Time Spent To Defend Reassessment Notice Issued Without Following Procedure Doesn't Extend Limitation For Revenue When Issuing Fresh Notice: Delhi HC

The Delhi High Court has held that if the Revenue issues a reassessment notice to an assessee under Section 148 of the Income Tax Act, 1961 without following due procedure, it cannot later issue fresh reassessment notice beyond the prescribed period, claiming that time spent on earlier litigation is to be excluded for the purposes of computing limitation. A division bench of Acting Chief Justice Vibhu Bakhru and Justice Tushar Rao Gedela observed, “Notice issued under Section 148 of the Act in the earlier round was set aside on the ground that the AO had not followed the mandatory requirement of seeking an approval from the competent authority…The fact that the Revenue had not taken the steps in accordance with law cannot possibly be construed as a factor in favour of the Revenue for extending the limitation.” The Petitioner had challenged the reassessment notice issued to it as being time-barred. Section 149 prescribes that the maximum period within which notice under Section 148 of the Act could have been issued is six years from the end of the relevant assessment year. On the question of stay order, Court said there was no order impeding the Revenue from issuing another notice to the assessee within the prescribed time.