Facts of the Case

  1. The Assessing Officer issued a notice under Section 148A(b) on 28.03.2024.
  2. The assessee was initially granted time till 08.04.2024 to furnish a reply.
  3. On 05.04.2024, the assessee sought an adjournment.
  4. The Assessing Officer extended the hearing date to 15.04.2024.
  5. On 15.04.2024, the assessee again sought adjournment.
  6. The Assessing Officer rejected the request for further adjournment.
  7. Since no reply was filed, 15.04.2024 was treated as the deemed date of filing reply.
  8. On 16.04.2024, the Assessing Officer passed an order under Section 148A(d) and simultaneously issued notice under Section 148.
  9. The assessee challenged both actions before the Delhi High Court as being time-barred.

Issues Involved

  1. Whether the period available to the assessee for filing a reply to a notice under Section 148A(b) is to be excluded while computing limitation under Section 149?
  2. Whether the extended period granted through adjournments also qualifies for exclusion under the Fifth and Sixth Provisos to Section 149?
  3. Whether, in the absence of an actual reply, the last date allowed by the Assessing Officer can be treated as the deemed date of filing reply for limitation purposes?
  4. Whether the order under Section 148A(d) and the consequential notice under Section 148 dated 16.04.2024 were issued within the prescribed limitation period?

Petitioner’s Arguments

  • The reassessment proceedings had become time-barred.
  • The order under Section 148A(d) and notice under Section 148 were issued beyond the limitation period prescribed under Section 149.
  • Therefore, the reassessment proceedings were liable to be quashed.

Respondent’s Arguments

  • The Revenue relied upon the Fifth and Sixth Provisos to Section 149.
  • It was contended that the entire period granted to the assessee for responding to the notice under Section 148A(b), including the extended period, had to be excluded while computing limitation.
  • Since the assessee failed to file any reply, the date on which the adjournment request was rejected should be treated as the deemed date of filing reply.
  • The order under Section 148A(d) and notice under Section 148 were issued on the very next day and were therefore well within limitation.

Court Findings

The Delhi High Court dismissed the writ petition and upheld the reassessment proceedings.

The Court held that:

  • The Fifth and Sixth Provisos to Section 149 clearly mandate exclusion of the period available to the assessee for filing a reply under Section 148A(b).
  • A combined reading of both provisos requires exclusion of the period commencing from issuance of notice under Section 148A(b) until the date of filing reply.
  • After such exclusion, the Assessing Officer gets the benefit of the statutory period contemplated under the Sixth Proviso for passing an order under Section 148A(d) and issuing notice under Section 148.
  • Since no reply was filed by the assessee, the date on which the final adjournment request was rejected, i.e., 15.04.2024, had to be treated as the deemed date of filing reply.
  • The order under Section 148A(d) and notice under Section 148 issued on 16.04.2024 were therefore within limitation.

Court Order

The Delhi High Court held that:

  • The order passed under Section 148A(d) dated 16.04.2024 was valid.
  • The notice issued under Section 148 dated 16.04.2024 was valid.
  • The reassessment proceedings were not barred by limitation.
  • The writ petition was dismissed.

Result: Decision in favour of the Revenue.

 

Important Clarification by the Court

The Court clarified that:

  1. Time granted to an assessee under Section 148A(b), including extended time granted through adjournments, must be excluded while computing limitation under Section 149.
  2. Where no reply is filed, the final date allowed by the Assessing Officer may be treated as the deemed date of filing reply.
  3. After such deemed reply date, the limitation period must be computed by applying the Sixth Proviso to Section 149.
  4. Notices issued after 1 March cannot automatically be treated as time-barred merely because the reply period extends beyond the financial year-end.

Sections Involved

  • Section 148 – Issue of Notice Where Income Escaped Assessment
  • Section 148A(b) – Opportunity of Being Heard Before Issuance of Notice
  • Section 148A(d) – Order Deciding Whether Notice Under Section 148 Should Be Issued
  • Section 149 – Time Limit for Issuance of Notice
  • Fifth Proviso to Section 149
  • Sixth Proviso to Section 149
  • Section 282
  • Sections 280 and 281 (as referred)

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