The Delhi High Court has quashed the reassessment notice and order citing the limitation.
The bench of Justice Vibhu Bakhru and Justice Tushar Rao Gedela has observed that by virtue of Taxation and Other Laws (Relaxation and Amendment of Certain Provisions Act) (TOLA) 2021 (TOLA), the AO had period of twenty-nine days limitation left on the date of commencement of the reassessment proceedings, which began on 01.06.2021, to issue a notice under Section 148 of the Income Tax Act. The said notice was required to be accompanied by an order under Section 148A(d) of the Income Tax Act.
The assessee/petitioner is a company incorporated under the Companies Act, 1956. The petitioner claims that it has been regularly filing its return of income and had done so for the AY 2013-14 as well.
On 24.03.2020, the Government of India announced the nationwide lockdown (initially for a period of twenty-one days) in the wake of spread of the novel coronavirus (COVID-19) pandemic.
On 31.03.2020, the President of India promulgated the Taxation and Other Laws (Relaxation of Certain Provisions) Ordinance, 2020, whereby time limits as stipulated in respect of various actions and compliances, were extended. Thereafter, the Parliament enacted TOLA, which came into force with effect from 31.03.2020.
The Assessing Officer issued a notice under Section 148 of the Income Tax Act on the basis that he had reason to believe that the income of the Assessee chargeable to tax in respect of AY 2013-14 had escaped assessment within the meaning of Section 147. The reason to believe is the jurisdictional condition for issuance of such notices under the provisions for reassessment as existed prior to 01.04.2021. The Assessee responded to the notice disputing the validity of the notice.
The Assessee claimed that the notice was void ab initio as the necessary procedure as prescribed under Section 148A of the Income Tax Act was not followed.
The issue raised was whether the order and the notice were issued beyond the period as stipulated for passing such an order or issuance of such a notice.
The court held that the AO was required to pass an order under Section 148A(d) of the Income Tax Act within the twenty-nine days notwithstanding the time stipulated under Section 148A(d) of the Income Tax Act. This period expired on 12.07.2022.
The court noted that the time available to the AO to pass an order under Section 148A(d) of the Act was necessarily truncated and the same was required to be passed on or before 12.07.2022. The fourth proviso to Section 149 of the Income Tax Act did not come into play as the time period available for the AO to pass an order under Section 148A(d) of the Income Tax Act was in excess of the seven days.
The court allowed and the orde passed under Section 148A(d) of the Act; the notice issued under Section 148 of the Income Tax Act; and the assessment order dated 30.05.2023 framed under Section 147 of the Act pursuant to the notice dated 30.07.2022 for AY 2013-14, are set aside.
Case Details
Case Title: Ram Balram Buildhome Pvt. Ltd. Versus Income Tax Officer And Anr.
Case No.: W.P.(C) 16232/2024 & CM APPL. 68188/2024
Date: 30.01.2025
Counsel For Petitioner: Keshav Sehgal
Counsel For Respondent: Sr. Advocate Aseem Chawla
