Supreme Court Dismisses Income Tax Dept Plea Against Telangana HC Ruling On Time-Barred Reassessment Notices

The Supreme Court has dismissed a Special Leave Petition filed by the Income Tax Department against a common Telangana High Court judgment setting aside reassessment notices issued against several taxpayers as time-barred.

The plea challenged a common judgment of the Telangana High Court, which endorsed the Delhi High Court's view that mere generation or signing of a reassessment notice does not amount to issuance and that a notice is issued only when it is dispatched

The Bench of Justice Manoj Misra and Justice Manmohan dismissed the petition filed by Revenue against Man Mohan Agarwal (HUF). The Court noted that an earlier special leave petition arising from the same High Court order had already been dismissed.

The case arose from a common order of the Telangana High Court in a batch of writ petitions. A Division Bench of Justice P. Sam Koshy and Justice N. Tukaramji had allowed the petitions. It set aside reassessment notices issued under Section 148 of the Income Tax Act, 1961. The notices were held to be barred by limitation.

The High Court examined notices dated March 31, 2021. It found that they were electronically dispatched on or after April 1, 2021. The court held that mere generation or signing of a notice on March 31 was not enough.

It ruled that issuance is complete only when the notice is dispatched. The notice must also leave the control of the Income Tax Department's electronic system. Since the notices were dispatched after April 1, 2021, they were held to be time-barred and were quashed.

By dismissing the present special leave petition, the Supreme Court left the High Court's ruling undisturbed.

For Petitioners: Advocate Madhulika Upadhyay, AOR, N Venkataraman, A.S.G., V C Bharathi, Udai Khanna, Sarthak Karol, Padmesh Mishra, Varun Chug, Advocates

Click Here To Read Telangana High Court Order