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Facts
The Assessing Officer (AO) initiated reassessment proceedings against the assessee for AY 2018-19 based on information about Bitcoin sales not reported in the original return. The AO issued a notice u/s. 148A(b) providing only one day for the assessee to respond, which was less than the mandatory seven days.
Held
The Tribunal held that issuing a notice u/s. 148A(b) without providing the mandatory minimum period of seven days for response is contrary to law. Consequently, the reassessment proceedings initiated based on such a notice are liable to be quashed.
Key Issues
Whether reassessment proceedings initiated by issuing a notice u/s. 148A(b) of the Act, which provided less than the statutory minimum of seven days for the assessee to respond, are valid and legally sustainable.
Sections Cited
148A, 148, 147, 144B, 250, 271AAC(1), 132, 132A, 135A
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, ‘A’ BENCH: CHENNAI
Before: SHRI SS VISWANETHRA RAVI & MS. PADMAVATHY.S
आदेश / O R D E R
PER PADMAVATHY.S, A.M: This appeal and Stay Application by the assessee is against the order of the Commissioner of Income Tax (Appeals)/National Faceless Appeal Centre (NFAC), Delhi, (in short "CIT(A)") passed u/s. 250 of the Income Tax Act, 1961 ( in short "the Act") dated 22.09.2025 for Assessment Year (AY) 2018- 19.
2. The assessee is an individual. As per information flagged in accordance with the risk management strategy formulated by CBDT information is received by the A.O that the assessee has sold Bitcoin to the tune of Rs.41,59,173/- during the financial year relevant to the year under consideration. The A.O noticed that in the return of income filed for A.Y 2018-19 which is filed on 02.08.2018 the assessee has not included the above mentioned transaction and accordingly had reason to believe that the income chargeable to tax as escaped assessment. The A.O initiated the re-assessment proceedings by issue of notice u/s. 148A(b) of the Act dated 30.03.2022. The A.O in the said notice called on the assessee to submit the supporting documents etc. by 31.03.2022. The A.O subsequently passed an order u/s. 148A(d) of the Act on 31.03.2022 stating that since the assessee did not reply and therefore, constrained to conclude that the assessee does not have any objection against issuing of notice u/s. 148 of the Act. The A.O also issued a notice u/s. 148 on 31.03.2022 reopening the assessment. After considering the response filed by the assessee, the A.O passed an order u/s. 147 r.w.s 144B of the Act, whereby he made various additions to the tune of Rs. 11,68,270/-. On further appeal, the CIT(A) confirmed the additions without condoning the delay in filing the appeal before him. The assessee is in appeal before the Tribunal against the order of CIT(A).
3. The Ld. A.R submitted that out of the various grounds raised by the assessee if ground No.5 which reads as under is adjudicated in favour of the assessee, the rest of the grounds would become academic. “5 The CIT(A) failed to appreciate that the assessing officer failed to grant 7 clear days to file response to notice under section 148A(b) of the Act and therefore, considering the rationale laid down by the Hon'ble Karnataka High Court in the case of Bevinakuppe Ningegowda vs ITO in WP No.16325 of 2025, notice under section 148 of the Act and assessment order passed pursuant to the said notice are liable to be treated as non-est.”
The Ld. Authorized Representative (A.R) with regard to the legal contention raised in the above ground submitted that the A.O failed to provide the mandatory minimum time limit of seven days to the assessee while issuing notice u/s. 148A(b) of the Act. The Ld. AR further submitted that the A.O issued notice u/s. 148A(b) of the Act on 30.03.2022 calling on the assessee to raise objections and furnish details on or before 31.03.2022. Accordingly, the Ld. AR submitted that the initiation of reassessment proceedings without giving minimum time limit for responding as per section 148A(b) is not valid and the consequential proceedings are liable to be quashed. The ld. AR in this regard placed reliance on the decision of Hon'ble Karnataka High Court in the case of Shri Bevinakuppe Ningegowda Ramalingegowda vs. ITO [WP No.16325 of 2025 dated 04.09.2025].
The Ld. Departmental Representative (DR), on the other hand, submitted that the time provided for response u/s. 148A(b) of the Act is directory in nature and the same to be considered based on the prejudice caused to the assessee. Accordingly, the Ld. DR relied on the orders of the lower authorities.
We have heard the parties and perused the material available on record. The contention of the assessee is that the A.O has not provided the minimum timeline as prescribed to respond to the notice u/s. 148A(b) of the Act and therefore, the reassessment proceedings are invalid. In this regard, we notice that the Hon'ble Karnataka High Court in the case of Shri Bevinakuppe Ningegowda Ramalingegowda (supra), has considered an identical issue, where it has been held that:
1. “The petitioner is before this Court seeking the following prayers: i) Issue a writ of Certiorari or direction in the nature of a writ of certiorari quashing the notice under Section 148A(b) of the Act, dated 20/03/2022 bearing DIN No.ITBA/AST/F/148A(SCN)/2021-22/1041110019(1), issued by the Respondent No.1 for the assessment year 2018-19 herein marked as Annexure - A. ii) Issue a writ of Certiorari or direction in the nature of a writ of certiorari quashing the notice under section 148 of the Act dated 27/04/2022 bearing DIN No. ITBA/AST/S/148_1/2022- 23/1042880981(1) issued by the Respondent No.1 for the assessment year 2018-19 herein marked as Annexure - A1. iii) Issue a writ of Certiorari or direction in the nature of a writ of certiorari quashing the order under section 148A(d) of the Act, dated 27/04/2022, bearing DIN No. ITBA/AST/F/148A/2022-23/1042880971(1) passed by the Respondent No.1 for the assessment year 2018-19 herein marked as Annexure - A2. iv) Issue a writ of Certiorari or direction in the nature of a writ of certiorari quashing the order passed under section 147 r.w.s. 144B dated 06/12/2023 bearing DIN No.ITBA/AST/S/147/2023- 24/1058525769(1) passed by the Respondent No.2 for the assessment year 2018-19 herein marked as Annexure - A3. v) Issue a writ of Certiorari or direction in the nature of a writ of certiorari quashing the penalty order under Section 271AAC(1) of the Act dated 20/06/2024 bearing DIN No. ITBA / PNL / F /271AAC(1) / 2024-25/1065858089(1) passed by the Respondent No.2 for the assessment year 2018-19 herein marked as Annexure - A4. vi) And pass such other orders as this Hon'ble Court deems fit and proper in the interest of justice and equity.”
2. Heard Sri Ravi Shankar S V, learned counsel appearing for petitioner and Sri Thirumalesh, learned counsel appearing for respondents 1 to 3.
The issue revolves around the minimum period to the assessee to respond to the notice issued by the Income Tax Authorities, which the statute mandates to be, not less than 7 days. The issue was before the Division Bench of this Court in W.A.No.612 of 2025. The Division Bench, in terms of its order dated 05-08-2025 while rejecting the appeal filed against the order of the learned Single Judge had favoured the assessee. The Division Bench holds as follows: “…. …. ….
The respondent [Assessee] had filed the said petition, inter alia, impugning a notice dated 20.03.2022 issued under Section 148A (b) of the Income Tax Act, 1961 [Act] for the assessment year [AY] 2015-16 on the ground that the said notice did not provide sufficient time for the Assessee to file a response to show cause calling upon him to show cause why it was not a fit case for issuance of a notice under Section 148 of the Act.
3. The learned Single Judge has found merit in the aforesaid contention and accordingly, set aside the impugned notice as well as the notice dated 31.03.2022 issued under Section 148A (d) of the Act and further reassessment proceedings that were initiated pursuant to the said notice.
4. Before proceeding further, it would be relevant to refer to Section 148A of the Act, as was in force at the material time. The same is set out as below:
"148A. Conducting inquiry, providing opportunity before issue of notice under section 148.
The Assessing Officer shall, before issuing any notice under section 148,- (a) conduct any enquiry, if required, with the prior approval of specified authority, with respect to the information which suggests that the income chargeable to tax has escaped assessment; (b) provide an opportunity of being heard to the assessee, by serving upon him a notice to show cause within such time, as may be specified in the notice, being not less than seven days and but not exceeding thirty days from the date on which such notice is issued, or such time, as may be extended by him on the basis of an application in this behalf, as to why a notice under section 148 should not be issued on the basis of information which suggests that income chargeable to tax has escaped assessment in his case for the relevant assessment year and results of enquiry conducted, if any, as per clause (a); (c)consider the reply of assessee furnished, if any, in response to the show-cause notice referred to in clause (b); (d)decide, on the basis of material available on record including reply of the assessee, whether or not it is a fit case to issue a notice under section 148, by passing an order, with the prior approval of specified authority, within one month from the end of the month in which the reply referred to in clause (c) is received by him, or where no such reply is furnished, within one month from the end of the month in which time or extended time allowed to furnish a reply as per clause (b) expires:
Provided that the provisions of this section shall not apply in a case where,- (a) a search is initiated under section 132 or books of account, other documents or any assets are requisitioned under section 132A in the case of the assessee on or after the 1st day of April, 2021; or (b) the Assessing Officer is satisfied, with the prior approval of the Principal Commissioner or Commissioner that any money, bullion, jewellery or other valuable article or thing, seized in a search under section 132 or requisitioned under section 132A, in the case of any other person on or after the 1st day of April, 2021, belongs to the assessee; or (c) the Assessing Officer is satisfied, with the prior approval of the Principal Commissioner or Commissioner that any books of account or documents, seized in a search under section 132 or requisitioned under section 132A, in case of any other person on or after the 1st day of April, 2021, pertains or pertain to, or any information contained therein, 2[relate to, the assessee; Or (d) the Assessing Officer has received any information under the scheme notified under section 135A pertaining to income chargeable to tax escaping assessment for any assessment year in the case of the assessee.] 5. It is clear from the plain reading of Clause (b) of Section 148A of the Act, that a notice under Section 148A(b) of the Act is required to provide an opportunity to the assessee to respond to the information which may suggests that the assessee’s income has escaped assessment. The minimum period of such notice is stipulated as “not less than seven days”. In the present case, the impugned notice was issued on 20.03.2022 and the Assessee was called upon to furnish a reply on or before 25.03.2022. Indisputably, the impugned notice did not comply with the requirement of providing a minimum period of seven days to respond to the said notice.
6. The impugned notice is contrary to law as rightly pointed out by the learned Single Judge.”
4. Learned counsel Sri Thirumalesh M appearing for the respondents would not dispute the position of law being affirmed by the Division Bench, as the notice was set aside by the learned single Judge.
5. In the light of the issue being covered on all its fours to the order in the writ appeal as afore-quoted, the petition deserves to succeed on the same lines.”
In the above decision, the Hon’ble High Court has relied on the decision of the Division Bench in the case of ITO v. Venkatal Ayyappa Ranjanna [2025] 178 taxmaqnn.com 410 (Kar.), where the identical issue has been considered by the Hon'ble High Court. From the combined perusal of the above judicial precedence, it is clear that where the A.O does not provide the minimum period of seven days to respond to the notice u/s. 148A(b) of the Act as provided in the said section then the impugned notice is contrary to law and the consequential proceedings are liable to be quashed. In the present case, the A.O has issued a notice u/s. 148A(b) of the Act on 30.03.2022 calling on the assessee to furnish the details by 31.03.2022. The copy of the relevant notice is extracted below:
From the above, it is clear that the A.O has given only one day to the assessee to respond, which is clearly contrary to the provisions u/s. 148A(b) of the Act, which provides that the minimum period of seven days should be given to the assessee to respond. Accordingly, respectfully following the above judicial precedence, we hold that the notice issued by the A.O u/s. 148A(b) of the Act is contrary to the law and the consequential reassessment proceedings therefore is liable to be quashed. The ground no.5 raised by the assessee in this regard is allowed.
Since, we have considered the legal contention of the assessee and allowed the appeal, the other grounds have become academic and left open accordingly.
Since, we have allowed the main appeal in favour of the assessee, the stay application filed by the assessee has become infructuous and is dismissed accordingly.
In the result, the appeal of the assessee is allowed, and the stay application is dismissed as infructuous.
Order pronounced on 12th day of December, 2025 at Chennai.