Shaikh Saidque Haji Shaikh Taher Vs ITO (ITAT Nagpur)
The Nagpur Bench of the ITAT has held that where the Assessing Officer granted less than the statutory minimum period to respond to a notice under section 148A(b), the notice was invalid and the consequent reassessment proceedings could not survive.
The assessee, Shaikh Saidque Haji Shaikh Taher, faced two appeals for AY 2019-20. In ITA No. 342/NAG/2026, the assessee challenged, among other matters, the addition of Rs. 29,67,100 under section 69 and the validity of reassessment proceedings under section 147. The principal legal objection was that the notice under section 148A(b) had provided less than seven days for submitting a response.
The notice was issued on 18 March 2023 in the evening and required the assessee to submit his reply by 24 March 2023. The Tribunal noted that the Assessing Officer had effectively granted only five days and, even if the date of issue was counted, only six days were available. The statutory provision required a minimum seven-day period.
The assessee relied upon the decisions of the Bombay High Court in Mukesh J. Rupatel v. ITO [2023] 153 taxmann.com 70 and the Rajasthan High Court in Bijendra Singh v. PCIT [2024] 162 taxmann.com 66. The assessee submitted that the minimum period prescribed under section 148A(b) was mandatory and that a notice allowing less than seven days could not be sustained.
The Revenue opposed admission of the legal issue on the ground that it had not been raised before the lower authorities. The Tribunal, however, admitted the issue, holding that it went to the root of the reassessment proceedings, involved no new facts and constituted a pure question of law. For this purpose, it relied upon National Thermal Power Co. Ltd. v. CIT [1998] 229 ITR 383 (SC).
The Tribunal examined the notice dated 18 March 2023 and found that the assessee had been given only five effective days, or six days even on the alternative calculation, instead of the required minimum seven days. The Tribunal then considered the judicial precedents concerning the statutory period under section 148A(b).
In Mukesh J. Rupatel, the Bombay High Court had considered a notice dated 15 March 2023 which allowed time up to 20 March 2023. The High Court took note of the CBDT guidelines dated 01.08.2022, which provided that the assessee should be given between seven and thirty days to submit a reply to the notice under section 148A(b). The High Court treated the minimum seven-day requirement as mandatory and held that failure to comply rendered the notice invalid.
The Tribunal also considered Bijendra Singh, where the Rajasthan High Court dealt with a notice dated 16 March 2022, posted on 17 March 2022, requiring a response by 23 March 2022. The Court observed that, even including the relevant terminal dates, the period fell short of seven days as contemplated by section 148A(b), and the notice could not be sustained.
Applying these principles, the Tribunal held that the Assessing Officer had granted less than seven days to the assessee to respond to the notice under section 148A(b). It concluded that the defect rendered the notice invalid and the subsequent reassessment proceedings under section 147 void ab initio.
Accordingly, the reassessment order dated 29 January 2024 was quashed, the finding of the CIT(A) was reversed and the impugned addition was deleted. Since the reassessment itself had been quashed, the remaining grounds on merits were treated as academic and dismissed as infructuous.
The second appeal, ITA No. 345/NAG/2026, concerned penalty under section 271AAC(1) amounting to Rs. 1,78,026. The Tribunal noted that the penalty had been computed at 10% of the tax payable under section 115BBE. Since the underlying quantum addition had been deleted while deciding ITA No. 342/NAG/2026, the Tribunal held that the consequential penalty, being dependent upon that addition, was not sustainable and deleted it.
Cases Discussed
- Mukesh J. Rupatel vs. ITO [2023] 153 taxmann.com 70 (Bombay)
- Bijendra Singh vs. PCIT [2024] 162 taxmann.com 66 (Rajasthan)
- National Thermal Power Co. Ltd. vs. CIT [1998] 229 ITR 383 (SC)
FULL TEXT OF THE JUDGMENT/ORDER OF ITAT, NAGPUR
These appeal by the assessee are directed against the separate orders of Ld. Commissioner of Income Tax (Appeals)/NFAC, Delhi (for short, “CIT(A)”) evenly dated 27.02.2026 passed u/sec. 250 of the Income Tax Act, 1961 (for short, “Act”) which are arising out of assessment order dated 29.01.2024 passed u/sec. 147 of the Act and penalty order dated 12.07.2024 passed u/sec. 271AAC(1) for the Assessment Year (A.Y.) 2019-20.
2. In ITA No.342/NAG/2026, assessee apart from raising ground challenging the addition of Rs. 29,67,100/- u/sec. 69, also raised legal grounds challenging the validity of proceedings u/sec. 148 of the Act on the ground that less than 07 days time was given for reply to the notice u/sec. 148A(b) of the Act which makes the re-assessment proceedings void ab initio in the light of certain judicial precedents and ITA No.345/NAG/2026 has been filed against levy of penalty u/sec. 271AAC(1) of the Act at Rs. 1,78,026/-
3. Since the legal issue challenging the validity of notice issued u/sec. 148 of the Act goes to the root of re-assessment proceedings, I first take up the same. Learned counsel for the assessee, at the outset, referring to the notice issued u/sec. 148A(b) submitted that notice has been issued on the evening of 18.03.2023 requiring the assessee to file his submissions on or before 24.03.2023. This indicates that less than 07 days time was given to the assessee to file his reply to the notice issued u/sec. 148A(c) of the Act. Placing reliance on the decision Hon’ble Jurisdictional High Court in the case of Mukesh J. Rupatel vs. ITO [2023] 153 taxmannn.com 70 (Bombay) and that of Hon’ble Rajasthan High Court in the case of Bijendra Singh vs. PCIT [2024] 162 taxmann.com 66 (Rajasthan), learned counsel submitted that the Hon’ble Courts have held that giving time less than 07 days to the petitioner to file his reply to the notice u/sec. 148A(b) of the Act, is in violation of mandatory provisions of section 148A(b) of the Act and such notice issued to the petitioner cannot be sustained.
4. On the other hand, Ld.DR submitted that this issue has never been raised before the lower authorities.
5. I have heard the rival submissions and perused the material placed before me. So far as admission of legal issue is concerned, I find that this legal issue goes to the root cause of the re-assessment proceedings giving rise to the impugned addition and there being no new facts brought before this Tribunal and it is purely question of law, which has been raised by the assessee and therefore, in the light of the judgment of Hon’ble Apex Court in the case of National Thermal Power Co. Ltd. vs. CIT [1998] 229 ITR 383 (SC), this legal issue is hereby admitted.
6. I find that notice u/sec. 148A(b) of the Act is dated 18.03.2023 and issued by the ITO, Ward-4(3), Nagpur under the digital signature uploaded at 3.10PM and asked the assessee to file reply along with supporting documents on or before 24.03.2023. Practically, Ld.Assessing Officer (AO) has given time only for 05 days and even if consider the date of issue of notice, the effective days are only 06, which is less than 07 days time period required to be given to the assessee to file reply to the notice u/sec. 148A(b) of the Act, as mandated in the said provision. This fact that the Ld. AO has given time to file reply u/sec. 148A(b) of the Act is less than 07 days is not in dispute. Now, whether such notice which seeks reply from the assessee in less than 07 days, is sustainable in law or not, needs to be examined in the light judicial precedents.
7. I find that the Hon’ble Jurisdictional High Court in the case of Mukesh J. Rupatel (supra) has dealt with the very same issue, wherein notice dated 15.03.2023, giving time to reply upto 20.03.2023 i.e. less than 07 days. Hon’ble Court took a note of the CBDT guidelines dated 01.08.2022 for issuing notice u/sec. 148 of the Act which provides that if the result of an inquiry/ information available, suggests that the income chargeable to tax has escaped assessment, Ld.AO shall provide an opportunity of being heard by the assessee by issuing show-cause notice u/sec. 148A(b) of the Act and the notice shall provide between 07 to 30 days time to the assessee to submit their reply. Hon’ble Court observed that minimum 07 days time required to be given is a mandatory requirement and failure to comply with, would render the notice itself invalid and on this ground alone i.e. giving time of less than 07 days to the assessee to file reply to the notice u/sec. 148A(b) of the Act, such notice required to be quashed and set aside.
8. I find that similar view has also been taken by the Hon’ble Rajasthan High Court in the case of Bijendra Singh (supra) holding that notice dated 16.03.2022 was issued/posted on 17.03.2022 and date fixed for response was 23.03.2022, the Hon’ble Court observed that including 02 days i.e. date of sending notice as well as last date indicated, even if notice was received by the petitioner, same falls short of seven days period as envisaged in the provisions of section 148A(b) of the Act, notice issued to the petitioner cannot be sustained.
9. In the light of the above two judgments of Hon’ble Jurisdictional High Court and the Hon’ble High Court of Rajasthan (supra), I find that, in instant case also, Ld. AO has given less than 07 days time to the assessee to file reply u/sec. 148A(c) of the Act to the notice u/sec. 148A(b) of the Act and by giving less than 07 days time is futile to the issuance of notice u/sec. 148A(b) of the Act and such notice deserves to be quashed and renders the subsequent re-assessment proceedings carried out u/sec. 147 of the Act as void ab initio. Therefore, re-assessment order dated 29.01.2024 framed u/sec. 147 of the Act is hereby quashed. Finding of Ld.CIT(A) is reversed and the impugned addition stands deleted.
10. So far as the remaining grounds of appeal on merits are concerned, since I have already quashed the reassessment order by holding that the notice issued u/sec. 148A(b) of the Act is invalid rendering the re-assessment proceedings as bad in law, adjudication of the remaining grounds on merits would be merely academic in nature. Accordingly, the remaining grounds do not require any further adjudication and are, therefore, dismissed as infructuous.
11. ITA No. 345/NAG/2026 is against levy of penalty u/sec. 271AAC(1) of the Act and the Ld. AO has computed it @10% of the tax payable u/sec. 115BBE of the Act. I find that since quantum addition itself has been deleted on the legal ground while adjudicating ITA No.342/NAG/2026, the impugned penalty which is dependent upon the quantum addition is not sustainable and is therefore deleted. Finding of Ld.CIT(A) is set and the grounds of appeal raised by the assessee are allowed.
12. In the result, both the appeals of the assessee are allowed.
Order pronounced on 11th September, 2026 under Rule 34(5) of the Income Tax (Appellate Tribunal) Rules, 1963
