Reassessment Notice issued behind Period Prescribed u/s 149 of Income Tax Act is invalid: Supreme Court dismisses SLP [Read Order]

The Supreme Court has upheld that the reassessment notice issued behind the period prescribed under section 149 of the Income Tax Act, 1961 is invalid and dismissed the SLP which arose out of impugned final judgment and order passed by the High Court of Delhi.

Raminder Singh, the petitioner challenged a notice issued under Section 148 of the Income Tax Act 1961 for reopening the assessment for the Assessment Year 2019-2020.                             

The High Court observed that the notice under Section 148 of the Income Tax Act (accompanied by an order under clause (d) of Section 148A of the Act) is required to be issued within the period of three years from the end of the relevant assessment year if the income escaping assessment is less than ₹50,00,000/-.  

The sixth proviso to Section 149(1) of the Act makes it amply clear that if the time available to the Assessing Officer to pass an order under Clause (d) of Section 148A is truncated to less than 7 days on account of the period of limitation available for issuing a notice under Section 148, the same shall be extended for the said period. 

It was further observed that the period of one month from the end of the month in which the time available to the assessee to respond to the notice under Clause (b) of Section 148A expires, is available to the Assessing Officer to pass an order under clause (d) of Section 148A of the Act only within the rubric of Section 149 of Act, that is, within the overall time available in terms of Section 149(1) of the Act for issuance of a notice under Section 148 of the Act. This is because a notice under Section 148 of the Act which is not accompanied with the order under Clause (d) of Section 148 of the Act would be non-compliant with the Act. And, no such notice can be issued beyond the period as specified under Section 149(1) of the Act. 

A two-judge bench of Justice B V Nagarathna and Justice Ujjal Bhuyan held that “However, the pendency of these special leave petitions would not come in the way of the A.O. passing orders pursuant to the issuance of notice under Section 148A of the Income Tax Act, 1961. It is needless to observe that the said order shall be subject to the result of these petitions.”

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