Proceedings under Section 148A of the Income Tax Act, 1961 necessarily required to be completed within the period available for issuing notice under Section 148
In a recent judgment, Hon’ble Delhi High Court has held that proceedings under Section 148A of the Income Tax Act, 1961 necessarily required to be completed within the period available for issuing notice under Section 148, as prescribed under Section 149 of the Act.
ABCAUS Case Law Citation:
4396 (2025) (01) abcaus.in HC
In the instant case, the Petitioner/assessee had filed a Writ Petition challenging notice issued under Section 148 of the Income Tax Act, 1961 (the Act), order passed under Section 148A(d) of the Act, assessment order framed under Section 147 of the Act read with Section 144 and 144B of the Act.
The case of the Petitioner was that the order passed under Section 148A(d) of the Act (the impugned order) as well as the notice (the impugned notice) issued under Section 148 of the Act were beyond the period as stipulated under Section 149(1) of the Act.
The Assessee was a limited company. The petitioner had been regularly filing its return of income and including return for the relevant Assessment Year i.e. AY 2013-14. On 24.03.2020, the Government of India announced the nationwide lockdown (initially for a period of twenty-one days) in the wake of spread of the novel coronavirus (COVID-19) pandemic.
On 31.03.2020, the President of India promulgated the Taxation and Other Laws (Relaxation of Certain Provisions) Ordinance, 2020, whereby time limits as stipulated in respect of various actions and compliances, were extended. Thereafter, the Parliament enacted the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 (TOLA), which came into force with effect from 31.03.2020.
The Assessing Officer (AO) issued a notice dated 01.06.2021 under Section 148. The Assessee responded to the notice dated 01.06.2021 disputing the validity of the notice. The Assessee claimed that the notice was void ab initio as the necessary procedure as prescribed under Section 148A of the Act was not followed.
The AO issued another notice dated 30.05.2022 in furtherance of the notice dated 01.06.2021 construing the same as a notice under Section 148A(b) of the Act. The Assessee was called upon to furnish a response to the said notice.
The petitioner furnished its response to the notice. Thereafter, the AO passed the impugned order dated 30.07.2022 under Section 148A(d) of the Act holding that it was a fit case to reopen the Assessee’s assessment for the AY 2013-14.
According to the Assessee, the impugned notice was issued beyond the period of limitation as prescribed under Section 149(1) of the Act as extended by the Supreme Court. However, it was the Revenue’s case that the impugned notice was within the time as extended by virtue of the TOLA and the decision of the Supreme Court in Union of India & Ors. v. Ashish Agarwal. The Revenue contended that the impugned notice had been issued within the time as prescribed under Section 149(1) of the Act computed in accordance with the third and fourth proviso to Section 149 of the Act as was in force at the material time.
The Hon’ble High Court observed that the central question to be addressed was whether the impugned notice was issued within the extended time as available to the AO by virtue of the provisions of the TOLA, the directions issued by the Supreme Court in the case of Ashish Agarwal and the timelines as explained by the Supreme Court in the case of Rajeev Bansal.
The Hon’ble High Court observed that by virtue of TOLA, the AO had period of twenty-nine days limitation left on the date of commencement of the reassessment proceedings, which began on 01.06.2021, to issue a notice under Section 148 of the Act. The said notice was required to be accompanied by an order under Section 148A(d) of the Act. Thus, the AO was required to pass an order under Section 148A(d) of the Act within the said twenty-nine days notwithstanding the time stipulated under Section 148A(d) of the Act. This period expired on 12.07.2022. Since the period of limitation, as provided under Section 149(1) of the Act, had expired prior to issuance of the impugned notice on 30.07.2022. The said was squarely beyond the period of limitation.
The Hon’ble High Court rejected the contention of the Revenue that the AO was required to pass an order under Section 148A(d) of the Act by the end of the month following the month on which the reply to the notice under Section 148A(b) of the Act was received. Thus, the order under Section 148A(d) of the Act as well as the notice under Section 148 of the Act (both dated 30.07.2022) were within the prescribed period.
The Hon’ble High Court opined that the contention was without merit as it does not take into account that proceedings under Section 148A of the Act necessarily required to be completed within the period available for issuing notice under Section 148 of the Act, as prescribed under Section 149 of the Act. Thus, the time available to the AO to pass an order under Section 148A(d) of the Act was necessarily truncated and the same was required to be passed on or before 12.07.2022. The fourth proviso to Section 149 of the Act did not come into play as the time period available for the AO to pass an order under Section 148A(d) of the Act was in excess of the seven days.
The Hon’ble High Court held that the impugned notice u/s 148 dated 30.07.2022 had been issued beyond the period of limitation. Accordingly, the petition was allowed and the impugned order u/s 148A(d), the impugned notice issued under Section 148 of the Act and the assessment order framed under Section 147 of the Act were set aside.
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