Accolade Holdings Private Limited (Formerlyknown As Blue Eye Entertainment Privatelimited v. Income Tax Officer, Ward 2(1), Delhi & Ors

Signature Not Verified $~77 IN THE HIGH COURT OF DELHI AT NEW DELHI %Date of Decision : 28.05.2025 +W.P.(C) 7170/2023 ACCOLADE HOLDINGS PRIVATE LIMITED (FORMERLYKNOWN AS BLUE EYE ENTERTAINMENT PRIVATELIMITED) versus INCOME TAX OFFICER, WARD 2(1), DELHI & ORS. .....RespondentThrough:Mr Sanjay Kumar, SSC, Ms MonicaBenjaminandMs EashaKadian,JSCs for the Revenue. CORAM:HON'BLE MR. JUSTICE VIBHU BAKHRUHON'BLE MR. JUSTICE TEJAS KARIA VIBHU BAKHRU, J. (ORAL) CM APPL. 32476/2025(early hearing) 1.For the reasons stated in the application, the early hearing is allowed. 2.The petition is taken up for hearing today. 3.The hearing scheduled on 04.07.2025 is cancelled. 4.The application stands disposed of. W.P.(C) 7170/2023 & CM APPL. 32477/2025 5.The petitioner [Assessee] has filed the above-captioned petition, interalia, impugning an order dated 31.07.2022 [impugned order] passed underSection 148A(d) of the Income Tax Act, 1961 [the Act] along with thenotice dated 31.07.2022 [impugned notice] issued under Section 148 of theAct; in respect of assessment year 2013-14. 6.It is the Assessee’s case that the impugned notice has been issuedbeyond the prescribed period of limitation. 7.The initial notice under Section 148 of the Act for AY 2013-14 wasissued on 26.06.2021. The said notice was unsustainable as it was issued inaccordance with the statutory regime regarding reassessment as in forceprior to 31.03.2021. This Court in the case of Mon Mohan Kohli v.Assistant Commissioner of Income Tax & Anr.: Neutral Citation No.:2021:DHC:4181-DB had set aside such notices that were issued after31.03.2021 without following the procedure as prescribed under Section148A of the Act. 8.However, the Supreme Court in the case of Union of India & Ors. v.Ashish Agarwal: (2023) 1 SCC 617, issued directions for considering thesaid notices as notices issued under Section 148A(b) of the Act, and grantingtime to the Assessing Officer to supply the material on the basis ofwhich such notices were premised. Therefore, in compliance with thedirections issued by the Supreme Court in the case of Union of India & Ors.v. Ashish Agarwal (supra), the AO in the present case, provided informationand material to the Assessee on 24.05.2022 and directed the Assessee tofurnish the reply within two (2) weeks that is by 07.06.2022. The Assesseeresponded to the said notice dated 24.05.2022 on 07.06.2022. 9.The AO passed an order under Section 148A(d) of the Act on31.07.2022. According to the Assessee, the same was beyond the period asstipulated. 10.In the present case, the period of six years from the end of theassessment year available for issuing a notice under Section 148 of the Actexpired on 31.03.2020. Thus, in terms of the first proviso to Section 149(1)of the Act, a notice under Section 148 of the Act could not be issued.However, the said period was extended by the Taxation and Other Laws(Relaxation and Amendment of Certain Provisions) Act, 2020 .Consequently, the time limit for issuing such a notice under Section 148 wasextended to 30.06.2021. 11.The original notice under Section 148 of the Act was issued on26.06.2021, which was four (4) days before the expiry of period oflimitation. 9.The AO passed an order under Section 148A(d) of the Act on31.07.2022. According to the Assessee, the same was beyond the period asstipulated. 10.In the present case, the period of six years from the end of theassessment year available for issuing a notice under Section 148 of the Actexpired on 31.03.2020. Thus, in terms of the first proviso to Section 149(1)of the Act, a notice under Section 148 of the Act could not be issued.However, the said period was extended by the Taxation and Other Laws(Relaxation and Amendment of Certain Provisions) Act, 2020 .Consequently, the time limit for issuing such a notice under Section 148 wasextended to 30.06.2021. 11.The original notice under Section 148 of the Act was issued on26.06.2021, which was four (4) days before the expiry of period oflimitation. 12.As noted above, the said notice was deemed to be a notice underSection 148A(b) of the Act by virtue of the decision of Union of India &Ors. v. Ashish Agarwal (supra). The Supreme Court also granted furthertime to provide the material, which was required to accompany such anotice. As explained by the Supreme Court in the case of Union of India v.Rajeev Bansal: 2024 SCC OnLine SC 2693, the period from the date of theissuance of the notice till 04.05.2022, the date on which the Supreme Courthad rendered the decision in Union of India & Ors. v. Ashish Agarwal(supra) was required to be excluded in terms of the fifth proviso to Section149(1) of the Act. Additionally, the time provided till the date of providingthe material, which should have accompanied a notice under Section148A(b) of the Act, as well as the time allowed to the assessee to respond to Signature Not Verified the said notice was also required to be excluded by virtue of the fifth provisoto Section 149(1) of the Act, as applicable at the material time.13.Since the initial notice under Section 148 of the Act – subsequentlyconstrued as a notice under Section 148A(b) of the Act – was issued four (4)days before the expiry of period of limitation; there were four (4) daysavailable for the AO to issue notice under Section 148 of the Act after theAssessee had furnished its reply to the said notice. Since this periodavailable to the AO to issue notice under Section 148 of the Act was lessthan seven (7) days, in terms of the sixth proviso to Section 149(1) of theAct, the AO had seven (7) days to issue notice under Section 148 of the Act.Therefore, the last day to issue notice was 14.06.2022, that is seven daysfrom 07.06.2022. The impugned notice was issued on 31.07.2022, which isafter the period for issuing such a notice had expired. 14.Concededly, the said controversy is covered in favour of the Assesseeby the decision of this Court in Ram Balram Buildhome Pvt. Ltd. v. IncomeTax Officer and Anr.: Neutral Citation No.: 2025:DHC:547-DB.15.The present petition is, accordingly, allowed and all proceedingsinitiated pursuant thereto are set aside. The pending application is alsodisposed of. VIBHU BAKHRU, J TEJAS KARIA, J MAY 28, 2025M Click here to check corrigendum, if any