Section 148 notice issued beyond six-year limitation period quashed along with subsequent assessment order

The Bombay HC quashed a Section 148 notice issued on 25 July 2022 for assessment year 2013-14, finding it beyond the limitation period. The six-year limitation expired on 31 March 2020, extended to 31 March 2021 due to Covid-19. The Assessing Officer erroneously applied Finance Act 2022 amendments effective from 1 April 2022 to the earlier assessment year. Since the notice was issued without jurisdiction after limitation expired, the subsequent assessment order dated 26 May 2023 was also rendered illegal and quashed.

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Issues:
1. Challenge to order under Income-tax Act
2. Validity of notice under Section 148 for assessment year 2013-14
3. Delay in filing petition

Analysis:
Issue 1: The petitioner challenged an order passed under the Income-tax Act, specifically under Section 147 read with Section 144 and Section 144B. The petitioner sought various reliefs, including quashing of notices, assessment orders, penalty orders, and demand notices issued under different sections of the Act.

Issue 2: The primary grievance of the petitioner was regarding the validity of the notice issued under Section 148 for the assessment year 2013-14. The petitioner argued that the notice was issued beyond the limitation period prescribed under Section 149 of the Act. The petitioner contended that the notice was issued almost two years after the limitation period had expired, and the Assessing Officer had overlooked the relevant provisions while issuing the notice.

Issue 3: The respondent argued that the petition should not be entertained due to a delay in filing, as the assessment order was passed against the petitioner before filing the petition. However, the petitioner argued that the order was illegal, and new causes of action arose after subsequent penalty orders were issued. The court noted that the notice under Section 148 was inherently without jurisdiction, rendering the subsequent assessment order illegal. The court emphasized that an illegal order cannot be enforced, even if there is a delay in challenging it, as illegality cannot be extinguished by acquiescence.

Conclusion:
The court, after considering the arguments and relevant legal provisions, allowed the petition in favor of the petitioner. The court held that the notice under Section 148 for the assessment year 2013-14 was issued without jurisdiction, making the subsequent assessment order illegal. The court emphasized that an inherently void order cannot be enforced, and the petition was allowed in line with previous judgments on similar issues.

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