected by the Tribunal as factually distinguishable.
The Court's Analysis
The Tribunal conducted a rigorous analysis of CBDT Instruction No. 1/2018, particularly para 4.2, which leaves no room for discretion: "All departmental orders... are to be signed digitally by the Assessing Officer." The Court emphasized that the instruction was issued under the Board’s statutory authority under Section 119 of the Income-tax Act, 1961, and is binding on all officers.
"No exception has been provided by the Board to the said conditions. The instructions dated 12.02.2018 issued by the Board would apply to all assessments made electronically."
The Tribunal noted that the Revenue’s explanation - that the AO signed manually due to transfer of charge, leave, and non-receipt from CPC - did not constitute a legal exception. Administrative inconvenience cannot override a clear statutory directive. The Court further relied on the Supreme Court’s rulings in Chandra Kishore Jha and Cherukuri Mani, which hold that when a statute prescribes a manner for doing something, it must be done in that manner and no other.
The Tribunal distinguished Mytheenkunju Muhammed Kunju Kandathil Jewellers on the ground that it involved a different factual matrix, including non-e-proceedings and different procedural context. The Court concluded that the failure to digitally sign the order was not a mere irregularity but an incurable defect that vitiates the entire proceeding, especially since the order was served on the assessee.
The Tribunal also affirmed that the doctrine of substantial compliance does not apply where the law prescribes a mandatory form. The e-proceedings system was designed to ensure transparency, accountability, and uniformity - purposes defeated by manual signing.
The Verdict
The appeal is allowed. The assessment order dated 18.12.2019 is quashed on the ground that it was not digitally signed as mandated by CBDT Instruction No. 1/2018. The case is remanded to the Assessing Officer for fresh assessment in accordance with law, with the assessee being given a full opportunity to be heard under the e-proceedings framework. No costs are awarded.
What This Means For Similar Cases
Digital Signature Is Mandatory, Not Optional
- Practitioners must now challenge any assessment order issued under e-proceedings that lacks a digital signature, regardless of the correctness of the tax demand.
- The burden shifts to the Revenue to prove compliance with digital signing; mere assertion of administrative delay is insufficient.
E-Proceedings Cannot Be Half-Electronic
- Any assessment initiated electronically must conclude electronically. Manual signing, printing, or physical service after e-filing invalidates the order.
- Tax officers must ensure digital signing is completed before serving the order, even if CPC delays occur.
Precedent Binding Across Jurisdictions
- Coordinate bench decisions in ITAT Delhi (Navneet Technologies, Outsystems Singapore) are binding on all benches within the same jurisdiction.
- Similar orders in other ITAT benches (Mumbai, Kolkata, etc.) may now be challenged on identical grounds.
Procedural Compliance Trumps Substantive Outcome
- The judgment reinforces that procedural violations in tax proceedings are not curable by the correctness of the result.
- Practitioners should routinely verify digital signatures in e-assessment orders before filing appeals or responding to notices.
