The Delhi High Court has quashed the 2nd Assessment Notice which was issued beyond 4 years i.e. beyond the limitation period.
The bench of Justice Vibhu Bakhru and Justice Tejas Karia has observed that the period of limitation for issuance of notice under Section 148 of the Income Tax Act was four years from the end of the relevant assessment year.
The bench found that the second section 148 notice has been issued beyond the period of limitation. Thus, without going into the question whether the second section 148 notice is invalid as it was issued when the proceedings for reassessment of income for the relevant assessment year had commenced pursuant to the notice issued under Section 153C of the Income Tax Act, all proceedings continued pursuant thereto are required to be set aside.
The Assessee had filed her return of income for assessment year [AY] 2016-17 on 30.07.2016. On 23.06.2021, the AO issued a notice under Section 148 of the Act [the first section 148 notice] seeking to reopen the assessment for AY 2016-17.
Several petitions were filed challenging such notices that were issued after 31.03.2021 but by following the regime for reassessment that existed prior to 31.03.2021. This court as well as several other High Courts set aside such notices on the ground that the procedure as prescribed under Section 148A of the Act was not followed.
The AO issued a notice under Section 153C of the Act, which was premised on a note that recorded the satisfaction regarding the material found during the search conducted in the case of Alankit Group and related entities. The Assessee filed her return of income in response to the notice on 09.07.2022.
Although, the AO had commenced the proceedings under Section 153C of the Act in respect of block of assessment years, which included AY 2016-17, it nonetheless proceeded to pass an order dated 14.07.2022 under Section 148A(d) of the Act holding that it was a fit case for issuance of a notice under Section 148. On the same date, the AO also issued a notice under Section 148 [the second section 148 notice]. The Assessee filed her objections dated 31.08.2022 to the second section 148 notice.
The Assessee received a communication, informing the Assessee that there may be duplicate proceedings considering that the first section 148 notice had been issued under the statutory provisions of Section 147 to 151 that were in force prior to 31.03.2021 and subsequently the second section 148 notice was issued. Since there were two e-Proceedings for the same assessment year, the earlier proceeding was rendered redundant and closed.
The court held that the first section 148 notice – which was directed to be considered as a notice under Section 148A(b) of the Income Tax Act in terms of the decision of the Supreme Court in Union of India & Ors. v. Ashish Agarwal – was issued on 23.06.2021 as the last date for issuing a notice under Section 148 of the Act in this case had expired on 31.03.2021.
Case Details
Case Title: Pratishtha Garg Versus ACIT
Case No.: W.P.(C) 16681/2024
Date: 25.03.2025
Counsel For Petitioner: Mr. Sumit Lalchandani, Mr. Salil Kapoor, Mr. Tarun Chanana & Ms. Ananya Kapoor, Advs.
Counsel For Respondent: Mr. Gaurav Gupta, Mr. Shivendra Singh & Mr. Yojit Pareek, Advs.
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