Notice issued with a delay of 2 Minutes: Reassessment Proceeding quashed by Delhi HC
In a twist that could rival the tension of a cricket match’s last over, the Delhi High Court recently quashed a reassessment notice—issued just two minutes beyond the deadline. Who would’ve thought that two minutes could make such a big difference in tax matters? For Acropolis Realty Pvt. Ltd., those two minutes turned out to be nothing short of a golden buzzer!
Case Overview
Case Name: Acropolis Realty Pvt. Ltd. vs. ITO
Court: Delhi High Court
Decision Date: October 23, 2024
Facts of the Case
The petitioner, Acropolis Realty Pvt. Ltd., had filed its income tax return for Assessment Year (AY) 2019–20 on March 20, 2020, declaring “NIL” income. But the Assessing Officer (AO) wasn’t buying it. Claiming that ₹4,86,300 had “escaped” assessment, the AO decided to launch reassessment proceedings.
Here’s the kicker:
• The reassessment notice was issued digitally at 12:02 AM on April 1, 2023, two minutes after the statutory deadline of March 31, 2023.
• A follow-up notice was issued on April 17, 2023.
Those 120 seconds proved to be pivotal for the petitioner, as the reassessment notice was challenged in court.
Legal Framework
1. Section 148A: Ensures the taxpayer gets a heads-up before reassessment by requiring prior notice.
2. Section 149(1)(a): Limits reassessment notices to three years from the end of the relevant AY unless income escaping assessment exceeds ₹50 lakh.
3. Section 149(1)(b): Allows an extended window if the escaped income is over ₹50 lakh (spoiler: it wasn’t in this case).
The Core Question
Could a reassessment notice, issued two minutes after the clock struck midnight, still hold water? Or did Cinderella’s tax liability vanish along with the statutory carriage?
Arguments Made
For the Petitioner (Acropolis Realty):
• The notice was time-barred as it was digitally signed after the statutory deadline.
• Since the alleged escaped income was below ₹50 lakh, the extension under Section 149(1)(b) didn’t apply.
For the Revenue:
• The notice was in the works before midnight. Surely, a 120-second “technicality” shouldn’t derail the entire reassessment process.
Court’s Reasoning: A Strict Interpretation of Time
The Delhi High Court, like a stern invigilator, reminded the Revenue that “issuing” a notice means it must be finalized and dispatched, not just prepared or thought about.
Drawing from the precedent in Suman Jeet Agarwal vs. ITO:
• A notice is considered issued only when it is communicated, not when the AO is burning the midnight oil to sign it.
• In this case, the notice was digitally signed at 12:02 AM on April 1, 2023, clearly outside the three-year limit under Section 149(1)(a).
No brownie points for starting early, the court held. Timing is everything—especially in the tax world!
The Judgment: Time is Money (Saved)
The Delhi High Court ruled in favor of the petitioner, declaring the reassessment notice invalid. Here’s what it meant:
• Both notices (dated April 1, 2023, and April 17, 2023) were quashed.
• Subsequent orders were voided.
A Lesson in Timeliness (and Humor)
This case is a reminder that tax officers need to be as punctual as an atomic clock when it comes to statutory deadlines. Two minutes may not seem like much—barely enough time to make a cup of tea—but in the legal world, those two minutes can spell the difference between a valid notice and a “better luck next time” scenario.
For taxpayers, this is a classic example of how even the smallest details can work in their favor. And for tax professionals? Well, it’s a gentle nudge to remind everyone that when it comes to deadlines, the Income Tax Act is a stickler for precision.
So, the next time someone tells you “what difference do two minutes make,” you can point them to this case and say, “Two minutes can save lakhs!”
The copy of the order is as under:
