SANJAY GUPTA vs. INCOME TAX OFFICER, WARD 29(1), DELHI & ORS.

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W.P.(C)/5255/2023HC DelhiDLHC01015029202328 May 2025Author: HON'BLE MR. JUSTICE VIBHU BAKHRU,HON'BLE MR. JUSTICE TEJAS KARIA4 pages
AI SummaryAllowed

What did the High Court hold?

The Delhi High Court allowed the petition and set aside all proceedings initiated pursuant to the impugned notice and order. The Court reasoned that the initial notice under Section 148, deemed to be under Section 148A(b) by virtue of the Supreme Court's decision in Union of India & Ors. v. Ashish Agarwal, was issued five days before the expiry of the limitation period (25.06.2021, with the original period expiring on 31.03.2021, extended to 30.06.2021 by TOLA). The Court applied the fifth proviso to Section 149(1) of the Act, which mandates exclusion of the period from the notice's issuance until 04.05.2022 (date of Ashish Agarwal judgment), and the time granted to the assessee to respond. It further considered the sixth proviso to Section 149(1), which grants seven days for the AO to issue notice under Section 148 if the remaining period is less than seven days after the assessee's reply. Calculating these exclusions, the last day for issuing the notice was determined to be 21.06.2022. Since the impugned notice was issued on 29.07.2022, it was beyond the permissible time limit. The Court noted that the controversy was covered by its earlier decision in Ram Balram Buildhome Pvt. Ltd. v. Income Tax Officer and Anr.

What were the facts?

The Petitioner (Assessee), Sanjay Gupta, challenged an order dated 28.07.2022 passed under Section 148A(d) of the Income Tax Act, 1961, and a notice dated 29.07.2022 issued under Section 148 of the Act, for Assessment Year (AY) 2014-15. The Assessee contended that the impugned notice was issued beyond the prescribed period of limitation. An initial notice under Section 148 was issued on 25.06.2021. Following the Supreme Court's decision in Union of India & Ors. v. Ashish Agarwal, this notice was treated as issued under Section 148A(b), and the Assessing Officer (AO) provided material to the Assessee on 29.05.2022, requiring a reply by 14.06.2022. The Assessee replied on 13.06.2022. The AO passed the order under Section 148A(d) on 28.07.2022.

What were the issues?

1. Whether the impugned notice dated 29.07.2022 issued under Section 148 of the Income Tax Act, 1961, for AY 2014-15, was issued beyond the period of limitation prescribed under Section 149(1) of the Act, considering the provisos and the directions in Union of India & Ors. v. Ashish Agarwal. Assessee's Contention: The Assessee argued that the impugned notice was issued beyond the prescribed period of limitation. They relied on the fact that the period of six years from the end of the assessment year expired on 31.03.2021, and even with extensions under TOLA and the Supreme Court's directions in Ashish Agarwal, the AO's order was beyond the permissible time limit. Revenue's Contention: The judgment does not record any specific contentions made by the Revenue regarding the limitation period. However, the Revenue was represented by counsel.

Which sections of the Income-tax Act were involved?

Section 148A,Section 148,Section 149(1)

AI-generated summary — verify with the full judgment below

$~74 * IN THE HIGH COURT OF DELHI AT NEW DELHI % Date of Decision : 28.05.2025 + SANJAY GUPTA .....Petitioner Through: Mr Ved Jain, Mr Nischay Kantoor, Ms Soniya Dodeja, and Mr Sarthak Abrol, Advocates. versus INCOME TAX OFFICER, WARD 29(1), DELHI & ORS. .....Respondents Through: Mr Siddhartha Sinha, SCC for the Revenue. Mr Rajesh Kumar, SPC for UOI. CORAM: HON'BLE MR. JUSTICE VIBHU BAKHRU HON'BLE MR. JUSTICE TEJAS KARIA VIBHU BAKHRU, J. (ORAL) CM APPL. 32468/2025 (early hearing)

1.

For the reasons stated in the application, the early hearing is allowed.

2.

The petition is taken up for hearing today.

3.

The hearing scheduled on 04.07.2025 is cancelled.

4.

The application stands disposed of. W.P.(C) 5255/2023 & CM APPL. 32469/2025

5.

The petitioner [Assessee] has filed the above-captioned petition, inter alia, impugning an order dated 28.07.2022 [impugned order] passed under Section 148A(d) of the Income Tax Act, 1961 [the Act] along with the W.P.(C) 5255/2023 notice dated 29.07.2022 [impugned notice] issued under Section 148 of the Act; in respect of assessment year [AY] 2014-15. 6. It is the Assessee’s case that the impugned notice has been issued beyond the prescribed period of limitation.

7.

The initial notice under Section 148 of the Act for AY 2014-15 was issued on 25.06.2021. The said notice was unsustainable as it was issued in accordance with the statutory regime regarding reassessment as in force prior to 31.03.2021. This Court in the case of Mon Mohan Kohli v. Assistant Commissioner of Income Tax & Anr.: Neutral Citation No.: 2021:DHC:4181-DB had set aside such notices that were issued after 31.03.2021 without following the procedure as prescribed under Section 148A of the Act.

8.

However, the Supreme Court in the case of Union of India & Ors. v. Ashish Agarwal: (2023) 1 SCC 617, issued directions for considering the said notices as notices issued under Section 148A(b) of the Act, and granting time to the Assessing Officer [AO] to supply the material on the basis of which such notices were premised. Therefore, in compliance with the directions issued by the Supreme Court in the case of Union of India & Ors. v. Ashish Agarwal (supra), the AO in the present case, provided information and material to the Assessee on 29.05.2022 and directed the Assessee to furnish the reply within two (2) weeks that is by 14.06.2022. The Assessee responded to the said notice dated 29.05.2022 on 13.06.2022. 9. The AO passed an order under Section 148A(d) of the Act on 28.07.2022. According to the Assessee, the same was beyond the period as W.P.(C) 5255/2023 stipulated.

10.

In the present case, the period of six years from the end of the assessment year available for issuing a notice under Section 148 of the Act expired on 31.03.2021. Thus, in terms of the first proviso to Section 149(1) of the Act, a notice under Section 148 of the Act could not be issued. However, the said period was extended by the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 [TOLA]. Consequently, the time limit for issuing such a notice under Section 148 was extended to 30.06.2021. 11. The original notice under Section 148 of the Act was issued on 25.06.2021, which was five (5) days before the expiry of period of limitation.

12.

As noted above, the said notice was deemed to be a notice under Section 148A(b) of the Act by virtue of the decision of Union of India & Ors. v. Ashish Agarwal (supra). The Supreme Court also granted further time to provide the material, which was required to accompany such a notice. As explained by the Supreme Court in the case of Union of India v. Rajeev Bansal: 2024 SCC OnLine SC 2693, the period from the date of the issuance of the notice till 04.05.2022, the date on which the Supreme Court had rendered the decision in Union of India & Ors. v. Ashish Agarwal (supra) was required to be excluded in terms of the fifth proviso to Section 149(1) of the Act. Additionally, the time provided till the date of providing the material, which should have accompanied a notice under Section 148A(b) of the Act, as well as the time allowed to the assessee to respond to W.P.(C) 5255/2023 the said notice was also required to be excluded by virtue of the fifth proviso to Section 149(1) of the Act, as applicable at the material time.

13.

Since the initial notice under Section 148 of the Act –subsequently construed as a notice under Section 148A(b) of the Act – was issued five (5) days before the expiry of period of limitation; there were five (5) days available for the AO to issue notice under Section 148 of the Act after the Assessee had furnished its reply to the said notice. Since this period available to the AO to issue notice under Section 148 of the Act was less than seven (7) days, in terms of the sixth proviso to Section 149(1) of the Act, the AO had seven (7) days to issue notice under Section 148 of the Act. Therefore, the last day to issue notice was 21.06.2022, that is seven days from 14.06.2022. The impugned notice was issued on 29.07.2022, which is after the period for issuing such a notice had expired.

14.

Concededly, the controversy involved in the present case is covered by the decision of this Court in Ram Balram Buildhome Pvt. Ltd. v. Income Tax Officer and Anr.: Neutral Citation No.2025:DHC:547-DB.

15.

The present petition is, accordingly, allowed and all proceedings initiated pursuant thereto are set aside. The pending application is also disposed of. VIBHU BAKHRU, J TEJAS KARIA, J MAY 28, 2025 M Click here to check corrigendum, if any

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