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Facts
The revenue appealed an order related to AY 2014-15, and the assessee filed a cross-objection. The core issue was the validity of the assumption of jurisdiction under Section 147 of the Income Tax Act, specifically if the notice under Section 148 was barred by limitation.
Held
The Tribunal held that the notice issued under Section 148 of the Act on 26-07-2022 was barred by limitation, following the Supreme Court's decision in Union of India vs. Rajeev Bansal. Consequently, the reopening of assessment was quashed.
Key Issues
Whether the notice issued under Section 148 of the Income Tax Act, 1961, for reopening assessment for AY 2014-15, was issued beyond the period of limitation.
Sections Cited
147, 148, 144B, 148A, 149, 151
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, DELHI BENCH “C”: NEW DELHI
Before: SHRI M. BALAGANESH & SHRI SUDHIR KUMAR
of the National Faceless Appeal Centre (NFAC), Delhi [hereinafter referred to as „ld. NFAC, in short] in Appeal No. ITBA/NFAC/S/250/2024- 25/1071406478(1) dated 20.12.2024 against the order of assessment passed u/s 147 r.w.s. 144B of the Income-tax Act, 1961 (hereinafter referred to as „the Act‟) dated 27.05.2023 by the Assessing Officer, Assessment Unit, Income Tax Department (hereinafter referred to as „ld. AO‟). Identical issue is involved in both these appeals and hence they are taken up together and disposed of by this common order for the sake of convenience.
At the outset, we find that the Cross Objections preferred by the assessee is delayed by 33 days. Considering the reason adduced in the condonation petition, we are inclined to condone the delay and admit the Cross Objection of the assessee for adjudication.
The Ground No. 2 raised by the assessee is challenging the validity of assumption of jurisdiction u/s 147 of the Act, wherein, it has been pleaded that the notice u/s 148 of the Act is barred by limitation. This goes to root the matter and hence, is taken up first for adjudication.
We have heard the rival submissions and peruse the materials available on record. We find that the assessee had challenged the validity of assumption of jurisdiction by the Learned AO under section 147 of the Act. The Learned AR before us argued that the notice issued under section 148 of the Act is barred by limitation in view of the decision of the Hon‟ble Supreme Court in the case of Union of India vs Rajeev Bansal reported in 469 ITR 46 (SC). In support of this proposition, the Learned AR placed on record the table containing the list of dates and events as under:-
A. Key Facts
S. Particulars Date Relevant Pg. No. No. of Paperbook Notice issued u/s 148 (unamended 30.06.2021 Page 19 1. provisions prior to Finance Act, 2021) 2. Letter communicating information 26.05.2022 Page 42-43 with reference to section 148A(b) pursuant to SC decision in Ashish Agarwal 3. Reply filed by the assessee 09.06.2022 Page 49-90 4. Order u/s 148A(d) 26.07.2022 Page 110-115 5. Notice issued u/s 148 (amended 26.07.2022 Page 116-117 provisions post Finance Act, 2021)
B. Computation of limitation as per decision of UOI vs. Rajeev Bansal: S. Particulars Particulars SC Paras No. Assessment Year 2014-15 1. Period of limitation u/s 149 [3 years or 6 2. years] 6 years 3. Original Period of limitation u/s 149 31.03.2021 4. Extended period of limitation as per Income 30.06.2021 Paras 65-69 Tax Act read with TOLA 5. Sanction to be obtained u/s 151 till PCIT 30.06.2021 [within 6 years] Date of original notice u/s 148 - deemed SCN 30.06.2021 6. u/s 148A(b) 7. Time surviving from date of issuance of 1 day Paras 109- deemed SCN till expiry of period as extended 113 by TOLA [from 30.06.2021 till 30.06.2021] 8. Period of deemed stay to be excluded as per Paras 105- 30.06.2021 fifth proviso to section 149 [Date of Original to 107 148 till extended time allowed to file reply to 09.06.202 assessee] 2 9. Last date for issuing notice u/s 148 10.06.2022 Para 111- [09.06.2022 + 1 day] 113 Further extension as per sixth proviso to section 149 [time period extended to 7 days] 16.06.2022 10. Actual date of issuance of notice u/s 148 26.07.2022 11.
Hence, notice u/s 148 of the Act issued on 26.07.2022 is Para 111- barred by Limitation 113 Page | 3
Hence, in view of the decision of the Hon'ble Supreme Court in the case of Rajeev Bansal (supra), the extended due date for issuance of notice u/s 148 of the Act expired on 10-06-2022 and since, the notice u/s 148 of the Act is issued on 26-7-2022, the said notice is to be treated as barred by limitation and consequentially reassessment proceedings would be liable to be quashed as void ab initio. This issue was also subject matter of consideration by the Hon‟ble Jurisdictional High Court in the case of Ram Balram Buildhome Vs. ITO & Anr reported in 445 ITR 1 (Del) dated 30.01.2025. Relevant operative portion of the said order is reproduced herein below:-
“65. 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 30.06.2021 [Notification No.38/21 dated 27.04.2021]. 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. 67 Additionally, the period from the date of decision in Union of India & Ors. v. Ashish Agarwal2 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 Union of India & Ors. v. Rajeev Bansal4.
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 Page | 4 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 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.” Page | 5
Respectfully following the said decision, we hold that the notice issued u/s 148 of the Act on 26-7-2022 is barred by limitation. Accordingly, the Ground No. 2 raised by the assessee in his Cross Objection is allowed.
Since, reopening of assessment has been quashed hereinabove, the adjudication of the other grounds raised by the assessee in the Cross Objection and the grounds raised by the revenue becomes academic in nature and they are left open.
In the result, the Cross Objection of the assessee is allowed and appeal of the revenue is dismissed.