Adjournments sought by assessee under Section 148A(b) extend reassessment limitation period via Section 149's fifth proviso.

In brief

The question

Whether the notice dated 15.04.2024 issued under Section 148 of the Act for AY 2017-18 is barred by limitation.

The court held

The Court dismissed the writ petitions, holding that the impugned notices were valid and within limitation.

It also directed

The Court concluded that the period consumed due to the petitioners' requests for adjournments stands excluded under the Fifth Proviso to Section 149, meaning the AO acted within jurisdiction.

The challenge to the notices for being void ab-initio was rejected.

01Facts

The petitioners challenged notices issued under Section 148 of the Income Tax Act, 1961 (“the Act”) for Assessment Year (AY) 2017-18, dated 15.04.2024 and 06.04.2024, arguing they were time-barred.

p. 2, para 1

For BKR Capital, a show-cause notice under Section 148A(b) was issued on 21.03.2024.

p. 2, para 3

The petitioner sought multiple adjournments on 28.03.2024 and 08.04.2024, eventually filing a reply on 13.04.2024.

pp. 2, para 3-4

The Assessing Officer (AO) rejected the objections under Section 148A(d) and issued the impugned Section 148 notice on 15.04.2024.

p. 2, para 4

The petitioners contended that the six-year limitation period under the first proviso to Section 149(1) expired on 31.03.2024.

pp. 2-3, para 5

02Issues

i.Whether the notice dated 15.04.2024 issued under Section 148 of the Act for AY 2017-18 is barred by limitation.

pp. 9-10, para 14

03Law Applied

The Court applied Section 149 of the Income Tax Act, 1961 (as amended by the Finance Act, 2021).

The First Proviso to Section 149(1) stipulates that no notice under Section 148 shall be issued for AYs beginning on or before 01.04.2021 if such notice was already time-barred under the old law (six years).

p. 6, 11, para 13, 19

The Fifth Proviso to Section 149(1) provides for the exclusion of time allowed to an assessee to respond to a show-cause notice issued under Section 148A(b) when computing limitation.

p. 6, 11, para 13, 21

The Court distinguished *Manju Somani v. ITO* regarding statutory exclusions.

p. 12, para 27

The Court distinguished *Raminder Singh v. ACIT* regarding composite limitation frameworks.

p. 4, para 11

Provisions in the judgment · 10

Income Tax Act, 1961 10 provisions

Section 148Section 148ASection 149Section 151Section 153ASection 153CSection 132Section 132ASection 131Section 133A

04Reasoning

The Court reasoned that since the Section 148A(b) notice was issued on 21.03.2024, the reassessment proceedings were initiated within the six-year limitation period ending 31.03.2024.

pp. 10-11, para 15, 19

The court rejected the petitioners' narrow interpretation of the First Proviso, holding that the "limitation framework" must be read harmoniously with the Fifth Proviso.

p. 4, para 12

It was observed that the delay in issuing the final Section 148 notice was directly attributable to the adjournments sought by the petitioners on 28.03.2024 and 08.04.2024.

p. 10, para 16

Consequently, the period between 28.03.2024 (original reply date) and 15.04.2024 (date of order/notice) must be excluded from the limitation clock.

p. 13, para 30

The Court further noted that a contrary view would penalize AOs for granting fair hearings, thereby defeating the purpose of Section 148A.

p. 12, para 26

05Holding

The Court dismissed the writ petitions, holding that the impugned notices were valid and within limitation.

pp. 13-14, para 31-32

The Court concluded that the period consumed due to the petitioners' requests for adjournments stands excluded under the Fifth Proviso to Section 149, meaning the AO acted within jurisdiction.

pp. 13, para 29-30

The challenge to the notices for being void ab-initio was rejected.

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