NISHANT NARANG,DELHI vs. ITO WARD 36(1), DELHI

Shri Amit Goel, appearing on behalf of the assessee submits that the assessee in appeal has inter alia assailed the assessment proceedings on the ground of limitation. The ld. AR submits that the case of the assessee for AY 2013-14 was reopened beyond the period of three years to make the addition of less than Rs.50,00,000/-. The ld. AR furnish a chart giving vital dates to show that the notice issued notice u/s.148 of the Income Tax Act, 1961(hereinafter referred to as ‘the Act’) is time barred and the assessment proceedings arising from invalid notice are vitiated. The ld. AR vehemently stated that the case of the assessee is squarely covered by the decision of the Hon’ble Supreme Court of India in the case of UOI vs. Ashish Aggarwal, 138 taxmann.com 64.

Per contra, Shri Manoj Kumar, representing the department vehemently defending the impugned order prayed for dismissing appeal of the assessee.

Both sides heard, orders of the authorities below examined. The assessee in appeal has assailed validity of assessment proceeding on the ground that the reopening is bad in law as the notice issued u/s.148 of the Act is beyond the period of limitation. The date chart furnished by the assessee is as under:-

For the sake of completeness the manner of calculation of due date for issuance of notice u/s.148 of the Act as explained by Hon’ble Delhi High Court in the case of Ram Balram Buildhome Pvt. Ltd. vs. ITO, 171 taxmann.com 99 is reproduced herein below:-

By virtue of Section 3(1) of TOLA time for completion of specified acts, which fell during the period 20.03.2020 to 31.12.2020 were extended till 30.06.20212. Thus, the notice dated 01.06.2021 was issued twenty-nine days prior to the expiry of period of limitation for issuing a notice under Section 148 of the Act as was extended by TOLA. As noted above, the period from 01.06.2021, the date of issuance of notice, and 04.05.2022, being the date of decision of the Supreme Court in Ashish Agarwal (supra) is required to be excluded by virtue of the third proviso to Section 149(1) of the Act.

Additionally, the period from the date of decision in Ashish Agarwal (supra) till the date of providing material, as required to the accompanied with a notice under Section 148A(b) of the Act, is required to be excluded. Thus, the period between 04.05.2022 to 30.05.2022, the date on which the AO had issued the notice under Section 148A(b) of the Act in furtherance of his earlier notice dated 01.06.2021, is also required to be excluded by virtue of the third proviso to Section 149(1) of the Act as held by the Supreme Court in Rajeev Bansal (supra).

In addition to the above, the time granted to the petitioner to respond to the notice dated 30.05.2022 - the period of two weeks -is also required to be excluded by virtue of the third proviso to Section 149(1) of the Act. The petitioner had furnished its response to the notice under Section 148A(b) of the Act on 13.06.2022. Thus, the period of limitation began running from that date.

As noted above, by virtue of TOLA, the AO had period of twenty-nine days limitation left on the date of commencement of the reassessment proceedings, which began on 01.06.2021, to issue a notice under Section 148 of the Act. The said notice was required to be accompanied by an order under Section 148A(d) of the Act. Thus, the AO was required to pass an order under Section 148A(d) of the Act within the said twenty-nine days notwithstanding the time stipulated under Section 148A(d) of the Act. This period expired on 12.07.2022.

Since the period of limitation, as provided under Section 149(1) of the Act, had expired prior to issuance of the impugned notice on 30.07.2022. The said is squarely beyond the period of limitation.

It is contended on behalf of the Revenue that the AO is required to pass an order under Section 148A(d) of the Act by the end of the month following the month on which the reply to the notice under Section 148A(b) of the Act was received. Thus, the order under Section 148A(d) of the Act as well as the notice under Section 148 of the Act (both dated 30.07.2022) are within the prescribed period. This contention is without merit as it does not take into account that proceedings under Section 148A of the Act necessarily required to be completed within the period available for issuing notice under Section 148 of the Act, as prescribed under Section 149 of the Act. Thus, the time available to the AO to pass an order under Section 148A(d) of the Act was necessarily truncated and the same was required to be passed on or before 12.07.2022. The fourth proviso to Section 149 of the (A.Y.2013-14) Act did not come into play as the time period available for the AO to pass an order under Section 148A(d) of the Act was in excess of the seven days.

In view of the above, we find merit in Mr. Sehgal's contention that the impugned notice dated 30.07.2022 has been issued beyond the period of limitation.

The petition is accordingly allowed and the impugned order dated 30.07.2022 passed under Section 148A(d) of the Act; the impugned notice dated 30.07.2022 issued under Section 148 of the Act; and the assessment order dated 30.05.2023 framed under Section 147 of the Act pursuant to the notice dated 30.07.2022 for AY 2013-14, are set aside. Pending application is also disposed of.” (Emphasized by us) 6. Considering the time line of notice issued u/s.148 of the Act with reference to TOLA, I find that the notice issued by the AO u/s.148 of the Act dated 30.07.2022 is barred by limitation. Hence, the same is invalid. Any assessment proceedings consequent to invalid notice are vitiated. Accordingly, I find merit in the submissions of the AR of the assessee on jurisdictional issue. Accordingly, I have no hesitation in holding that the assessment made consequent to invalid notice u/s. 148 of the Act is non-est.

In the result, assessment order is quashed and appeal of the assessee is allowed.