Balwant Rai Wadhwa vs. ITO (ITAT Delhi)

DATE: (Date of pronouncement)
DATE: January 27, 2011 (Date of publication)

Click here to download the judgement (Balwant_Wadhwa_147_reasons_6_years.pdf)

Despite service of s. 148 Notice in time, non-supply of ‘Reasons For Reopening’ within time renders the reopening void

In respect of AY 2001-02, the AO served notice u/s 148 on 28.3.2008 within the limitation period. However, the recorded reasons were supplied on 15.5.2008 after the limitation period. The assessee argued before the Tribunal that in the light of the observations in Haryana Acrylic vs. CIT 308 ITR 38 (Del), if the reasons for reopening were not served on the assessee within 6 years, the reopening was void. HELD upholding the challenge:

(i) U/s 149(1)(b) a notice u/s 148 cannot be issued after the issue of 6 years from the end of the AY. In Haryana Acrylic vs. CIT 308 ITR 38 it was held that a notice u/s 148 without the communication of the reasons there for is meaningless inasmuch as the AO is bound to furnish the reasons within a reasonable time. It was held that a case where the notice has been issued within the said period of six years but the reasons have not been furnished within that period is hit by the bar of limitation because the issuance of the notice and the communication and furnishing of reasons go hand-in-hand. The expression ‘within a reasonable period of time’ as used in GKN Driveshafts 259 ITR 19 (SC) cannot be stretched to such an extent that it extends even beyond the six years stipulated in s. 149;

(ii) As the issuance of the s. 148 notice and the communication and furnishing of reasons go hand in hand, the reasons have to be supplied to the assessee before the expiry of period of 6 years. If this is not done, the validity of the s. 148 notice cannot be upheld. In any proceeding, whether civil or criminal, a summons issued without a copy of the plaint or complaint has to be construed as if no valid service of notice has been effected upon the defendant or respondents.

Note: In Mayawati vs. CIT 321 ITR 349 (Del) it was held that the s. 148 notice has to be “issued” within 6 years but need not be “served” within that period

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