Time Allowed for Reply Excluded from Reassessment Limitation: SC Dismisses SLP

Sunil Bhalla Vs DCIT (Supreme Court of India)

Background and Reassessment Proceedings

The dispute arose from reassessment proceedings initiated against Sunil Bhalla under Sections 148A and 148 of the Income Tax Act, 1961. The Assessing Officer issued a show-cause notice under Section 148A(b) on 28.03.2024, granting time for reply up to 08.04.2024. The assessee sought an adjournment on 05.04.2024 and again sought adjournment on 15.04.2024. The latter request was declined. On 16.04.2024, the Assessing Officer passed the order under Section 148A(d) and simultaneously issued the consequential notice under Section 148. The assessee challenged these proceedings before the Delhi High Court, principally contending that the reassessment proceedings had become barred by limitation because the original statutory limitation expired on 31.03.2024 and even the initial period allowed for responding to the Section 148A(b) notice extended beyond that date.

Delhi High Court Proceedings and Reasoning

The Delhi High Court considered the petition along with the legal position examined in Shailendra Nath Rai v. Assistant Commissioner of Income Tax Circle 60(1) New Delhi & Anr.. The central issue concerned computation of limitation in light of the fifth and sixth provisos to Section 149. The High Court held that the time allowed to an assessee for responding to a notice under Section 148A(b), including the extended time granted for filing the reply, has to be excluded while computing limitation. It reasoned that accepting the contrary interpretation would make notices issued after 1 March potentially dependent upon the uncertain period taken by an assessee to respond and would frustrate the statutory opportunity of hearing provided under Section 148A.