MR. PRASHANT PRAFUL SHAH ,MUMBAI vs. ITO WARD 42(1)(4), MUMBAI

In the instant case, the chronological events for adjudication of the appeal under consideration are as under:-

Thus, the Assessee on the basis of aforesaid chronological events has claimed that notice under Section 148 of the Act dated 27.04.2024, has been issued on day beyond outer limit of limitation, as computed after applying both the fifth and sixth provisos to Section 149(1) of the Act and therefore, the same is barred by limitation being void ab initio and bad in law and therefore, liable to be quashed.

We observe from the record that the assessment year pertains to AY 2019-20 and initially notice under Section 148 A(b) of the Act was issued on 31.03.2023, according to which the compliance date was prescribed as 19.04.2023 and therefore, 19 days period is required to be excluded as per the fifth proviso to Section 149 (1) of the Act and thus, extended deadline, after exclusion of 19 days for issuing the notice under Section 148 of the Act was 19.04.2023 (i.e. 31.03.2023 + 19 days). According to sixth proviso, seven days margin time was available for the AO to pass the order under Section 148A(d) of the Act and/or to issue the notice under section 148 of the Act, which as per the provision of the law as applicable was up to 26.04.2023 (i.e. 19.04.2023 + 7 days) but

We further observe that the Hon’ble Delhi High Court in the case of Baba Global Ltd. vs. Assistant Commissioner of Income Tax (2025) 176 taxmann.com 466 (Del.) (07-07-2025) has also dealt with the fifth and sixth proviso to Section 149 of the Act and while excluding the period to be excluded as provided in fifth and sixth proviso to Section 149 of the Act, ultimately held the notice issued on dated 27.04.2023 as involved as time barred and consequently set aside the order and notice issued under Section 148 of the Act. For brevity and ready reference, conclusion drawn by the Hon’ble Delhi High Court, is reproduced herein below : 11. We also find merit in the petitioner's contention that the impugned notice has been issued beyond the period of limitation. It is not disputed that the present case does not fall under clause (b) of sub-section (1) of Section 149 of the Act. Thus, in terms of clause (a) of sub-section (1) of Section 149 of the Act, the AO was proscribed from issuing a notice after three years from the end of the relevant assessment year. It follows that the last date for issuance of a notice under Section 148 of the Act was 31.03.2023. The AO had issued a notice under Section 148A(b) of the Act on the last date of expiry of the period of limitation and had afforded the petitioner an opportunity to respond to the said notice by 20.04.2023. In terms of the Fifth proviso to Section 149(1) of the Act, the time allowed to an Assessee to respond to the notice under Section 148A(b) of the Act is required to be excluded. Further, in terms of the Sixth proviso to Section 149(1) of the Act if the time available to the AO for passing an order under Section 148A(d) of the Act does not exceed seven days, the same was required to be extended to a period of seven days. Since the notice under Section 148A(b) was issued on 31.03.2023 - that is, the last date of expiry of limitation - the AO did not have seven days' time to pass an order under Section 148A(d) of the Act and the period for passing an order was required to be extended by a period of seven days from 20.04.2023. This period expired on 27.04.2023. Therefore, in terms of Section 149(1)(a) of the Act, the impugned notice was issued beyond the period of limitation, notwithstanding the time available to the AO for passing an order under Section 148A(d) of the Act. Concededly, this issue is covered by the decision of this Court in Raminder Singh v. Assistant Commissioner of Income-tax [2023] 156 taxmann.com 148/[2024] 461 ITR 368 (Delhi)/2023:DHC:6672-DB. 12. In view of the above, the impugned order and the impugned notice are set aside.

We also observe that in the instant case, the approval for issuance of notice under Section 151 of the Act was issued on dated 27.04.2023 whereas the escaped income in this case was Rs.2,50,000/- only and

Thus, on the aforesaid analysis, the notice dated 27.04.023 issued under Section 148 of the Act along with the assessment order dated 06.01.2025 passed under Section 147 r.w.s. 144B of the Act, is quashed.

In the result, appeal filed by the Assessee is allowed.