Imran Ahmad Vs ITO (ITAT Ranchi)
Summary: The ITAT Ranchi held that the notice issued under Section 148A(b) of the Income Tax Act, 1961 was invalid because the assessee was not provided the statutorily mandated seven clear days to respond.
The notice dated 12.03.2022 required the assessee to submit the response by 18.03.2022. Excluding the date of issuance and the date fixed for response, the assessee received only five clear days. The Tribunal held that Section 148A(b) requires a minimum of seven clear days.
The Tribunal followed the decision of the Jharkhand High Court in Satish Kumar Vs. PCIT, which had interpreted the expression “not less than seven days” and held that both terminal dates must be excluded. The principle regarding computation of such statutory periods was traced to the Supreme Court’s decision in Pioneer Motors (Private) Ltd. Vs. Municipal Council, Nagercoil.
The Tribunal consequently held the notice under Section 148A(b) to be invalid and quashed the notice as well as all subsequent proceedings arising therefrom. Since the additional legal ground went to the root of the assessment proceedings, the other grounds on merits and other legal issues became academic.
List of Cases Discussed / Relied Upon
1. Satish Kumar Vs. PCIT — W.P.(T) No.2640 of 2023, dated 28.08.2023.
2. Pioneer Motors (Private) Ltd. Vs. Municipal Council, Nagercoil — AIR 1967 SC 684.
3. National Thermal Power Co. Ltd. Vs. CIT — 229 ITR 383 (SC).
FULL TEXT OF THE ORDER OF ITAT RANCHI
This appeal preferred by the assessee emanates from the order of CIT(A)/NFAC, Delhi, dated 18.07.2024, for the assessment year 2018- 2019 as per the grounds of appeal on record.
2. That, in this case the assessee had preferred both the grounds on merits as well as legal grounds. At the time of hearing, learned. Authorised Representative submitted that he would be assailing the following additional legal ground and if he succeeds then all other grounds both merits as well as on other legal grounds shall stand academic in nature.
3. The additional legal ground as assailed by the assessee is as follows:-
Additional Legal Ground
1) For that the show notice u/s.148A(b) dated 12/03/2022 was invalid and thus the proceedings initiated thereby deserves to be quashed. As per the notice dated 12/03/2022 compliance was sought for on or before 18/03/2022, whereas, as per the provisions of law, the clear period of not less than 7 days should be allowed in the show cause notice period. Reliance on this legal issue is placed upon the decision of Hon’ble Jurisdictional High Court in the case of Satish Kumar Vs PCIT in WP 2640/2023 dated 28/08/2023. As such, the notice issued U/s 148A(b) dated 12/03/2022 was bad in law and proceedings initiated thereby is fit to be quashed.
We humbly pray that the above grounds may kindly be admitted as fresh legal ground since the same goes to the very root of assessment proceedings and no fresh document or evidence is required to be called for. We pray that the ground be kindly admitted for adjudication as a fresh legal ground being raised before your honour in the light of- decision of Hon’ble Apex Court in case of NTPC VS CIT 229 ITR 383 (SC).
4. In the said additional legal ground, it has been contended by the assessee that as per the provision of Section 148A clause (b) of the Act, the assessee has not been provided clear 7 days time for the show cause as is mandated within the said provision. That, for the sake of completeness, the relevant provision is extracted as follows:- Conducting inquiry, providing opportunity before issue of notice under section 148.
148A.The Assessing Officer shall, before issuing any notice under section 148-
(a) conduct any enquiry, if required, with the prior approval of specified authority, with respect to the information which suggests that the income chargeable to tax has escaped assessment;
(b) provide an opportunity of being heard to the assessee, [*] by serving upon him a notice to show cause within such time, as may be specified in the notice, being not less than seven days and but not exceeding thirty days from the date on which such notice is issued, or such time, as may be extended by him on the basis of an application in this behalf, as to why a notice under section 148 should not be issued on the basis of information which suggests that income chargeable to tax has escaped assessment in his case for the relevant assessment year and results of enquiry conducted, if any, as per clause (a);
5. The entire periphery and ambit of the legal ground is confined to the interpretation of expression “being not less than 7 days….”. That as demonstrated by the assessee the notice dated 12th March, 2022 u/s.148A of the Act states that the assessee shall submit the response with supporting documents on or before 18th March, 2022. Therefore, as per Section 148A(b) of the Act, excluding these two dates i.e. date of issuance of the notice and the date on when response is sought from the assessee, a clear 7 days time should have been provided to the assessee as has been held by the Hon’ble Jurisdictional High Court in the case of Satish Kumar Vs. Pr.CIT, passed in W.P.(T) No.2640 of 2023, dated 06/28.08.2023. The relevant part of the judgment is extracted as follows:-
7. To decide the lis involved in the instant application it is necessary to peruse the provisions of the Act which governs the issue in hand, which is quoted herein below:-
Section 148A(b) of the I.T. Act.
“148A (b) provide an opportunity of being heard to the assessee, by serving upon him a notice to show.cause within such time, as may be specified in the notice, being not less than seven day days and but not exceeding thirty days from the date on which such notice is issued, or such time, as may be extended by him on the basis of an application in this behalf, as to why a notice under section 148 should not be issued on the basis of information which suggests that income chargeable to tax has escaped assessment in his case for the relevant assessment year and results of enquiry conducted, if any, as per clause (a);” From bare perusal of Section 148A(b) it appears that minimum 7 days is required to be given to the Assessee for filing reply. This 7 day is to be calculated by ignoring the date of issue and the last date of submission. In other words, minimum 7 clear days has to be provided to the Assessee for filing reply.
In this regard reference may be made to the case of Pioneer Motors (Private) Ltd. Vs. Municipal Council, Nagercoil reported in AIR 1967 SC 684 wherein at paragraph 8 and 9 the Hon’ble Apex Court has deliberated the issue with regard to counting of dates,
“8. The words “not being less than one month” do imply that clear one month’s notice was necessary to be given, that is, both the first day and the last day of the month had to be excluded. “When…… ‘not less than’ so many days are to intervene, both the terminal days are excluded from the computation.”
9……………….. In every case the words have to be construed in the context taking into consideration the language usedand the objection to be achieved. As we have said above, the use of the words “not being less than one month” implies the giving of a clear month excluding both the first and the last day of the month…….. Emphasis supplied.
8. Thus, we see that the law is no more res-integra; inasmuch as, the words ‘not be less than 7 days’ implies that clear seven days is obligatory to be given to the Assessee. Thus, on the one hand the notice which was given to the petitioner under Section 148A(b) was not in accordance with the provision of the Act, inasmuch as, only 6 clear days was given to him. So, on this score alone the notice under Section 148A(b) deserves to be quashed and set aside.
6. Considering the aforestated judgment as per the notice issued to the assessee u/s.148A of the Act, the assessee gets only five clear days for response i.e. excluding the date of issuance of the notice and the date on which the response is sought for. This is, therefore, violative of the mandate as prescribed in the Act and also as per the principle laid down by the Hon’ble High Court (supra). Therefore, on this score alone, the notice u/s.148A(b) of the Act is hereby quashed and set aside and all the subsequent proceedings becomes a nullity andnon estin the eyes of law.
7. That, since the Bench has answered this additional legal ground in favour of the assessee raised in this appeal, resultantly, all other grounds raised both on merits as well as the other legal grounds becomes academic in nature.
8. As per the above terms, the appeal of the assessee is allowed.
Order pronounced in the open court on 18/12/2024.
