ITO Vs Ramanath Narayan Shetty (Karnataka High Court)
Seven Days Means Seven Days: Karnataka High Court Rejects Revenue’s Appeal Against Quashing of Reassessment Notice
Reassessment Notice Invalid for Denying Statutory Response Period
The Karnataka High Court has held that where Section 148A of the Income-tax Act, 1961 mandates that an assessee must be given at least seven days to respond to a show-cause notice, the Assessing Officer cannot curtail that period. A notice granting less than the statutorily prescribed period is invalid, and all consequential reassessment proceedings are liable to be quashed.
The Division Bench dismissed the Revenue’s writ appeal and upheld the order of the learned Single Judge, who had quashed the notices and all further proceedings on the ground that the assessee was not provided the mandatory minimum period of seven days.
The ruling reiterates that the opportunity contemplated under Section 148A is a statutory safeguard and not an empty procedural formality.
Facts of the Case
The Income Tax Department initiated reassessment proceedings against the assessee, Sri Ramanath Narayan Shetty.
The Assessing Officer issued a notice dated March 7, 2023, under Section 148A, calling upon the assessee to furnish his reply on or before March 13, 2023. Thus, the notice did not provide the assessee with the minimum statutory period of seven days.
Thereafter, another notice was issued on March 13, 2023, requiring the assessee to submit supporting documents and his reply on or before March 15, 2023. The second notice granted barely two days for furnishing the required documents and explanation.
Aggrieved by the notices and the proceedings taken pursuant thereto, the assessee approached the Karnataka High Court by filing W.P. No. 330 of 2025.
The learned Single Judge, by an order dated September 8, 2025, quashed the impugned notices and all further proceedings arising from them. The notices were quashed solely on the ground that they failed to provide the minimum statutory notice period of seven days.
Challenging the Single Judge’s order, the Revenue preferred the present writ appeal under Section 4 of the Karnataka High Court Act, 1961.
Mandatory Requirement Under Section 148A
The Division Bench examined the opportunity contemplated under Section 148A of the Income-tax Act.
Under the law applicable to the impugned proceedings, the Assessing Officer was required to serve a show-cause notice upon the assessee and provide him with an opportunity to explain why a notice under Section 148 should not be issued. The statutory framework required the Assessing Officer to grant the assessee not less than seven days for submitting his response.
The first notice, issued on March 7, 2023, required compliance by March 13, 2023. The second notice, issued on March 13, 2023, required the assessee to submit supporting documents and a reply by March 15, 2023.
The High Court found that both notices granted a period shorter than the minimum period prescribed by law.
Revenue’s Appeal Rejected
The Division Bench held that the learned Single Judge was justified in quashing the notices and the consequential proceedings.
The Court observed that Section 148A mandates the grant of at least seven days to the assessee. Since neither of the notices satisfied this statutory requirement, there was no error or illegality in the order passed by the Single Judge.
The Court categorically concluded that the Revenue’s writ appeal was devoid of merit.
Accordingly, the writ appeal was rejected. The Revenue’s application for condonation of delay and its other interlocutory application were also rejected.
Thus, the order quashing the notices and all further proceedings remained undisturbed.
Statutory Opportunity Cannot Be Reduced for Administrative Convenience
The importance of the decision lies in the Court’s refusal to treat the response period as a flexible or merely technical requirement.
The reassessment procedure affects the finality of an already completed assessment or returned income. The preliminary opportunity under Section 148A was introduced to enable the assessee to place relevant facts, explanations and supporting documents before the Assessing Officer before a reassessment notice is issued.
If the assessee is granted only two or three effective working days to collect documents, reconcile transactions and prepare a reply, the statutory opportunity may become illusory.
Where the legislation itself prescribes a minimum period, the Assessing Officer has no discretion to reduce it. The assessee need not separately establish that a longer period would necessarily have changed the ultimate outcome. Failure to comply with the mandatory timeline itself vitiates the proceeding.
Author’s Comments
The decision sends a simple but important message: seven days means seven days. The statutory period cannot be compressed merely because the reassessment limitation period is approaching or because the Department wishes to complete the proceedings expeditiously.
The Assessing Officer must ensure that the notice provides the complete statutory period, calculated in a manner that gives the assessee a real and effective opportunity to respond. Issuing another notice with an even shorter compliance window does not cure the original defect. In the present case, the second notice requiring supporting documents within two days aggravated rather than rectified the procedural lapse.
The ruling is helpful in cases where reassessment proceedings are completed hurriedly with an unreasonably short response time. However, an assessee should, wherever possible, place an objection on record immediately, seek the statutory time or an extension, and file at least a preliminary response. This prevents the Department from subsequently arguing that the assessee accepted the shortened timeline or failed to utilise the available opportunity.
The judgment also demonstrates that observance of natural justice is not satisfied merely by uploading a notice on the portal. The opportunity must comply with the minimum period fixed by Parliament and must be capable of being meaningfully exercised. Once the foundational show-cause notice is invalid for breach of a mandatory statutory requirement, the consequential reassessment proceedings cannot ordinarily survive.
FULL TEXT OF THE JUDGMENT/ORDER OF KARNATAKA HIGH COURT
Heard Sri.E.I.Sanmathi, learned counsel for the appellant-Revenue.
2. The above appeal filed under Section 4 of the Karnataka High Court Act, 1961, is directed against the learned single judge’s order dated 08.09.2025 in WP No.330/2025, whereunder the learned single judge quashed the notice issued under Section 148A(d) of the Income Tax Act, 1961 solely on the ground that the notice is short of statutory notice period of 7 days. The appellants had issued notice under 148A of Act, 1961 dated 07.03.2023 calling upon the respondent to submit his reply on or before 13.03.2023. Again, one more notice was issued on 13.03.2023 under Section 148A of Act, 1961 calling upon the respondent to submit supporting documents and reply on or before 15.03.2023.
3. Section 148A mandates that the assessee shall be given an opportunity of hearing by serving upon the assessee a notice to show cause as to why notice under section 148 should not be issued by providing atleast 7 days time. As both the notices issued under Section 148A of the Act, 1961 was short of 7 days period, learned single judge rightly quashed the notices at Annexures – A and A1 and all further proceedings thereto. We do not find any error or illegality in the order passed by the learned single judge. There is no merit in the writ appeal.
4. Accordingly, the writ appeal as well as IA No.1/2026 for condonation of delay and IA No.2/2026 stands rejected.
