The Delhi High Court held that the notice issued under section 148 Income Tax Act, 1961 on the last date of the limitation period was not time barred and dismissed the petition. Raminder Singh, the petitioner has filed the present application seeking a review of the order dated 07.08.2023 whereby the above-captioned petition was dismissed. The petitioner challenged the notice dated 17.04.2023 (‘the impugned notice’) issued under Section 148 of the Income Tax Act 1961 (‘the Act’) for reopening the assessment for the Assessment Year 2019-2020.  The impugned notice indicated the transactions forming the basis of income that had escaped assessment, related to supplies from two parties: Milap Advertising and Marketing Private Limited for an aggregate amount of ₹47,67,772/-; and Angel Enterprises for an aggregate value of ₹44,80,000/-. It was alleged that the expenses relating to supplies from Milap Advertising and Marketing Private Limited were booked in the Financial Year 2018-2019 relevant to the Assessment Year 2019-2020.

The value of supplies from Milap Advertising and Marketing Private Limited was less than ₹50,00,000/(Rupees Fifty Lakhs) and therefore, the income for Assessment Year 2019-2020 escaping assessment could not exceed the said amount. Consequently, the period of limitation for reopening the assessment was three years and not ten years.  The court held that the impugned notice was within the stipulated period after excluding the period afforded to the petitioner to respond to the notice under clause (b) of Section 148A of the Act and the time for passing the order under clause (d) of Section 148A of the Act under the fifth and the sixth proviso to Section 149 of the Act. Accordingly, the petition was rejected. The petitioner sought to review the order and stated that there were no accommodation entries in its books as the proper purchase bills for the work done by the supplier were provided along with the applicable GST.

In addition, TDS was also deducted from the amounts paid/credited. Further argued that the impugned notice is vague and unspecific, and has no nexus with the petitioner. Thirdly the proposals and approvals for issuing the impugned notice under clause (b) of Section 148A of the Act were not provided to the petitioner. Fourthly, the income alleged to have escaped assessment is less than ₹50,00,000/-; therefore, the notice beyond the period of three years could not be issued.   The petitioner claimed that there is no escapement of income from assessment is a matter of merits, which is required to be decided by the Assessing Officer. We are also unable to accept that the notice under Section 148A(b) of the Act is vague or cryptic.  The said notice sets out the transactions alleged to have escaped assessment under the Act.  The petitioner has also contested the said allegation by providing details of the said transactions.  A division bench comprising Justice Vibhu Bakhru and Justice Amit Mahajan observed that the impugned notice was issued on the last date of the limitation period – 17.04.2023 – and the petitioner’s contention that the same was issued beyond the period of limitation was erroneous. Mr. K.R. Manjani, the counsel who appeared for the petitioner submitted that the aforesaid conclusion that the impugned notice was issued within the period of limitation, is erroneous.

It was stated that the sixth proviso to Section 149(1) of the Act is not applicable since the said proviso applies in respect of an order under clause (d) of Section 148A of the Act and not to a notice under Section 148 of the Act.  It was evident that the sixth proviso to Section 149(1) of the Act is not applicable as the Assessing Officer had time till 31.05.2023 to pass an order under clause (d) of Section 148A of the Act.   Section 149(1) of the Act expressly provides the time limit for issuing the notice under Section 148 of the Act. Thus, the notice under Section 148 of the Act (accompanied by an order under clause (d) of Section 148A of the Act) is required to be issued within three years from the end of the relevant assessment year if the income escaping assessment is less than ₹50,00,000/-.

The Court viewed that “one month from the end of the month in which the time available to the assessee to respond to the notice under Clause (b) of Section 148A expires, is available to the Assessing Officer to pass an order under clause (d) of Section 148A of the Act only within the rubric of Section 149 of Act, that is, within the overall time available in terms of Section 149(1) of the Act for issuance of a notice under Section 148 of the Act. This is because a notice under Section 148 of the Act which is not accompanied with the order under Clause (d) of Section 148 of the Act would be non-compliant with the Act. And, no such notice can be issued beyond the period as specified under Section 149(1) of the Act.”  The Court dismissed the review petition as no ground to review the order.