Reassessment Set Aside: “Technical Glitch” No Excuse for AO Granting Only 2 Days to Reply; Minimum Time u/s 148A(b) Mandatory

By | January 1, 2026
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Reassessment Set Aside: “Technical Glitch” No Excuse for AO Granting Only 2 Days to Reply; Minimum Time u/s 148A(b) Mandatory

ISSUE

Whether an order passed under Section 148A(d) is valid when the Assessing Officer (AO), after admitting to a “technical glitch” in the initial notice, demanded specific details on 29-03-2023 and passed the final order on 31-03-2023, thereby denying the assessee the adequate statutory time to respond.

FACTS

  • Assessment Year: 2019-20.

  • The Notice: The AO issued a show-cause notice under Section 148A(b) alleging unexplained financial transactions. The assessee replied with the details available.

  • The Defect: On 29-03-2023, the AO communicated that due to “technical glitches,” specific bank-wise and entry-wise details were not demanded in the earlier notice. He directed the assessee to furnish these new, specific details immediately.

  • The Adjournment Request: The assessee requested 30 days to compile and provide this detailed data.

  • The Rush: Ignoring the request and the statutory timeline, the AO passed the order under Section 148A(d) on 31-03-2023 (just two days later) to meet the limitation deadline.

HELD

  • Violation of Statute: Section 148A(b) mandates that the assessee be given a minimum time (not less than 7 days, extendable) to respond to the allegations. Granting essentially 2 days (29th to 31st) is a clear violation of this provision.

  • Natural Justice Denied: The AO cannot penalize the assessee for the department’s “technical glitches.” By introducing new, specific requirements at the last minute and passing the order without waiting for a reply, the AO violated the principles of natural justice (Audialteram Partem).

  • Verdict: The order under Section 148A(d) and the consequential notice under Section 148 were held untenable and were quashed. [In Favour of Assessee]

KEY TAKEAWAYS

  1. The “March Rush” Defense: This is a classic example of the department rushing to close cases before the March 31st deadline. Courts are strictly holding that the limitation period (deadline) cannot override the mandatory procedural safeguards (minimum time to reply) given to taxpayers.

  2. Minimum 7 Days: Under Section 148A(b), the AO must provide a minimum of 7 days to the assessee to reply. Any order passed giving less time (e.g., 2-3 days) is liable to be quashed solely on this technical ground.

  3. Adjournment Requests: If you receive a notice on March 27th or 28th asking for details by March 30th, immediately file a Request for Adjournment citing Section 148A(b). Even if the AO rejects it and passes the order, your adjournment request becomes the primary evidence of “denial of opportunity” in the writ petition.

HIGH COURT OF GUJARAT
Gaurang Raghavjibhai Patel
v.
Income-tax Officer Ward – 3(2)(1)*
BHARGAV D. KARIA and Pranav Trivedi, JJ.
R/SPECIAL CIVIL APPLICATION NO. 9576 of 2023
OCTOBER  16, 2025
Manish J Shah, Adv. for the Petitioner. Karan G Sanghani, Adv. for the Respondent.
JUDGMENT
Pranav Trivedi, J. – Heard learned advocate Mr. Manish Shah for the petitioner and learned Senior Standing Counsel Mr. Varun K. Patel for the respondents.
2. Rule returnable forthwith. Learned Senior Standing Counsel Mr. Karan Sanghani waives service of notice of Rule for the respondents.
3.-4. Having regard to the controversy involved which is in narrow compass, this matter is taken up for hearing with the consent of learned advocates for both the parties.
5. The present petition is preferred under Articles 226 and 227 of the Constitution of India praying to quash and set aside the impugned order dated 31.03.2023 issued under Section 148A(d) of the Income Tax (For Short “the Act”) as well as the notice issued under Section 148A of the Act dated 31.03.2023.
6. The brief facts leading to filing of the present writ petition are that the petitioner is an individual and has filed his return of income on 31.08.2019 for the Assessment Year 2019-20 under Section 139 (1) of the Act declaring the total income of Rs.8,05,650/-. It is the case of the petitioner that the return filed by the petitioner was processed and accepted without conducting scrutiny of assessment while issuing notice under Section 143(2) of the Act.
6.1. Subsequent to the acceptance of the return of income filed by the petitioner, the notice was issued under Section 148A(b) of the Act on 18.03.2023 stating that there was an information which suggested that income chargeable to tax for Assessment Year 2019-20 has escaped assessment. It was further alleged that the financial transactions of Rs.14,96,82,215/- had remained unexplained.
6.2. In response to the notice under Section 148A(b) of the Act, the petitioner communicated to the department on 27.03.2023 furnishing of the details available with him. The respondent vide communication 29.03.2023 directed the petitioner to provide specific bank-wise and entry-wise details as the same was not demanded in the earlier notice due to some technical glitches. However, despite the fact that the requisition made by the respondent on 29.03.2023, only one day time was provided to the petitioner to file its return i.e. on or before 30.03.2023. It is the case of the petitioner that the respondent effectively provided only one day time to furnish requisite material and therefore on 30.03.2023 the petitioner communicated to the respondent to provide 30 days time to effectively reply the details demanded for furnishing the details vide communication dated 29.03.2023.
6.3. It is the case of the petitioner that despite the request being made by the petitioner on 30.03.2023, the respondent without acceding to the request passed an order under Section 148A(d) of the Act on the very next date i.e. on 31.03.2023 based on the preliminary details provided by the petitioner. The respondent recorded satisfaction to the effect that the case of the petitioner was fit for issuing notice under Section 148 of the Act and income to the tune of Rs.14,06,82,215/- had escaped the assessment. In wake of such submissions, the order dated 31.03.2023 passed under Section 148A(d) of the Act is nothing but breach of principles of natural justice.
7. It was further submitted by learned advocate Mr. Manish Shah for the petitioner that the demand vide communication dated 29.03.2023 was with regard to 17 different transactions and comprehensive details of 13 pages. This was practically impossible for the petitioner to respond in less than 24 hours of time. Therefore, such action of respondent is nothing but blatant violation of the principles of natural justice. The statutory provisions contained under Section 148A(b) of the Act requires giving minimum 7 days time to provide information.
8. Per contra, learned Senior Standing Counsel Mr. Karan Sanghani was not in a position to controvert the fact of giving minimum 7 days’ time to provide the information. However, he has referred to and relied upon the affidavit-in-reply filed on behalf of the respondent. On the basis of the affidavit-in-reply filed by the respondent, it was submitted that the petitioner had already provided the basic information on 18.03.2023. It was further submitted that the assessee had been provided detailed information vide letter dated 29.03.2023 and instead of replying the petitoner had sought extension of time. However, as the time for passing the order under Section 148A(d) of the Act was barred by limitation on 31.03.2023, order under Section 148A(d) of the Act was passed on 31.03.2023. However, learned Senior Standing Counsel Mr. Karan Sanghani was not in a position to controvert the fact of providing less than 24 hours’ time to the petitioner to give details and has requested the Court to pass appropriate order.
9. Having heard the learned advocates for the respective parties and having perused the material on record, certain factual aspects are not in dispute. It is not in dispute that subsequent notice was issued by the respondent on 29.03.2023 requesting to provide certain details of 17 transactions wherein less than 24 hours time was given to the petitioner for providing the details. In the instant case notice under Section 148A(b) of the Act was issued on 18.03.2023 wherein the petitioner was directed to furnish reply on or before 27.03.2023. It further transpires that the petitioner received communication dated 29.03.2023 and in the said communication, the respondent authority has specifically observed that the said authority issued notice and certain attachment was also supplied to the petitioner, however, the respondent came to know thereafter that the attachment has not reached to the petitioner. It was also observed that it seems that due to some technical glitches, the subject information sent as attachment could not reach to the petitioner. In the said communication, the petitioner was asked to give reply within 24 hours i.e. on or before 30.03.2023. It was pointed out by leaned advocate for the petitioner that on 30.03.2023, the petitioner requested the respondent authority to grant more time and also pointed out about the provision contained in Section 148A(b) of the Act, however without considering the said reply, the impugned order has been passed by the respondent authority. Thus, the time period is less than the time stipulated under Section 148A(b) of the Act. Section 148A(b) of the Act reads as under :-
Section 148A The Assessing Officer shall, before issuing any notice under Section 148 :-
(a) xxx xxx
(b) Provide an opportunity of being heard to the assessee, by serving upon him a notice to show cause within such time, as may be specified in the notice, being not less than seven days and not exceeding thirty days from the date on which such notice is issued, or such time, as may be extended by him on the basis of an application in this behalf, as to why a notice under Section 148 should not be issued on the basis of information which suggest that income chargeable to tax has escaped assessment in his case for the relevant assessment year and results of enquiry conducted, if any, as per clause (a);”
10. Upon perusing the above provision, it is not in dispute that the petitioner was not given adequate time as required under Section 148A(b) of the Act, and was not heard before passing the impugned order. It is a fundamental proposition of law that the other side should be heard before any order is passed. The maxim of Audi Alteram Partem is broad enough to include the rule against bias since a fair hearing is must for it to be unbiased hearing. In the instant case, the fact is not in dispute that the petitioner was not given appropriate time to respond to the notice issued under Section 148A(b) of the Act and the impugned order was passed without hearing the petitioner.
11. In view of the same, the impugned order under Section 148A(d) of the Act dated 31.03.2023 passed by the respondent as well as the notice of the same date issued under Section 148A of the Act are not tenable and the same are required to be quashed and set-aside.
12. Considering the facts of the case, the petition succeeds and is accordingly allowed. The impugned order and notice dated 31.03.2023 are hereby quashed and set aside and the matter is remanded to the respondent to comply with the provisions of Section 148A(b) of the Act and pass a fresh order after following due procedure of law.
13. Such exercise shall be completed within twelve (12) weeks from the date of receipt of copy of this order.
14. Rule is made absolute to the aforesaid extent with no order as to costs.