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Facts
The assessee challenged a notice issued under Section 148A(b) of the Income Tax Act for reassessment, arguing that it provided less than the statutory minimum of seven days for response. The notice was issued on 16.03.2022 with a response due date of 21.03.2022, which is only six days.
Held
The tribunal, relying on High Court precedents, held that a notice issued under Section 148A(b) that grants less than seven days for response is invalid. Consequently, the notice and all subsequent proceedings, including the assessment order, were quashed.
Key Issues
Whether a reassessment notice issued under Section 148A(b) of the Income Tax Act providing less than the statutorily mandated minimum seven days for response is valid, and if its invalidity renders subsequent proceedings void.
Sections Cited
148A(b), 148, 147, 148A(d), 151
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Income Tax Appellate Tribunal, “SMC” BENCH KOLKATA
Before: SHRI GEORGE MATHAN
(नििाारण वर्ा / Assessment Year :2018-19) Piyush Kumar Sarda Vs Income Tax Officer, Ward 44(2) 3/1b, Sir hari Ram Goenka Street, 3, Government Place (West), Kolkata-700001, West Bengal Kolkata-700001, West Bengal PAN No. : ATBPS 4944 D (अपीलार्थी /Appellant) .. (प्रत्यर्थी / Respondent) नििााररती की ओर से /Assessee by : Shri Sunil Surana, AR राजस्व की ओर से /Revenue by : Shri Shankar Naskar, Sr. DR सुनवाई की तारीख / Date of Hearing : 23/07/2025 घोषणा की तारीख/Date of Pronouncement : 23/07/2025 आदेश / O R D E R This is an appeal filed by the assessee against the order of the ld. CIT (A), NFAC, Delhi IN Appeal No. ITBA/NFAC/S/250/2024- 25/1073572282(1) vide order dated 21.02.2025 for the Assessment Year 2018-19.
2. Shri Sunil Surana, ld. AR, appeared on behalf of the assessee. Shri Shankar Naskar, Sr.DR appeared on behalf of the revenue.
3. It was submitted by the ld.AR that the notice issued u/s.148A(b) of the Act 16.03.2022 in the case of assessee, copy of which is placed at page Nos.1 to 3 of the paper book. The same reads as follows :-
4. It was the submission that the notice has been issued on 16.03.2022 and the date for response has been provided for 21.03.2022, which was less than seven days. It was the submission that the provisions of Section 148A(b) of the Act that require “being not less than seven days from the date on which such notice is issued, is to be provided to the assessee. It was the submission that as the notice does not give the assessee seven days, therefore, the notice issued u/s.148A(b) of the Act is invalid. The ld.AR placed reliance on the decision of the Hon’ble Karnataka High Court in the case of Panjos Builders Pvt. Ltd., passed in Writ Petition `No.23572 of 2023, dated 08.01.2024, wherein in paras 7 & 8 the Hon’ble High Court has held as under :- 7. So also, having regard to the minimum period of seven days prescribed under Section 148A(b) of the IT Act as held by the High Court of Bombay in the case of Mukesh J. Ruparel Vs. Income Tax Officer, Ward 27(2)(1) - W.P.No.15268/2023 dated 25.07.2023, that if notice under Section 148A(b) prescribes a period lesser than a period of seven days as contemplated in the said provision, the said notice would be vitiated resulting in quashment of not only the notice but also the subsequent assessment orders, penalty notices, orders, etc. In the aforesaid judgment of the Bombay High Court, it is held as under: "Petitioner is impugning a notice dated 15th March 2023 issued under Section 148A(b) of the Income Tax Act, 1961 (the Act), the order dated 31st March 2023 passed under Section 148-A(d) of the Act and notice dated 31st March 2023 issued under Section 148 of the Act.
Petitioner is an individual who did not file return of income for Assessment Year 2016-17 because his income was less than taxable limit.
Petitioner received a notice dated 15th March 2023 under Clause 148A(b) of the Act from Respondent No.1, stating that Respondent No.1 has information which suggests that income chargeable to tax for Assessment Year 2016-17 has escaped assessment within the meaning of Section 147 of the Act. Petitioner was provided with information / enquiry on which reliance was placed in the form of annexure to the notice and Petitioner was called upon to show cause on or before 28th March 2023 as to why a notice under Section 148 of the Act should not be issued. The information which suggested that there has been an escapement of income from assessment provided details of a property that Petitioner had purchased. Petitioner was directed to provide head-wise computation of income, details of Financial Year 2015-16 supported with copy of registered agreement with annexure II, details of payment made and source of acquisition of said immovable property.
Petitioner submitted an elaborate reply on 18th March 2023 and also raised certain objections. The main objection raised was that under the provision of Section 148A(b) of the Act, the assessee should be provided an opportunity of being heard by serving upon the assessee a notice to show cause within such time as may be specified in the notice being not less than seven days but not exceeding thirty days from the date on which said notice has been issued. Since the notice dated 15th March 2023 provides only for five days when the law requires minimum seven days to be given, the notice itself was bad-in-law.
Along with reply, Petitioner also provided a photo copy of the notarised affidavit of Petitioner's brother affirmed on 18th March 2023, in which the brother has confirmed of giving gift of Rs.75 lakhs to Petitioner on 26th March 2019, which is much beyond the relevant Assessment Year.
Respondent No.1 has passed the impugned order dated 31st March 2023 under Clause D of Section 148A of the Act. In the order, Respondent No.1 states that from the statement issued by HDFC Bank for the period 1st April 2018 to 31st March 2019 of the brother, it is seen that there is a credit entry of Rs.1 Crore on 19th March 2019, out of which Rs.75 lakhs has been paid to Petitioner on 26th March 2019. Respondent No.1 also states that the gift deed submitted by Petitioner from the brother has not been notarised.
Moreover, Respondent No.1 states that income chargeable to tax has escaped assessment without mentioning what is the amount of income that has escaped assessment. Further, the approval under Section 151 of the Act which is annexed to the impugned order is of one Poonam Vijay Chhabria whose PAN number is also entirely different from the PAN number of Petitioner. Respondent No.1 is totally silent about the objections raised by Petitioner of minimum seven days notice required. Mr. Gandhi states that on each of these grounds not only the impugned order dated 31st March 2023 but also the notice dated 31st March 2023 itself should be quashed and set aside.
No reply has been filed though Petition was served more than a month ago. We have, therefore, decided to go ahead and consider the matter and dispose it since we were, prima facie, satisfied that there was merit in Petitioner's submissions. Section 148-A(B) of the Act reads as under:- "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)."
The notice dated 15th March 2023 gives time only up to 20th March 2023 to show cause. We have to note that even the guidelines dated 1st August 2022 for issuing of notice under Section 148 of the Act also provide that if the result of an enquiry / information available suggests that income chargeable to tax has escaped assessment, the Assessing Officer shall provide an opportunity of being heard by assessee by issuing the show cause notice under Section 148A(b) of the Act and the notice shall provide between seven to thirty days time for the assessee to submit their reply. A template of the show cause notice is also annexed to the guidelines. Therefore, in view of the guidelines, we would also read that the minimum seven days required to be made as a mandatory requirement and failure to comply with would render a notice itself invalid. Therefore, on this ground alone, the notice requires to be quashed and set aside. Perhaps, being aware of this position, Respondent No.1 has chosen not to deal with these objections raised by Petitioner in the reply to the show cause notice.
We also found in the said guidelines a provision that the order under Section 148A(d) of the Act shall be sent to assessee along with the approval of the specified authority for such order under Section 148A(d) of the Act. In the case at hand, the approval that has been sent is of some other assessee and not Petitioner. This also indicates non- application of mind by Respondent No.1. On this ground also, the order dated 31st March 2023 impugned in the Petition is required to be quashed and set aside.
Further, in the guidelines to which is annexed a template of the order to be passed under Section 148A(d) of the Act provides for mentioning of amount escaped based on the information and how this amount is represented in the form of assets. It also provides that the Assessing Officer will specify the quantum of income / assets / expenditure / entry which has escaped assessment. This not stated in the order under Clause D of Section 148 of the Act. On this ground also, the said order dated 31st March 2023 is required to be quashed and set aside.
Further, there is a factually incorrect statement made in the order that the affidavit of Petitioner's brother that was submitted was not notarised when it was factually a notarised affidavit.
Further, in the impugned order, it is stated that the HDFC statement / document do not substantiate the credit worthiness and genuineness of the lender of the gift, i.e., brother of Petitioner. Mr. Gandhi states that if only Petitioner was called upon to submit, Petitioner would have submitted evidence towards credit worthiness of the brother because in the show cause notice issued, Petitioner was only directed to call upon to disclose the source from which he got money to pay for the flat. In over view, therefore,, on this ground also, the impugned order dated 31st March 2023 is required to be quashed and set aside.
Accordingly, we hereby quash and set aside the notice dated 15th March 2023 issued under clause (b) of Section 148-A of the Act, the impugned order dated 31st March 2023 issued under clause (d) of Section 148A of the Act and consequent notice dated 31st March 2023 issued under Section 148 of the Act.
Petition disposed. There shall be no order as to costs." 8. In the instant case, it is an undisputed fact that the Notice at Annexure - A dated 21.03.2022 is not signed either physically or digitally but the impugned notice also prescribes a period of six days, which is lesser than the minimum prescribed period of seven days as contemplated under Section 148A(b) of the IT Act. Under these circumstances, in the light of the judgment of this Court in Begur's case and the judgment of the Bombay High Court in Mukesh's case supra, I am of the considered opinion that the impugned notice at Annexure - A and also consequential proceedings, orders, notices, etc., deserves to be quashed by reserving liberty in favour of the respondents to take recourse to such remedies as available in law. 5. It was the submission that the notice issued u/s.148A(b) of the Act being invalid, the assessment order is liable to be annulled. 6. In reply, ld. Sr. DR drew my attention to page 2 of the paper book which is the Annexure to the notice u/s.148A(b) of the Act, wherein it is mentioned that the assessee is requested to furnish written submission with all supporting documents within 07 days from the date of receipt of the communication. It was submitted that more than 07 days has been given to the assessee.