DCIT Vs Vishwanath Singhal (ITAT Delhi)
Delhi ITAT Quashes Reassessment for Granting Less Than Mandatory Seven Days’ Time Under Section 148A(b)
The Delhi ITAT quashed the reassessment proceedings, holding that the notice issued under section 148A(b) was invalid as it granted the assessee less than the mandatory minimum period of seven days to respond. The Assessing Officer issued the notice on 12 March 2022, requiring the assessee to furnish a reply by 17 March 2022, thereby violating the statutory requirement prescribed under section 148A(b).
The Tribunal relied on the Delhi High Court’s decision in Shri Sai Co-operative Thrift and Credit Society Ltd. v. ITO, which held that granting not less than seven days to respond is a mandatory requirement and that failure to do so vitiates the entire reopening process. The High Court had further held that even if the assessee submits a reply within the curtailed period, the statutory violation is not cured where inadequate time causes prejudice.
Applying the above binding precedent, the Tribunal held that the reassessment was legally unsustainable and quashed the reopening proceedings. Consequently, the assessee’s cross-objection was allowed, the Revenue’s appeal was dismissed, and all issues on merits were rendered academic.
Cases Discussed
- Shri Sai Co-operative Thrift and Credit Society Ltd. Vs. ITO (Delhi HC), W.P.(C) No.7385/2022, dated 12.05.2022
FULL TEXT OF THE ORDER OF ITAT DELHI
This Revenue’s appeal ITA No.2028/Del/2025 and assessee’s cross-objection C.O. No.255/Del/2026, arise against the Commissioner of Income Tax (Appeals)/National Faceless Appeal Centre [in short, the “CIT(A)/NFAC”], Delhi’s DIN and order no. ITBA/NFAC/S/250/2024-25/1072636719(1), dated 28.01.2025 involving proceedings under section 147 of the Income-tax Act, 1961 (hereinafter referred to as ‘the Act’).
Heard both the parties. Case file perused.
2. It emerges at the outset with the able assistance coming from both the parties that the assessee’s cross objection C.O. No. 255/Del/2026 raises the first and foremost legal issue of validity of the impugned reopening itself. This is for the precise reason that the learned departmental authorities had issued section 148A(b) notice to the assessee on 12.03.2022 seeking his reply by 17th March, 2022 (page 2 of the paper-book).
3. This being the clinching factual position going unrebutted from the Revenue side, the assessee has quoted hon’ble jurisdictional high court’s recent decision being W.P.(C) No.7385/2022, Shri Sai Co-operative Thrift and Credit Society Ltd. Vs. ITO, dated 12.05.2022 that any such notice giving less than seven days mandatory response time, vitiates the reopening itself; as follows:
“2. Learned counsel for the Petitioner states that the Respondent has issued a notice to petitioner-society under clause (b) of Section 148A of the Act on 22nd March, 2022 on the ground that the Petitioner had made cash deposits of Rs.92,11,800/- in its bank accounts but had not filed its Income Tax Return. He states that the Petitioner was asked to furnish a reply to the said notice on or before 25th March, 2022. He further states that the Petitioner duly replied to the said notice on 25th March, 2022 clearly explaining that all the cash deposited by the Petitioner was received from the members of the society, for which cash receipts had been issued to the members and proper record in this regard had been maintained. He states that in the reply, the petitioner had also explained that KYC of all the members were properly done and books of accounts of the Petitioner were duly audited and were furnished to the Registrar of Companies.
3. Learned counsel for the Petitioner states that the respondents passed the order dated 6th April, 2022 under clause (d) of Section 148A rejecting the reply of the Petitioner on the ground that although the Petitioner had stated that the cash deposited in the bank account of the Petitioner was received from its members yet it had failed to provide the list of members who had given cash to the Petitioner.
4. Learned counsel for the Petitioner states that the Petitioner was granted only three days’ time to file its response to the notice. He states that the list of members could not be filed along with the reply as the time granted to the Petitioner to prepare the list and furnish along with its reply was inadequate. He emphasises that the revenue has failed to give a minimum time of seven days to the petitioner to file its reply and, thus, failed to fulfil the criterion of ‘not less than seven days” as provided in clause (b) of Section 148A of the Act.
5. Issue notice. Mr.Sunil Agarwal, learned counsel for the revenue, accepts notice.
6. He, on instructions, states that the Assessing Officer did not issue any corrigendum extending the time limit for filing the reply as no such request was made. He further states that as the said reply was filed within the time stipulated in the notice dated 22nd March, 2022, no prejudice has been caused to the petitioner.
7. Having heard learned counsel for the parties, this Court is of the view that under Section 148A(b) of the Act, a minimum time of seven days has to be granted to the assessee to file its reply to the said show cause notice.
8. In the present case, though the petitioner responded to the show cause notice, yet it could not provide all the relevant details and documents, as the time period of three days to respond to the show cause notice was inadequate. Consequently, this Court is of the view that in the present case not only there has been a violation of the mandatory time period stipulated under Section 148A(b) of the Act, but grave prejudice has been caused to the petitioner.
9. Accordingly, the impugned order dated 6th April, 2022 under Section 148A(d) and notice under Section 148 of the Act are quashed. If the law permits the respondent/revenue to take further steps in the matter, it shall be at liberty to do so. Needless to state that if and when such steps are taken and if the petitioner has a grievance, it shall be at liberty to take its remedies in accordance with law.
10. With the aforesaid direction, the present writ petition stands disposed of.”
4. I adopt the above extracted detailed order of hon’ble jurisdictional high court mutatis mutandis to quash the impugned reopening. The assessee succeeds in his cross-objection C.O. No. 255/Del/2026 and the Revenue’s main appeal ITA No. 2028/Del/2025 is dismissed therefore.
All other remaining pleadings on merits stands rendered academic.
5. This Revenue’s appeal ITA No.2028/Del/2025 is dismissed and the assessee’s cross-objection C.O. No.255/Del/2026 is allowed. A copy of this common order be placed in the respective case files.
Order pronounced in the open court on 16th July, 2026
