Facts of the Case

The petitioner, Parveen Kumar Malhotra, filed a writ petition challenging the order dated 28.07.2022 passed under Section 148A(d) of the Income-tax Act, 1961 and the consequential notice dated 29.07.2022 issued under Section 148 for Assessment Year 2013–14.

An initial notice under Section 148 was issued on 23.06.2021 under the unamended reassessment regime. The said notice was unsustainable as it was issued after 31.03.2021 without following the procedure prescribed under Section 148A, as held by the Delhi High Court in Mon Mohan Kohli. Pursuant to the directions of the Supreme Court in Union of India vs. Ashish Agarwal, the said notice was deemed to be a notice under Section 148A(b). In compliance, the Assessing Officer supplied information and material to the petitioner on 02.06.2022 and directed the petitioner to furnish a reply by 18.06.2022. The petitioner submitted his response on 18.06.2022. Thereafter, the Assessing Officer passed the impugned order under Section 148A(d) on 28.07.2022 and issued the notice under Section 148 on 29.07.2022.

Issues Involved

Whether the notice issued under Section 148 for Assessment Year 2013–14 was barred by limitation under Section 149 after applying the exclusions mandated by the fifth proviso to Section 149, and whether the reassessment proceedings initiated pursuant thereto were sustainable in law.

Petitioner’s Arguments

The petitioner contended that the six-year limitation period for AY 2013–14 expired on 31.03.2020 and stood extended only up to 30.06.2021 by virtue of the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020. Since the original notice dated 23.06.2021 was issued seven days prior to expiry of limitation, only seven days remained available to the Assessing Officer after exclusion of the period contemplated by the fifth proviso to Section 149. Accordingly, the last permissible date for issuance of the notice under Section 148 after receipt of the petitioner’s reply on 18.06.2022 was 25.06.2022. The notice issued on 29.07.2022 was therefore beyond limitation.

Respondent’s Arguments

The Revenue fairly conceded that the controversy involved in the present case was squarely covered by the binding decision of the Delhi High Court in Ram Balram Buildhome Pvt. Ltd. vs. Income Tax Officer, which applied the principles laid down by the Supreme Court in Union of India vs. Rajeev Bansal.

Court Order / Findings

The Delhi High Court analysed the statutory scheme of Section 149 and the effect of the fifth proviso thereto, as explained by the Supreme Court in Union of India vs. Rajeev Bansal. The Court held that since the initial notice was issued only seven days before expiry of limitation, the Assessing Officer had only seven days available to issue a notice under Section 148 after the petitioner furnished his reply on 18.06.2022.

The Court found that the last permissible date for issuing the notice was 25.06.2022 and that the impugned notice dated 29.07.2022 was clearly time-barred. The Court further noted that the issue was conclusively covered by its decision in Ram Balram Buildhome Pvt. Ltd., which was binding on the Revenue.

Important Clarification

The Court clarified that computation of limitation under Section 149 must strictly adhere to the statutory framework and judicial interpretation. Once the residual period of limitation expires, the Assessing Officer lacks jurisdiction to proceed further, and any reassessment initiated thereafter is unsustainable in law.

Final Outcome

The writ petition was allowed. The Delhi High Court set aside the impugned order dated 28.07.2022 passed under Section 148A(d), the notice dated 29.07.2022 issued under Section 148 for Assessment Year 2013–14, and all proceedings initiated pursuant thereto. The pending application was also disposed of accordingly.

Link to download the order - https://www.mytaxexpert.co.in/uploads/1769676949_PARVEENKUMARMALHOTRAVsINCOMETAXOFFICERWARD301DELHIORS..pdf

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