Delhi High Court Upholds Reassessment, Says Defect In 7-Day Notice Under Income Tax Act Stood Cured By Corrigendum

The Delhi High Court has upheld reassessment proceedings against an taxpayer for Assessment Year 2018–19, holding that the defect of granting less than seven days to respond to a notice under Section 148A(b) of the Income Tax Act stood cured by a corrigendum issued within the limitation period.

A Division Bench of Justices V. Kameswar Rao and Vinod Kumar rejected the petitioner's challenge that the notice was invalid for providing only six days to respond, contrary to the statutory requirement of “not less than seven days”.

Rejecting this contention, the Court noted that the Assessing Officer (AO) had subsequently issued corrigenda extending the time for filing a reply. The corrigendum dated March 31, 2022 extended the deadline to April 2, 2022, thereby ensuring compliance with the statutory requirement.

“Even though the minimum period of seven days has not been granted initially, on a conjoint reading of the notice dated 22.03.2022 and the corrigendum dated 31.03.2022, the time to file reply to the notice dated 22.03.2022 has been extended till 02.04.2022. The same has the effect of correcting the error made by the AO in granting less than seven days to the assessee to file reply, bringing it in conformity with the statute,” it said.

The Court held that such a corrigendum, issued within the limitation period, effectively cures the defect in the original notice. It observed that the initial shortfall in granting time was merely an arithmetical error and could be rectified without invalidating the proceedings.

The Bench further reasoned that if the AO was empowered to withdraw the defective notice and issue a fresh notice within limitation, there was no legal impediment to correcting the defect through a corrigendum issued within the permissible time frame.

“While granting the initial time to the assessee to file the reply, i.e., till 28.03.2022, the AO has made an arithmetical error, i.e., he took into consideration the date of issuing the notice, i.e. 22.03.2022 while calculating the seven days period. It is the case of the Revenue that the AO noticed this mistake, and by way of the corrigenda attempted to correct the same. When the AO is not precluded from withdrawing the notice dated 22.03.2022 and issuing a fresh notice within the limitation period of 31.03.2022, thereby granting time of not less than seven days to file the reply, he would also have the power to correct his mistake by way of a corrigendum, as long as such corrigendum is issued within the period of limitation period, thus has the effect of correcting the error in the notice dated 22.03.2022,” it said.

The Court also rejected other challenges raised by the petitioner, including those relating to jurisdiction and approval by the competent authority, holding that the proceedings were validly initiated.

As such, the Court dismissed the petition and upheld the reassessment proceedings.

For Petitioner: Advocates Rohit Jain and Samarth Chaudhari

For Respondent: SSC Vipul Agrawal, JSCs Sakshi Shairwal, Akshat Singh, Harshita Katru and Gorang Ranjan