GRINTAN KANAKLAL DOSHI,MUMBAI vs. INCOME TAX OFFICER, WARD 27(1)(5), MUMBAI, MUMBAI

In the instant case, the Assessing Officer, vide assessment order dated 28.03.2024 passed under section 147 read with section 144 of the Act, made an addition of Rs.1,01,51,623/-, being 25% of the alleged non-genuine purchases of Rs.4,06,06,494/-. The Ld.

During the hearing, the Assessee raised three additional grounds, including a challenge to the validity of the notice dated 24.03.2023 issued under section 148A(b) of the Act, contending that the statutory minimum period of seven days was not afforded for furnishing a reply, thereby vitiating the reassessment proceedings.

On perusal of the notice dated 24.03.2023 issued by the Assessing Officer, Ward 27(1)(5), Mumbai, bearing DIN No. ITBA/AST/F/148A(SCN)/2022-23/1051229110(1), we find that the Assessee was required to furnish its reply on or before 30.03.2023. For ready reference, the relevant notice is reproduced hereunder:

Thus, the notice dated 24.03.2023 required compliance by 30.03.2023, thereby affording only six days, excluding the date of issuance, against the statutory minimum of seven days prescribed under section 148A(b) of the Act.

While concluding the hearing on 27.08.2026, we directed the Jurisdictional Assessing Officer to furnish a status report on the aforesaid issue within seven days, with an observation that non- compliance might invite an adverse inference. However, no report has been furnished.

The Ld. DR nevertheless contended that the date of issuance of the notice should also be included, while computing the statutory period. The Assessee, on the other hand, relied upon the judgments of the Hon'ble Bombay and Calcutta High Courts in Naresh Balchandrarao Shinde (2023) 451 ITR 149 (Bom.), Mukesh J. Ruparel (2023) 295 Taxman 475 (Bom.) and Girdhar Gopal Dalmia (2023) 450 ITR 143 (Cal.) contending that the statutory minimum period of seven days must be effectively afforded.

Having heard the parties and perused the material available on record, we find that section 148A(b), as applicable to the relevant proceedings, mandates a minimum period of seven days for furnishing a reply. The Hon'ble jurisdictional Bombay High Court in Naresh Balchandrarao Shinde v. ITO (supra), specifically noticed that granting less than seven days falls short of the statutory requirement. Further, in Mukesh J. Ruparel v. ITO, (supra) the Hon'ble High Court held that failure to grant the prescribed minimum period renders the notice invalid. Similarly, the Hon'ble Calcutta High Court in Girdhar Gopal Dalmia v. Union of India (supra) held that the date of receipt of the notice must be excluded while computing the statutory period and that the opportunity afforded must be reasonable and effective.

In the instant case, admittedly the notice dated 24.03.2023 expressly required compliance by 30.03.2023, thereby allowing only six days instead of the mandatory minimum of seven days. Thus, the contention of the Ld. DR seeking inclusion of the date of issuance in view of judgment in Girdhar Gopal Dalmia v. Union of India (supra), is therefore untenable. Moreover, despite a specific direction, the Revenue failed to furnish any material controverting the aforesaid factual position or establishing compliance with the statutory requirement. Consequently, respectfully following the aforesaid judicial principles, particularly the binding decision of the Hon'ble jurisdictional Bombay High Court in Mukesh J. Ruparel (supra), we hold that the mandatory requirement of section 148A(b) was violated. Accordingly, the notice under section 148A(b), consequential order under section 148A(d), notice under section 148 dated 31.03.2023 and reassessment order dated 28.03.2024 are quashed.

Since the reassessment proceedings stand quashed on the aforesaid legal ground, the remaining additional grounds and grounds on merits are rendered academic and/or futile exercise and thus we refrain from adjudicating the same.

In the result, the appeal filed by the Assessee is allowed on the aforesaid legal ground.