Patna HC Holds Income Tax Reassessment Notice Valid as Initial Notice Falls Within Limitation Period [Read Order]

The Patna High Court reassessment notice issued under Section 148A(b) of the Income Tax Act,1961 was valid, as the initial notice dated 28.03.2024 fell within the three-year limitation period under Section 149(1)(a) for AY 2020–21.

Chandra Shekhar,petitioner-assessee,received a notice under Section 148A(b) of the Income Tax Act, on 28.03.2024 for the assessment year 2020-21. He submitted his reply on 31.03.2024. A second notice was issued on 22.04.2024, and he responded on 25.04.2024. Despite this, an order under Section 148A(d) was passed on 30.04.2024.He challenged the notices and order dated 30.04.2024, stating that the proceedings were premature.

The petitioner's counsel argued that the Assessing Officer(AO) had no authority to reopen the case for the year 2020-21 after 31.03.2024. He stated that the second notice dated 22.04.2024, the reply on 25.04.2024, and the order and notice issued on 30.04.2024 were all issued beyond the time limit under Section 149(1)(a) of the  Act.

He relied on the Supreme Court’s judgment in Union of India v. Rajeev Bansal, decided on 3rd October 2024, and referred to key paragraphs of that ruling. He also said the second notice dated 22.04.2024 should be considered for calculating the time limit, not the earlier one dated 28.03.2024.

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The respondent’s counsel said the first notice was issued on 28.03.2024, before the deadline of 1st April 2024, so it was within time. The petitioner replied on 31.03.2024 asking for some information, which led to a second notice on 22.04.2024. After the petitioner’s reply on 25.04.2024, the final order was passed on 30.04.2024.

He argued that the process began with the first notice, not the second one, and all steps taken were within the time limit under the law.

The division bench of Justice P.B.Bajanthri and Justice Sunil Dutta Mishra considered whether the AO had the authority to issue a reassessment notice for the year 2020–21. It noted that the first notice under Section 148A(b) was issued on 28.03.2024, which was within the three-year time limit under Section 149(1)(a).

The petitioner argued that the limitation should be counted from the second notice dated 22.04.2024. However, the court found that this second notice was only issued in response to the petitioner’s earlier reply dated 31.03.2024, where more information was requested. Since the reassessment proceedings had already started with the first notice, the second notice did not affect the limitation period.

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The court also noted that the petitioner relied on the Rajeev Bansal judgment, which dealt with Section 149(1)(b), not relevant to this case. Here, the issue was under Section 149(1)(a), and the first notice was well within the allowed time.

It concluded that, based on the law and the facts, the notice dated 28.03.2024 was valid and the AO had the jurisdiction to proceed.

The bench found the writ petition premature and disposed of it, allowing the petitioner to participate in the ongoing proceedings and cooperate with the department.

To Read the full text of the Order CLICK HERE

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