Reassessment proceedings under Section 147 quashed for procedural violations and time-bar issues

The HC quashed reassessment proceedings under Section 147 due to procedural violations. The petitioner received the Section 148A(b) notice on 28.03.2022, one day before the reply deadline of 29.03.2022, but the notice was dated 23.03.2022. The court held that the seven-day period should be calculated from actual receipt, not the notice date. The AO violated natural justice principles by not providing adequate time for response. Additionally, the proceedings were time-barred as the six-year limitation period for AY 2015-16 had expired by 31.03.2021, making the reassessment notice issued in 2022 invalid. The court emphasized that the Income Tax Department cannot indefinitely pursue assessees beyond statutory limitations.

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Issues Involved:
1. Validity of the notice under Section 148 A (b) on grounds of limitation.
2. Violation of principles of natural justice in serving the notice.
3. Sustainability of the impugned order on the limitation aspect.

Summary:

1. Validity of the Notice under Section 148 A (b) on Grounds of Limitation:
The petitioner challenged the notice dated 23.03.2022 issued under Section 148 A (b) of the Income Tax Act, 1961, contending it was beyond the period of limitation. The court noted that the period of limitation for the assessment year 2015-16 ended on 31st March 2021. Thus, the impugned proceedings were not sustainable on the limitation aspect, as the Department failed to take appropriate action within the six-year period, which is mandatory.

2. Violation of Principles of Natural Justice in Serving the Notice:
The petitioner argued that the notice dated 23.03.2022 was received only on 28.03.2022, providing insufficient time to respond. The court observed that Section 148 A (b) requires a minimum of seven days for the assessee to furnish an explanation. The respondent's contention that the notice served through the e-portal on 23.03.2022 was sufficient was rejected. The court held that service of notice by post or courier is mandatory, and additional electronic service cannot replace it. Consequently, the notice dated 23.03.2022 was quashed for violating the principles of natural justice.

3. Sustainability of the Impugned Order on the Limitation Aspect:
The court reiterated that the limitation period for the assessment year 2015-16 had expired, making the impugned proceedings unsustainable. The court emphasized that the Income Tax Department cannot indefinitely hold an assessee accountable without timely action.

Conclusion:
The Writ Petition was allowed, quashing the impugned notice dated 23.03.2022 and all consequential proceedings. The court noted that if the petitioner still holds the deposited amount, the respondent-Department may proceed in accordance with law for subsequent years if permissible. No costs were awarded, and connected Miscellaneous Petitions were closed.

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