Adm Agro Industries Laturand Vizag Private Limited v. Assistant Commissioner Of Incometax, Circle 1(1), Delhi And Anr

$~29 *IN THE HIGH COURT OF DELHI AT NEW DELHI %Date of Decision: 06.05.2025 +W.P.(C) 4583/2023 ADM AGRO INDUSTRIES LATURAND VIZAG PRIVATE LIMITED .....Petitioner Through:Ms Ananya Kapoor, Advocate. versus ASSISTANT COMMISSIONER OF INCOMETAX, CIRCLE 1(1), DELHI AND ANR. CORAM:HON'BLE MR. JUSTICE VIBHU BAKHRUHON'BLE MR. JUSTICE TEJAS KARIA VIBHU BAKHRU, J. (ORAL) 1.The petitioner [Assessee] has filed the present petition, inter alia,impugning a notice dated 20.07.2022 [the impugned notice] issued underSection 148 of the Income Tax Act, 1961 [the Act] in respect of theAssessment Year 2013-14. It is the Assessee’s case that the impugnednotice has been issued beyond the prescribed period of limitation. 2.The initial notice under Section 148 of the Act for AY 2013-14 wasissued on 30.06.2021. The said notice was unsustainable as it was issued in Signature Not Verified accordance with the statutory regime as stood prior to 31.03.2021. Thiscourt in the case of Mon Mohan Kohli v. Assistant Commissioner ofIncome Tax & Anr.: Neutral Citation No.: 2021:DHC:4181-DB had setaside such notices that were issued after 31.03.2021 without following theprocedure as prescribed under Section 148A of the Act. Some of the otherHigh Courts also took a similar view and struck down notices that wereissued under Section 148 of the Act after 31.03.2021 but under theunamended provisions relating to the re-assessment of income that hadescaped assessment. 3.The Revenue appealed the decisions rendered by various High Courtsto the Supreme Court of India. In Union of India v. Ashish Agarwal: 2022SCC OnLine SC 543 – which was one of such appeals arising from thedecision of the Allahabad High Court – the Supreme Court delivered itsdecision on 04.05.2022, whereby it concurred with the view that theamended provisions which came into force after 31.03.2021 would beapplicable to notices issued thereafter. However, the Supreme Court alsoissued certain directions in exercise of powers under Article 142 of theConstitution of India. The Court directed that all notices that were issuedunder Section 148 of the Act after 01.04.2021 till the date of the saiddecision (04.05.2022), including those that had been set aside by the HighCourts, would be construed as show cause notices under Section 148A(b) ofthe Act. The Assessing Officers were directed to provide the informationand material relied upon by the Revenue for issuance of such notices, to therespective assessees within a period of thirty days from the date of thedecision so as to enable the respective assessees to respond to the same. 4.In compliance with the directions issued by the Supreme Court in the case of Union of India & Ors. v. Ashish Agarwal (supra), the AssessingOfficer provided information and material to the Assessee on25.05.2022. The Assessee was granted two weeks’ time to respond to thesaid notice. The Assessee responded to the notice dated 25.05.2022 by aletter dated 09.06.2022. 5.The AO passed an order under Section 148A(d) of the Act on19.07.2022. According to the Assessee, the same was beyond the period asstipulated for issuance of notice under Section 148 of the Act. 6.In the present case, the period of six years from the end of theassessment year for issuing a notice under Section 148 of the Act expired on31.03.2020. Thus, in terms of Section 149 of the Act, a notice under Section148 of the Act could not be issued. However, the said period was extendedby the Taxation and Other Laws (Relaxation and Amendment of CertainProvisions) Act, 2020 . Consequently, the time limit for issuingsuch a notice was extended to 30.06.2021. The original notice under Section148 of the Act was issued on 30.06.2021, which was the last date of expiryof the period of limitation. 5.The AO passed an order under Section 148A(d) of the Act on19.07.2022. According to the Assessee, the same was beyond the period asstipulated for issuance of notice under Section 148 of the Act. 6.In the present case, the period of six years from the end of theassessment year for issuing a notice under Section 148 of the Act expired on31.03.2020. Thus, in terms of Section 149 of the Act, a notice under Section148 of the Act could not be issued. However, the said period was extendedby the Taxation and Other Laws (Relaxation and Amendment of CertainProvisions) Act, 2020 . Consequently, the time limit for issuingsuch a notice was extended to 30.06.2021. The original notice under Section148 of the Act was issued on 30.06.2021, which was the last date of expiryof the period of limitation. 7.As noted above, the said notice was deemed to be a notice underSection 148A(b) of the Act by virtue of the decision of the Supreme Court inUnion of India & Ors. v. Ashish Agarwal (supra). The Supreme Court alsogranted further time to provide the material, which was required toaccompany such notice. As explained by the Supreme Court in the case ofUnion of India v. Rajeev Bansal: 2024 SCC OnLine SC 2693, the periodfrom the date of the issuance of the notice till 04.05.2022, the date on which the Supreme Court had rendered the decision in Union of India & Ors. v.Ashish Agarwal (supra), is required to be excluded. Additionally, the timeprovided till the date of providing the material, which should haveaccompanied a notice under Section 148A(b) of the Act, as well as the timeavailable to the assessee to respond to the said notice is also required to beexcluded by virtue of the Fourth Proviso to Section 149(1) of the Act, asapplicable at the material time. 8.In the present case, the time period for issuance of notice underSection 148 of the Act expired on 16.06.2022. However, the impugnednotice was issued on 20.07.2022, which is beyond the said period. Thus, thenotice was beyond the period of limitation. 9.This court in Ram Balram Buildhome Pvt. Ltd. v. Income TaxOfficer and Anr.: Neutral Citation No.: 2025:DHC:547-DB observed asunder: - “53. As is apparent from the plain language of thefourth proviso to Section 149(1) of the Act, it extendsthe period of limitation for issuing a notice underSection 148 of the Act so as to provide the AO aminimum of seven days to pass an order under Section148A(d) of the Act. If the time available to the AO todecide whether it is a fit case for issuance of noticeunder Section 148 of the Act in terms of Section148A(d) of the Act is less than seven days afterexcluding the period as provided under the thirdproviso, then the period of three years or ten years asprescribed is required to be extended by such period soas to make available to the AO at least seven days topass an order under Section 148A(d) of the Act andissueanoticeunderSection148oftheAct.Illustratively, if the show cause notice under Section148A(b) of the Act is issued to an assessee, on the lastdate on which issuance of such a notice under Section 148 of the Act is permissible, that is, on the last day ofexpiry of three years from the end of the relevantassessment year or ten years from the end of theassessment year as the case may be, the time madeavailable to the assessee to respond to a notice underSection 148A(b) of the Act (being a minimum of sevendays but not exceeding thirty days as provided in thenotice plus such further time as extended pursuant toan application), is required to be excluded for thecalculation of the period of three years or ten years asthe case may be. And, an additional period of sevendays is made available for the AO to pass an order.Thus, the period of limitation in such case would bethree years (after excluding the time provided to theassessee to respond to the notice under Section148A(b) of the Act) and seven days, or a period of tenyears (after excluding the time provided to the assesseeto respond to the notice under Section 148A(b) of theAct) and seven days as the case may be. 54. It is obvious, that in such a case, the AO would nothave a time for passing an order under Section148A(d) of the Act as stipulated under the said Clause,that is, one month from the end of the month in whichthe assessee furnishes a reply to the notices issuedunder Section 148A(b) of the Act. As noted above, theAO is required to complete the entire procedure forissuance of notice under Section 148 of the Act withinthe period as prescribed under Section 149 of the Act.Plainly, if the AO is unable to complete suchprocedure within the period of limitation, the AOwould cease to have the jurisdiction to issue such anotice. ********* 65. Thus, in the facts of the present case, the last datefor issuance of notice under Section 148 of the Act forAY 2013-14 under the statutory framework, as wasexisting prior to 01.04.2021 was 31.03.2020, that is,six years from the end of the relevant assessment year.66. By virtue of Section 3(1) of TOLA time forcompletion of specified acts, which fell during theperiod 20.03.2020 to 31.12.2020 were extended till 30.06.20218. Thus, the notice dated 01.06.2021 wasissued twenty-nine days prior to the expiry of period oflimitation for issuing a notice under Section 148 of theAct as was extended by TOLA. As noted above, theperiod from 01.06.2021, the date of issuance of notice,and 04.05.2022, being the date of decision of theSupreme Court in Union of India & Ors. v. AshishAgarwal is required to be excluded by virtue of thethird proviso to Section 149(1) of the Act. 67. Additionally, the period from the date of decisionin Union of India & Ors. v. Ashish Agarwal till thedateofprovidingmaterial,asrequiredtotheaccompanied with a notice under Section 148A(b) ofthe Act, is required to be excluded. Thus, the periodbetween 04.05.2022 to 30.05.2022, the date on whichthe AO had issued the notice under Section 148A(b) ofthe Act in furtherance of his earlier notice dated01.06.2021, is also required to be excluded by virtue ofthe third proviso to Section 149(1) of the Act as heldby the Supreme Court in Union of India & Ors. v.Rajeev Bansal. 68. In addition to the above, the time granted to thepetitioner to respond to the notice dated 30.05.2022 –the period of two weeks – is also required to beexcluded by virtue of the third proviso to Section149(1) of the Act. The petitioner had furnished itsresponse to the notice under Section 148A(b) of theAct on 13.06.2022. Thus, the period of limitationbegan running from that date. 69. As noted above, by virtue of TOLA, the AO hadperiod of twenty-nine days limitation left on the dateof commencement of the reassessment proceedings,which began on 01.06.2021, to issue a notice underSection 148 of the Act. The said notice was required tobe accompanied by an order under Section 148A(d) ofthe Act. Thus, the AO was required to pass an orderunder Section 148A(d) of the Act within the saidtwenty-nine days notwithstanding the time stipulatedunder Section 148A(d) of the Act. This period expiredon 12.07.2022. 70. Since the period of limitation, as provided under Section 149(1) of the Act, had expired prior toissuance of the impugned notice on 30.07.2022. Thesaid is squarely beyond the period of limitation.” 10.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 Another (supra). 11.The present petition is, accordingly, allowed and all proceedingsinitiated pursuant thereto are set aside. The pending application is alsodisposed of. VIBHU BAKHRU, J MAY 06, 2025M TEJAS KARIA, J Click here to check corrigendum, if any