Notice u/s 148 of Income Tax Act Issued Beyond Limitation Period: Delhi HC Sets Aside Proceedings [Read Order]
After excluding the time for material provision and response, the court found that the order was passed beyond the allowed time frame and, therefore, invalid.
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In a recent ruling the High Court of Delhi,set aside the reassessment proceedings for Assessment Year (AY) 2014-15, holding that the notice issued under Section 148 of the Income Tax Act,1961 on 23.06.2021 was beyond the prescribed limitation period. Saroj Mehndi,petitioner-assessee,challenged the reassessment proceedings for AY 2014–15, stating that the notice issued on 23.06.2021...
In a recent ruling the High Court of Delhi,set aside the reassessment proceedings for Assessment Year (AY) 2014-15, holding that the notice issued under Section 148 of the Income Tax Act,1961 on 23.06.2021 was beyond the prescribed limitation period.
Saroj Mehndi,petitioner-assessee,challenged the reassessment proceedings for AY 2014–15, stating that the notice issued on 23.06.2021 under Section 148 was invalid as it followed the old law, which had changed after 31.03.2021. The Delhi High Court in Mon Mohan Kohli v. ACIT had earlier quashed similar notices.
However, the Supreme Court in Union of India v. Ashish Agarwal allowed such notices to be treated as issued under Section 148A(b) and permitted the Assessing Officer (AO) to share the necessary information. The AO provided the material on 26.05.2022 and gave two weeks to respond, but the petitioner did not file a reply.
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The AO later passed an order under Section 148A(d) on 11.07.2022, which the petitioner claimed was beyond the limitation period.
The Division Bench of Justice Vibhu Bakhru and Justice Tejas Karia noted that in this case, the time limit to issue a notice under Section 148 for AY 2014–15 expired on 31.03.2021, but it was extended to 30.06.2021 by TOLA. The notice was issued on 23.06.2021, within the extended period.
Following the Supreme Court’s decision in Ashish Agarwal, this notice was treated as one under Section 148A(b), and additional time was granted to provide material and allow a reply. As clarified in Rajeev Bansal, the period from the date of the original notice till 04.05.2022, along with the time taken to provide material and reply, had to be excluded while calculating the limitation.
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After excluding those periods, the AO had time till 18.06.2022 to pass the order, but it was issued on 11.07.2022—beyond the allowed time. Since the order was passed after the limitation period, it was held to be invalid.
The issue was already settled in favour of the petitioner in Ram Balram Buildhome Pvt. Ltd. v. ITO. The court allowed the petition and set aside the proceedings.
To Read the full text of the Order CLICK HERE
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