Assessment order quashed as the notice issued under Section 148A(b) provided a response time of less than 7 days – Bengaluru ITAT
The Bengaluru Bench of the ITAT has quashed the assessment order on the grounds that the notice issued under Section 148A(b) provided a response time of less than 7 days and that the order passed under Section 148A(d) was non-speaking in nature.
Regarding the notice issued under Section 148A(b) with a response period of less than 7 days, the ITAT held that the statutory minimum requirement of 7 days to submit a response to the show cause notice is not a mere procedural formality but a critical aspect of due process. Therefore, the seven-day requirement is mandatory, and non-compliance with this renders the notice invalid. The ITAT Bench drew guidance and support from the judgment of the Hon’ble Jurisdictional High Court of Karnataka in Panjos Builders (P) Ltd. v. Income Tax Officer [2024] 161 taxmann.com 573 (Karnataka). In this case, the Hon’ble High Court, while relying on the decision of the Hon’ble Bombay High Court in Mukesh J. Ruparel v. ITO [2023] 153 taxmann.com 70 / 295 Taxman 475 [W.P. No. 15268 of 2023, dated 25/07/2023], held that if a notice under Section 148A(b) prescribes a period shorter than the statutory 7 days, the notice stands vitiated, thereby invalidating not just the notice but also any subsequent assessment orders, penalty notices, and related actions.
Furthermore, with respect to the non-speaking order under Section 148A(d), it was held that such an order must contain the necessary elements including reasons recorded, objections raised by the assessee, and a reasoned disposal of those objections. A speaking order is required to be enclosed with the notice issued under Section 148 of the Act. The Delhi High Court in Divya Capital One (P) Ltd. v. Asstt. CIT [W.P.(C) No. 7406 of 2022, dated 12-05-2022] emphasized the safeguards introduced through the amended reassessment scheme under the Finance Act, 2021, in line with the judgment of the Hon’ble Supreme Court in GKN Driveshafts (India) Ltd. v. ITO [2002] 125 Taxman 963. In the present case, the Assessing Officer was required to pass a speaking order under Section 148A(d) before proceeding to issue the notice under Section 148.
Case title: E. Ashwath Narayan vs ITO, ITA No.1920/Bang/2024
The copy of the order is as under:
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