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Facts
The assessee, a charitable trust, challenged the reassessment proceedings for AY 2014-15 initiated by a Section 148 notice issued on 28-06-2021, following a search conducted in 2018. The assessee filed a writ petition in Delhi High Court. Subsequent to the Supreme Court's Ashish Agarwal judgment, the AO issued further Section 148A(b) notices without providing full information and later issued a final Section 148 notice on 30-08-2022.
Held
The Tribunal, relying on the Supreme Court's Rajeev Bansal judgment, determined that the extended due date for issuing the Section 148 notice was 17-06-2022. Since the notice was actually issued on 30-08-2022, it was barred by limitation. Consequently, the reassessment proceedings were quashed as void ab initio.
Key Issues
Whether the reassessment notice issued under Section 148 of the Income Tax Act on 30-08-2022 for AY 2014-15 was barred by limitation, in light of the Supreme Court's decisions regarding extended timelines during the transitional period of reassessment.
Sections Cited
147, 144, 12AA, 139(1), 132, 148, 142(1), 148A(b), 148A(d), 151, 149(1), 3(1) of TOLA
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Income Tax Appellate Tribunal, DELHI BENCH “G”: NEW DELHI
Before: SHRI CHALLA NAGENDRA PRASAD & SHRI M. BALAGANESH
O R D E R PER M. BALAGANESH, A. M.:
AY 2014-15, arise out of the order of the National Faceless Appeal Centre (in short ‘NFAC)/Commissioner of Income Tax (Appeals), Delhi [hereinafter referred to as ‘ld. CIT(A)’, in short] in Appeal No.NFAC/2013-14/10286835 dated 27.01.2025 against the order of assessment passed u/s 147 r.w.s. 144 of the Income-tax Act, 1961 (hereinafter referred to as ‘the Act’) dated 30.05.2023 by the NaFAC (hereinafter referred to as ‘ld. AO’).
Ground Nos. 1 to 5 raised by the assessee are 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 perused the material available on record. The assessee is a public charitable trust carrying on various educational and charitable activities. The trust is duly registered under section 12AA of the Act vide order dated 5-8-2005 and registration granted with effect from 25-11-2004. The return of income for AY 2014-15 was filed by the assessee u/s 139(1) of the Act 29.9.2014 declaring total income of Rs Nil. Search was conducted on 9.1.2018 u/s 132 of the Act in the case of Anandilal & Ganesh Podar Society, M/s Podar Education Trust and M/s Podar Education & Sports Trust. The Jurisdictional Assessing Officer issued first notice under section 148 of the Act on 28-06-2021. The assessee filed Writ Petition in WP(C ) 9379 / 2021 before the Hon’ble Delhi High Court challenging the first notice issued under section 148 of the Act on 28- 06-2021. On 25-11-2021, the Assessing Officer issued notice under section 142(1) of the Act. The Hon’ble Delhi High Court passed an order on 1-9- 2021 on the Writ Petition filed by the assessee along with others, restraining the revenue from continuing with the reassessment proceedings in any manner pursuant to the aforesaid notice under section 148 of the Act. On 21- 03-2022, the assessee submitted its reply before the learned AO in response to show cause notice issued under section 142(1) of the Act dated 25-11-2021 along with the Hon’ble Delhi High Court order dated 16-03-2022 intimating the learned AO that the reassessment proceedings could not be proceeded with.
The decision of the Hon’ble Supreme Court in the case of Ashish Agarwal reported in 444 ITR 1 (SC) was delivered on 4-5-2022. On 27-05- 2022, the learned AO issued a letter for subsequent proceedings with reference to section 148A(b) of the Act without providing the relevant information and documents to the assessee. The assessee was given two weeks time to respond to the said notice i.e. on or before 10-6-2022. On 31-5- 2022. the assessee in response to notice issued under section 148A(b) of the Act dated 27-05-2022 requested for copy of the documents/ materials/ evidences on which the learned AO was placing reliance. The assessee also requested before the Learned AO that the period of two weeks time is to be reckoned from the date on which the relevant information / documents/ materials / evidences relied upon by the Learned AO were handed over to the assessee. On 06-06-2022, the assessee again requested for a copy of the documents/material/evidences on which the Learned AO was placing reliance in response to a letter issued under Section 148A(b) of the Act dated 27-05- 2022. On 15-06-2022, the assessee again requested for the same. No documents / materials / evidences were ever furnished to the assessee by the Learned AO.
On 30-6-2022, the Learned AO without disposing of the notice issued under Section 148A(b) of the Act on 27-5-2022, issued a fresh notice under Section 148A(b) along with information on 30-6-2022. On 30-6-2022, the Learned AO again issued a notice under Section 148A(b) of the Act to the Assessee without providing the copy of approval order under Section 151 of the Act.
The Learned AR before us submitted that the aforesaid show cause notices are time barred as per para 106 of the judgement of the Hon’ble Apex Court in the case of Union of India vs Rajeev Bansal in Civil Appeal No. 8629 of 2024 dated 3-10-2024 reported in 167 taxmann.com 70 (SC) . The relevant operative portion of the judgement in Rajeev Bansal supra is reproduced below:-
In Ashish Agarwal (supra), this Court directed the assessing officers to provide relevant information and materials relied upon by the Revenue to the assesses within thirty days from the date of the judgment. A show cause notice is effectively issued in terms of Section 148A(b) only if it is supplied along with the relevant information and material by the assessing officer. Due to the legal fiction, the assessing officers were deemed to have been inhibited from acting in pursuance of the Section 148A(b) notice till the relevant material was supplied to the assesses. Therefore, the show cause notices were deemed to have been stayed until the assessing officers provided the relevant information or material to the assesses in terms of the direction issued in Ashish Agarwal (supra). To summarize, the combined effect of the legal fiction and the directions issued by this Court in Ashish Agarwal (supra) is that the show cause notices that were deemed to have been issued during the period between 1 April 2021 and 30 June 2021 were stayed till the date of supply of the relevant information and material by the assessing officer to the assessee. After the supply of the relevant material and information to the assessee, time begins to run for the assesses to respond to the show cause notices.
On 30-8-2022, the Jurisdictional AO without considering or appreciating the facts of the case passed an order under Section 148A(d) of the Act without following the proper procedure prescribed under the new regime of section 148A of the Act. Later the Jurisdictional AO issued the second notice under Section 148 of the Act on 30-8-2022. Now the short question that arises for our consideration is as to whether the second reopening notice issued under section 148 of the Act on 30-8-2022 is barred by limitation or not?
To answer this question, the decision given in Para 112 of the decision of the Hon’ble Supreme Court in Rajeev Bansal case supra comes to our assistance. The relevant operative portion of the order is reproduced below:-
Let us take the instance of a notice issued on 1 May 2021 under the old regime for a relevant assessment year. Because of the legal fiction, the deemed show cause notices will also come into effect from 1 May 2021. After accounting for all the exclusions, the assessing officer will have sixty-one days [days between 1 May 2021 and 30 June 2021] to issue a notice under section 148 of the new regime. This time starts ticking for the assessing officer after receiving the response of the assessee. In this instance, if the assessee submits the response on 18 June 2022, the assessing officer will have sixty-one days from 18 June 2022 to issue a reassessment notice under section 148 of the new regime. Thus, in this illustration, the time limit for issuance of a notice under section 148 of the new regime will end on 18 August 2022.
Now let us apply the aforesaid decision to the facts of the instant case before us. For this, the following dates would be relevant:-
A. Date of original notice under section 148 28-6-2021 B. Time remaining till 30-6-2021 2 days C. Date of last reply to notice issued under section 148A(b) by Assessee 15-6-2022 D. Extended date by which notice should have been issued Under section 148 as per Ashish Agarwal & Rajeev Bansal ( C + B) 17-6-2022 E. Actual date of issuance of notice under section 148 30-8-2022
Hence, in view of the observations 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 17-06-2022 and since, the notice u/s 148 of the Act is issued on 30-8-2022, 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 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.”
Respectfully following the said decision, we hold that the notice issued u/s 148 of the Act on 30-8-2022 is barred by limitation. Accordingly, Ground Nos. 1 to 5 raised by the assessee are allowed.
Since, reopening of assessment has been quashed, the adjudication of the other grounds raised by the assessee becomes academic in nature and they are left open.
In the result, the appeal of the assessee is allowed.
Order pronounced in the open court on 03/09/2025.