Full Text
HIGH COURT OF DELHI
Date of Decision: 25.03.2025
PRATISHTHA GARG .....Petitioner
Through: Mr. Sumit Lalchandani, Mr. Salil Kapoor, Mr. Tarun Chanana & Ms. Ananya Kapoor, Advs.
Through: Mr. Gaurav Gupta, Mr. Shivendra Singh & Mr. Yojit Pareek, Advs.
HON'BLE MR. JUSTICE TEJAS KARIA VIBHU BAKHRU, J.(oral)
JUDGMENT
1. The petitioner [Assessee] has filed the present petition, inter alia, impugning an order dated 31.08.2024 passed under Section 148A(d) of the Income Tax Act, 1961 [the Act], whereby the Assessing Officer [AO] had dropped the proceedings in respect of a notice dated 14.08.2024 issued under Section 148A(b) of the Act. However, the proceedings commenced earlier, pursuant to the issuance of notice dated 14.07.2022 under Section 148 of the Act, which were abated would continue.
PREFATORY FACTS
2. 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.
3. 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.
4. The said decisions were subject matter of challenge before the Supreme Court and in Union of India & Ors. v. Ashish Agarwal: (2023) 1 SCC 617, the Supreme Court passed directions, inter alia, holding that the notices under Section 148 of the Act be construed as notice under Section 148A(b) of the Act. The Supreme Court granted further time for the AOs’ to provide the material and information, which is required to accompany such notices. Accordingly, the aforementioned notice under Section 148 of the Act is required to be construed as the notice under Section 148A(b) of the Act.
5. In terms of the decision of the Supreme Court in Union of India & Ors. v. Ashish Agarwal (supra), the AO also provided information, which, according to the AO, was suggestive of the petitioner’s income escaping assessment. The same was in the form of a fresh notice issued under Section 148A(b) of the Act on 22.05.2022.
6. The Assessee responded to the notice dated 22.05.2022 by a letter dated 07.06.2022, raising various objections.
7. Thereafter, on 29.06.2022, 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 said notice on 09.07.2022.
8. 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 of the Act. On the same date, the AO also issued a notice under Section 148 of the Act [the second section 148 notice]. The Assessee filed her objections dated 31.08.2022 to the second section 148 notice.
9. On 17.01.2023, 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 of the Act 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.
10. On 03.02.2023, the Assessee was informed that proceedings initiated pursuant to the second section 148 notice had abated as prior to the said date proceedings under Section 153C of the Act had commenced.
11. The Assessee filed petitions impugning the issuance of a notice under Section 153C of the Act [being W.P.(C) Nos.1046/2024 & 1048/2024]. The said petitions were allowed by an order dated 24.05.2024 and the notice under Section 153C of the Act was quashed insofar as AYs 2014-15, 2015-16 and 2016-17 are concerned. The said order was premised on the basis that the income, which has escaped assessment during the relevant assessment years did not exceed ₹50,00,000/- and therefore, the notice was beyond the period of limitation reckoned from the date of recording of satisfaction note dated 22.06.2022.
12. Thereafter, the AO once again re-initiated the reassessment proceedings by issuing a notice dated 14.08.2024 under Section 148A(b) of the Act. The Assessee challenged the validity of the said notice in her response dated 22.08.2024. Considering the response furnished by the Assessee and the material on record, the AO passed the impugned order dated 31.08.2024 dropping the proceedings initiated pursuant to the notice dated 14.08.2024 issued under Section 148A(b) of the Act. However, the AO revived the proceedings pursuant to the second section 148 notice.
13. The Assessee challenged the said proceedings on several grounds including that the notice was not approved by the competent authority as stipulated under Section 151 of the Act and the second notice under Section 148 of the Act was beyond the period of limitation.
REASONS & CONCLUSION
14. Mr. Gupta, learned counsel appearing for the Revenue advanced submissions, which we find are intrinsically inconsistent. First, he contended that the second section 148 notice should be considered as non est as it was issued after the notice under Section 153C of the Act was issued. However, he also submitted that the proceedings pursuant to the second section 148 notice would continue as in terms of Section 153A of the Act, all proceedings, which stood abated on account of commencement of proceedings would stand automatically revived, if the proceedings under Section 153A of the Act were dropped. Although, Mr Gupta contended that his submissions are in the alternative, we are not persuaded to accept that the Revenue can be permitted to take alternate stands. The impugned order states in unambiguous terms that the abated proceedings under Section 148 of the Act are revived. However, the said proceedings were ex facie illegal as initiation of the same would amount to initiating parallel assessment proceedings, which is impermissible.
15. Mr Gupta also submitted that the second Section 148 notice was not beyond the period of limitation as the period of limitation was six years from the end of the relevant assessment year (AY 2016-17) and the Section 148 of the Act notice was issued one year prior to the expiry of the limitation period. However, subsequently on a pointed query of this court, Mr. Gupta conceded that the period of limitation for issuing a notice under Section 148 of the Act in this case is required to be construed as four year from the end of the relevant assessment year as per the statutory regime which was in force prior to 31.03.2021. We must note that this was also in the context of alternate submissions made by the learned counsel for the Assessee that if the period of limitation is considered as six years from the end of the relevant assessment year than the second section 148 notice was issued without the approval of the competent authority as required under Section 151 of the Act.
16. Considering the definite stand taken on behalf of the Revenue is that the period of limitation for issuance of notice under Section 148 of the Act in the present case is four years from the end of the relevant assessment year, that is AY 2016-17, we find 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 Act, all proceedings continued pursuant thereto are required to be set aside. We say this for the reason that the first section 148 notice – which was directed to be considered as a notice under Section 148A(b) of the Act in terms of the decision of the Supreme Court in Union of India & Ors. v. Ashish Agarwal (supra) – 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. However, the period of limitation was extended by virtue of Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 [TOLA] and the time period for issuance of such notice was extended till 30.06.2021.
17. In the present case, the first section 148 notice was issued on 23.06.2021, which is six days prior to the expiry of the period of limitation. The time period for issuing a notice under Section 148 of the Act was extended by following the directions issued by the Supreme Court in Union of India & Ors. v. Ashish Agarwal (supra) and as explained by the Supreme Court in the latter decision in Union of India & Others v. Rajeev Bansal: 2024 SCC OnLine SC 2693. As noted above, the Assessee had responded to the first section 148 notice (which was required to be construed as a notice under Section 148A(b) of the Act) on 07.06.2022 and therefore the order under Section 148A(d) of the Act and the second notice under Section 148A of the Act was required to be issued within the period of seven days thereafter. In the present case the second 148 notice was issued beyond the period of limitation. The said issue is squarely covered by the decision of this Court in Ram Balram Buildhome Pvt. Ltd. v. Income Tax Officer & Anr.: Neutral Citation: 2025:DHC:547-DB.
18. In view of the above, we do not consider it apposite to examine the question as to whether the notice issued has been approved by the competent authority as stipulated under Section 151 of the Act or whether the second section 148 notice was valid.
19. The impugned order holding that the said proceedings would continue is set aside. The proceedings commenced pursuant to the second section 148 notice are also set aside.
20. The petition is allowed in the aforesaid terms.
VIBHU BAKHRU, J TEJAS KARIA, J MARCH 25, 2025 ‘gsr’ Click here to check corrigendum, if any