Time Granted To Assessee For Reply Must Be Excluded While Computing Reassessment Limitation: Delhi High Court

The Delhi High Court has reiterated that while computing the limitation period for reassessment proceedings under the Income Tax Act, the time granted to an assessee to respond to a notice issued under Section 148A(b) must be excluded in terms of the fifth and sixth provisos to Section 149.

Applying this principle, the Division Bench of Justices Dinesh Mehta and Vinod Kumar dismissed a writ petition challenging reassessment proceedings as time-barred, holding that the order passed under Section 148A(d) and the consequential notice under Section 148 were issued well within the prescribed limitation period.

The petitioner-assessee had mounted his challenge against the order dated April 16, 2024 passed under Section 148A(d) and the notice issued under Section 148 of the Income Tax Act, 1961.

It was contended that the reassessment proceedings had become barred by limitation because the notice under Section 148A(b) was issued on March 28, 2024, granting time until April 8, 2024 to respond, which extended beyond March 31, 2024.

Petitioner subsequently sought adjournments on April 5 and April 15, 2024, following which the Assessing Officer passed the order under Section 148A(d) and issued the notice under Section 148 on April 16, 2024.

The Court referred to its judgment delivered in Shailendra Nath Rai v. Assistant Commissioner of Income Tax, wherein it had interpreted the fifth and sixth provisos to Section 149. It reiterated that the period available to an assessee to file a reply to a notice under Section 148A(b), including any extended time, is required to be excluded while computing the limitation period for issuance of a notice under Section 148.

Applying that principle to the facts of the present case, the Court noted that although the petitioner had sought adjournments, no reply was ultimately filed. It therefore treated April 15, 2024, the date on which the Assessing Officer rejected the second request for adjournment, as the deemed date of filing the reply.

It observed that after rejecting the request for adjournment on April 15, the Assessing Officer passed the order under Section 148A(d) and issued the notice under Section 148 on the very next day, April 16, 2024.

“The last date for passing order under Section 148A(d) of the Act of 1961 and issuing notice under Section 148 was therefore 7 days from 15.04.2022, i.e. 22.04.2024. Since the order under Section 148A(d) and notice under Section 148 have admittedly been issued on 16.04.2024, the same are well within limitation,” it held.

As such, the writ petition was dismissed.

For Petitioner: Senior Advocate Salil Aggarwal,with Advocate Madhur Aggarwal

For Respondent: Puneet Rai, SSC Mr. Siddhartha Sinha, SSC and Ms. Easha Gurung, JSC