Mandatory 7-Day Compliance Period in S. 148A(b) Income Tax Notice Non-Negotiable: Karnataka HC Follows Venkatala Iyyappa Rajanna Case [Read Order]

The Karnataka High Court denied a writ appeal filed by the Income Tax Department against single court ruling quashing reassessment proceedings commenced against an assessee.

The controversy arose when the Assessing Officer issued a notice under Section 148A(b) for reopening of the assessment against Smt Praveena Kumari. The assessee challenged the notice before the Single Judge on the ground that the time given for compliance was less than seven days.

Relying upon a decision of the Division Bench of this Court in Income Tax Officer v. Venkatala Iyyappa Rajanna (supra), the Single Judge not only invalidated the notice under Section 148A(b) but also set aside any consequential steps. This includes the order under Section 148A(d), the notice issued under Section 148, the assessment established under Section 147 read with Section 144 and penalty notices issued under Section 271AAC(1) and 272A(1)(d) of the Act.

The Revenue was not happy with the quashing and went in for a Division Bench. The Revenue's standing counsel argued that the seven days' time limit was only "directory" and not "mandatory". It was submitted that although Section 148A provides for extension of time upto thirty days, initial term of less than seven days does not undermine the jurisdiction of the officer to serve notice.

The High Court rejected the plea of the Revenue and observed that the identical point of law has previously been exhaustively resolved by a Coordinate Division Bench in Venkatala Iyyappa Rajanna (W.A. No. 612 of 2025). By that important case it was clearly established that a notice under Section 148A(b) is not sustainable if the time given for compliance is less than seven days.

The Division Bench of Dr. Justice K. Manmadha Rao, Justice S.G. Pandit held that if the first notice is quashed on this ground, the subsequent decisions including the reassessment and penalty notices immediately become unsustainable. The Division Bench dismissed the appeal of the Revenue and said there was no basis to differ from the earlier verdict.

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