Section 148 notice valid: extended time for assessee’s reply is excluded from limitation period.

By | September 19, 2026
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Section 148 notice valid: extended time for assessee’s reply is excluded from limitation period.
Issue
Whether the time or extended time granted to an assessee to respond to a show-cause notice under Section 148A(b) should be excluded when computing the limitation period for passing an order under Section 148A(d) and issuing a reassessment notice under Section 148.
Facts
  • The Assessing Officer (AO) issued a notice under Section 148A(b) on March 28, 2024, allowing the assessee time until April 8, 2024, to file a reply.
  • On April 5, 2024, the assessee requested an adjournment, and the hearing was consequently deferred to April 15, 2024.
  • The assessee requested another adjournment on April 15, 2024, which the AO declined.
  • Because no reply was submitted, the AO treated April 15, 2024, as the deemed date of filing the reply.
  • The AO subsequently passed an order under Section 148A(d) and issued a reassessment notice under Section 148 on the very next day, April 16, 2024.
  • The assessee challenged this in the High Court, which ruled in favor of the revenue. The assessee then filed a Special Leave Petition (SLP) before the Supreme Court.
Decision
  • The Supreme Court dismissed the SLP, upholding the High Court’s order in favor of the Revenue.
  • The Court affirmed that as per the fifth and sixth provisos to Section 149, the time or extended time allowed to an assessee to reply to a Section 148A(b) notice must be excluded when computing the period of limitation.
  • The time between the issuance of the Section 148A(b) notice and the date the reply is filed (or deemed filed) is strictly excluded.
  • Because the assessee did not file a reply, the AO correctly treated the final extended date (April 15, 2024) as the deemed date of filing the reply.
  • From this deemed date, the sixth proviso to Section 149 grants the AO a period of 7 days to pass the Section 148A(d) order and issue the Section 148 notice.
  • Therefore, the order and notice issued on April 16, 2024, were legally valid and well within the limitation period.
Key Takeaways
  • Strict Exclusion of Extension Time: Any time or adjournment granted to the assessee to respond to a Section 148A(b) show-cause notice halts the limitation clock for the Revenue.
  • Concept of Deemed Date: If an assessee exhausts their extended time without filing a response, the final date of that extended period is legally treated as the “deemed date” of filing.
  • The 7-Day Rule: Once the reply is filed (or the deemed date is reached), the AO has a clear 7-day statutory window under the sixth proviso to Section 149 to conclude proceedings under Section 148A(d) and issue the reassessment notice.
  • Delay Tactics Ineffective: Seeking multiple adjournments does not prejudice the tax department’s timeline, as the entire duration of the extension is carved out of the limitation period calculation.
SUPREME COURT OF INDIA
Sunil Bhalla
v.
Deputy Commissioner of Income-tax
J.B. PARDIWALA and K. Vinod Chandran, JJ.
Special Leave to Appeal (C) No(s). 31342 of 2026†
SEPTEMBER  8, 2026
Salil Aggarwal, Sr. Adv., Bhargava V. Desai, AOR, Shivam Sharma, Uma Shankar, Shailesh Gupta, Ms. Prakriti Rastogi, Ms. Surbhi Tuli and Madhur Aggarwal, Advs. for the Petitioner.
ORDER
1. Having heard the learned counsel appearing for the petitioners and having gone through the materials on record, we are not inclined to interfere with the impugned judgment(s) and order(s) passed by the High Court.
2. The Special Leave Petitions are, accordingly, dismissed.
3. Pending application(s), if any, shall stand disposed of.