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Facts
The Assessee, engaged in the business of a travelport commerce platform, received receipts from territories outside America and Canada, which were not offered to tax. The Revenue initiated reassessment proceedings under Section 147 of the Income Tax Act, 1961, for AY 2016-17, alleging escaped assessment.
Held
The Tribunal held that the notice issued under Section 148 of the Act was beyond the period of limitation as per the decisions of the Hon'ble Supreme Court and the Delhi High Court. Consequently, the reassessment proceedings were quashed.
Key Issues
Whether the notice issued under Section 148 of the Income Tax Act, 1961, for reassessment was barred by limitation, considering the period of limitation prescribed and subsequent judicial pronouncements.
Sections Cited
147, 144C(13), 148, 149, 148A(d), 148A(b), 148A(c)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, DELHI
The AO passed an order under Section 148A(d) of the Act on 19.07.2022. According to the Assessee, the same was beyond the period as stipulated for issuance of notice under Section 148 of the Act.
In the present case, the period of six years from the end of the assessment year for issuing a notice under Section 148 of the Act expired on 31.03.2020. Thus, in terms of Section 149 of the Act, a notice under Section Travelport Global Distribution System BV Vs. ACIT 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 was extended to 30.06.2021. The original notice under Section 148 of the Act was issued on 30.06.2021, which was the last date of expiry of the period of limitation.
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 the Supreme Court in 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 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), is required to be excluded. 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 available to the assessee to respond to the said notice is also required to be excluded by virtue of the Fourth Proviso to Section 149(1) of the Act, as applicable at the material time.
In the present case, the time period for issuance of notice under Section 148 of the Act expired on 16.06.2022. However, the impugned notice was issued on 20.07.2022, which is beyond the said period. Thus, the notice was beyond the period of limitation.
This court in Ram BalramBuildhome Pvt. Ltd. v. Income Tax Officer and Anr.: Neutral Citation No.: 2025:DHC:547-DB observed as under: -
“53. As is apparent from the plain language of the fourth proviso to Section 149(1) of the Act, it extends the period of limitation for issuing a notice under Section 148 of the Act so as to provide the AO a minimum of seven days to pass an order under Section 148A(d) of the Act. If the time available to the AO to decide whether it is a fit case for issuance of notice under Section 148 of the Act in terms of Section 148A(d) of the Act is less than seven days after excluding the period as provided under the third proviso, then the period of three years or ten years as prescribed is required to be extended by such period so as to make available to the AO at least seven days to pass an order under Section 148A(d) of the Act and issue a notice under Section 148 of the Act. Illustratively, if the show cause notice under Section 148A(b) of the Act is issued to an assessee, on the last date on which issuance of such a notice under Section 148 of the Act is permissible, that is, on the last day of expiry of three years from the end of the relevant assessment year or ten years from the end of the assessment year as the case may be, the time made available to Travelport Global Distribution System BV Vs. ACIT the assessee to respond to a notice under Section 148A(b) of the Act (being a minimum of seven days but not exceeding thirty days as provided in the notice plus such further time as extended pursuant to an application), is required to be excluded for the calculation of the period of three years or ten years as the case may be. And, an additional period of seven days is made available for the AO to pass an order. Thus, the period of limitation in such case would be three years (after excluding the time provided to the assessee to respond to the notice under Section 148A(b) of the Act) and seven days, or a period of ten years (after excluding the time provided to the assessee to respond to the notice under Section 148A(b) of the Act) and seven days as the case may be.
It is obvious, that in such a case, the AO would not have a time for passing an order under Section 148A(d) of the Act as stipulated under the said Clause, that is, one month from the end of the month in which the assessee furnishes a reply to the notices issued under Section 148A(b) of the Act. As noted above, the AO is required to complete the entire procedure for issuance of notice under Section 148 of the Act within the period as prescribed under Section 149 of the Act. Plainly, if the AO is unable to complete such procedure within the period of limitation, the AO would cease to have the jurisdiction to issue such a notice. *** *** ***
Thus, in the facts of the present case, the last date for issuance of notice under Section 148 of the Act for AY 2013-14 under the statutory framework, as was existing prior to 01.04.2021 was 31.03.2020, that is, six years from the end of the relevant assessment year.
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 30.06.20218. 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 Union of India &Ors. v. Ashish Agarwal 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 Union of India &Ors. v. Ashish Agarwal 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
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.”
Concededly, the said controversy is covered in favour of the Assessee by the decision of this court in Ram BalramBuildhome Pvt. Ltd. v. Income Tax Officer and Another (supra).
The present petition is, accordingly, allowed and all proceedings initiated pursuant thereto are set aside. The pending application is also disposed of.”
6. In the present case, the Ld. Counsel submitted the table computing
the period of limitation as per decision of Hon'ble Supreme Court in the case of Rajeev Bansal (supra), which has been followed by Hon'ble High
Court of Delhi in the case of Ram Balram Build Home (P.) Ltd. (Supra) and ADM Agro Industries Lature and Vizag (P.) Ltd. (supra), which is reproduced as under:-
Travelport Global Distribution System BV Vs. ACIT S. No. Particulars Date Phase 1 Time Limit for issuance of notice under Section 148 of 31st March 2021 Old regime for AY 2016-17 i.e. 4 years from end of relevant AY's 2 By virtue of TOLA', time limit extended till 30th June 2021 (for completion of any action which ought to be done between 20 March 2020 to 31 March 2021). 3 Pursuant to TOLA, Ld. AO issued notice u/s 148 of 30th June 2021 the Act for AY 2016-17 under Old Regime. 4 Notice dated 30th June 2021 issued u/s 148 of the - Act under Old Regime got quashed by decision of High Court of Delhi in case of Appellant (W.P.(C) 8198/2021) vide order dated 15th December 2021. High Court stated that aforesaid notice was issued without following the procedure as prescribed under Section 148A of the Act under New Regime and hence, re-assessment proceedings cannot be initiated. 5 Hon'ble Supreme Court in the case of Union of India vs. Ashish Agarwal [TS-339-SC-2022] vide order dated 04 May 2022, held that all notices issued under section 148 of the Old Regime during the TOLA period should be considered as valid and were deemed to be issued under section 148A(b) of the Act under New Regime. 6 Pursuant to Ashish Agarwal decision (supra), Ld. AO 02nd June 2022 issued fresh notice under Section 148A(b) of the Act under New Regime. 7 Response filed as required under Section 148A(c) of Reply dated 16th the Act. Also, submitted litigation history on this issue June, 2022 along with appellate orders. 8 Order u/s 148A(d) of the Act under New Regime 28th July 2022 passed alleging escapement of income. Notice u/s 148 of the Act under New Regime issued to 29th July 2022 Appellant requiring it to file ITR within a period of 30 days.
7. As per the Judgment of Hon’ble Supreme Court decision in case of Rajeev Bansal (supra), the notice u/s 148 of the Act was required to be issued on or before 23 June 2022. Therefore, the notice dated 29th July,
2022 is barred by limitation specified u/s 149 of the Act, consequently, the re-assessment proceedings initiated thereupon is hereby quashed.