In a recent case, the Bombay High Court has quashed the notice issued under section 148 of the Income Tax Act, 1961 which was issued beyond the period specified under section 149(1) of the Act .
Gurpreet Singh,the Petitioner filed his return of income for the Assessment Year (“AY”) 2013-14 on 31/03/2014 declaring an income of Rs.37,17,840/- (Rupees Thirty Seven Lakh Seventeen Thousand Eight Hundred Forty Only). The Petitioner was selected for scrutiny by issuance of notice under Section 143(2) of the Income Tax Act, 1961 ( “theIncome Tax Act”). After detailed inquiries through notices under Section 142(1) of the Act, the assessment was completed by an order dated 23/02/2016 passed under Section 143(3) of the Act by the Assistant Commissioner of Income Tax, Circle 53(1) New Delhi, at the assessed income of Rs.60,60,370/- (Rupees Sixty Lakh Sixty Thousand Three Hundred Seventy Only).
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On 31/03/2020 the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 (“the TOLA”) was enacted. As a result, the time limit for completion or compliance of actions under the Act that were due for completion or compliance during the period from 20/03/2020 and 31/12/2020 was extended to 31/03/2021. Respondent No.2 vide Notification dated 31/03/2021 further extended the aforesaid time limit beyond 31/03/2021 till 30/04/2021.
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The Petitioner challenged the Notice dated 29/07/2022 issued by the Respondent No.1 under Section 148 of the Act for AY 2013-14, the Assessment Order dated 29/05/2023 passed by the Respondent No.3 along with other ancillary challenges. Income Tax was argued that the notice under section 148 of the Act seeking reassessment for the AY 2013-14 is time barred as per proviso of Section 149 of theIncome Tax Act. In support of the said ground,Income Tax is contended that in Ashish Agarwal (supra), the Supreme Court only brought notices issued under Section 148 of theIncome Tax Act from 01/04/2021 to 30/06/2021 within the ambit of reassessment but the same could not be construed to mean that the notices issued after 01/04/2021 in respect of AY 2013-14 which became time barred after 31/03/2021 could come out of the rigour of first proviso of substituted Section 149.
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The court found that a notice under Section 148 of the Income Tax Act accompanied by an order under Section 148A(d) is required to be issued within the time stipulated under Section 149 of the Income Tax Act. Section 148A(d) does not govern the computation of time as contemplated in terms of Section 149 of the Income Tax Act. The entire process under Section 148A(a) to (d) and the issuance of notice under Section 148 has to be completed within the total time available in terms of Section 149(1) of the Income Tax Act for issuance of notice under Section 148.
It was evident that the notice under Section 148A of theIncome Tax Act issued on was held to be beyond limitation. A division bench of Justice A.S. Chandurkar & Justice Nivedita P. Mehta held that the notice dated 29/07/2022, issued by Respondent no.1 under Section 148 of the Income Tax Act is beyond the time period specified under Section 149(1) of the Income Tax Act and quashed the same.
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