The Delhi High Court has refused to condone 2 minutes delay in issuing reassessment notice by the Assessing Officer (AO).
The bench of Justice Vibhu Bakhru and Justice Swarana Kanta Sharma has observed that notice could not have been issued prior to the same being signed. The fact that the steps to generate the impugned notice commenced on 31.03.2023 cannot be a ground to hold that the impugned notice was issued on 31.03.2023. The date of the notice is correctly reflected as 01.04.2023.
Table of Contents
Background
The petitioner filed its return of income for the assessment year (AY) 2019-20 on 20.03.2020 declaring ‘NIL’ income. The petitioner did not receive any intimation regarding its return at the material time.
The Assessing Officer (AO) sought to reopen the assessment by initiating proceedings under Section 148A of the Income Tax Act, 1961. The AO issued a notice under Section 148A(b) of the Income Tax Act alleging that he had information, which suggests that the petitioner’s income for the AY 2019-20 had escaped assessment. The notice indicated that the quantum of income that has escaped assessment was ascertained at Rs. 4,86,300.
Relevant Provisions
Section 149(1)(a) of the Income Tax Act, provides that no notice under Section 148 of the Act shall be issued beyond the period of three years except in cases that fall within the scope of Section 149(1)(b) of the Act.
Arguments
The assessee contended that the assessee’s income, which has possibly escaped assessment, is below the threshold limit of Rs. 50,00,000. Therefore, the time limit as provided in Clause (b) of Section 149(1) is not applicable. It is thus the petitioner’s case that the notice was issued beyond the period prescribed under the Act and therefore the same is liable to be set aside.
The department contended that although the notice bears the date of 01.04.2023, however, the same should be construed as having been issued on 31.03.2023. The process for issuing the notice had begun in the late hours of 31.03.2023 and the final act of affixing the digital signature – which is a system generated process – was completed on 12:02 AM on 01.04.2023.
The department contended that the delay is of only about two minutes in issuance of the impugned notice under Section 148A(b). Therefore, the same can be construed as having been issued within the period of three years from the end of the AY 2019-20.
Conclusion
The court noted that the notice was digitally signed on 01.04.2023. Thus, the process of digitally generating the same on the system was completed on 01.04.2023. Plainly, the notice could not have been issued prior to the same being signed. The fact that the steps to generate the notice commenced on 31.03.2023 cannot be a ground to hold that the notice was issued on 31.03.2023.
The court held that the date of the said notice is correctly reflected as 01.04.2023. In addition, it is also pointed out that the DIN & Notice Number mentioned in the notice also indicated that the notice was issued in the financial year 2023-24.
The court ruled that the reassessment proceedings could not have been initiated beyond the period of three years from the end of the relevant assessment year (AY 2019-20) as the income in respect of which the AO has information to suggest that it has escaped assessment, is below the threshold limit of Rs. 50,00,000.
The court allowed the petition is accordingly allowed and the impugned notices dated 01.04.2023 and 17.04.2023 as well as the impugned orders dated 17.04.2023 and 01.08.2024 are set aside. Pending application is also disposed of.
Case Details
Case Title: ACROPOLIS REALTY PVT. LTD Versus ITO
Case No.: W.P.(C) 14317/2024 & CM No.59931/2024
Date: 23.10.2024
Counsel For Petitioner: Sumit Lalchandani
Counsel For Respondent: Vipul Aggarwal
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