Time Spent To Defend Reassessment Notice Issued Without Following Procedure Doesn't Extend Limitation For Revenue When Issuing Fresh Notice: Delhi HC
The Delhi High Court has held that if the Revenue issues a reassessment notice to an assessee under Section 148 of the Income Tax Act, 1961 without following due procedure, it cannot later issue fresh reassessment notice beyond the prescribed period, claiming that time spent on earlier litigation is to be excluded for the purposes of computing limitation.A division bench of Acting Chief...
The Delhi High Court has held that if the Revenue issues a reassessment notice to an assessee under Section 148 of the Income Tax Act, 1961 without following due procedure, it cannot later issue fresh reassessment notice beyond the prescribed period, claiming that time spent on earlier litigation is to be excluded for the purposes of computing limitation.
A division bench of Acting Chief Justice Vibhu Bakhru and Justice Tushar Rao Gedela observed, “Notice issued under Section 148 of the Act in the earlier round was set aside on the ground that the AO had not followed the mandatory requirement of seeking an approval from the competent authority…The fact that the Revenue had not taken the steps in accordance with law cannot possibly be construed as a factor in favour of the Revenue for extending the limitation.”
The Petitioner had challenged the reassessment notice issued to it as being time-barred.
Section 149 prescribes that the maximum period within which notice under Section 148 of the Act could have been issued is six years from the end of the relevant assessment year.
Revenue argued that the impugned notice should be considered within the specified time as in the earlier round, the court had stayed the proceedings. It contended that in terms of Abhinav Jindal v. Assistant Commissioner of Income Tax Circle, benefit of the stay granted by the court is required to be construed in favor of the Revenue.
At the outset, the High Court noted that the Assessing Officer, prior to issuing the impugned notice, had issued another notice under Section 148 (within limitation period), which came to be faulted as it was issued under the erstwhile statutory regime (as existing prior to 01.04.2021).
“Clearly, the fact that the petitioner had succeeded in its challenge to the said notice cannot be a ground for exclusion of the period spent by the assessee in pursuing the said litigation. The time spent by the petitioner in pursuing the challenge can neither be excluded nor can be claimed as resulting in extension of the period of limitation,” Court remarked.
It proceeded to observe that Revenue must take all necessary steps, in accordance with law, for initiation of assessment proceedings within the period of limitation.
On the question of stay order, Court said there was no order impeding the Revenue from issuing another notice to the assessee within the prescribed time.
Accordingly, the petition came to be allowed.
Appearance: Dr Kapil Goel, Mr. Sandeep Goel, Advs. for Petitioner; Mr. Sanjay Kumar, SSC, Ms. Monica Benjamin, JSC, Ms. Easha Kadian, JSC for Respondent
Case title: Abhinav Jindal v. Assistant Commissioner Of Income Tax Circle 52
Citation: 2025 LiveLaw (Del) 100
Case no.: W.P.(C) 7405/2024