Reassessment notice is within limitation as time granted for filing response must be excluded.

Reassessment notice is within limitation as time granted for filing response must be excluded.

Issue

Whether the reassessment order passed under section 148A(d) and the consequential notice issued under section 148 were within the prescribed statutory period of limitation, after excluding the time allowed to the assessee to file a reply as per the fifth and sixth provisos to section 149.

Facts

• The Assessing Officer issued a show-cause notice to the assessee under section 148A(b) on March 28, 2024, providing a window until April 8, 2024, to file a response.

• On April 5, 2024, the assessee formally requested an adjournment, which the revenue granted, deferring the hearing to April 15, 2024.

• On the deferred date of April 15, 2024, the assessee moved another adjournment application, which the Assessing Officer explicitly declined.

• Because no written reply was submitted by the final deadline, the Assessing Officer treated April 15, 2024, as the deemed date of filing the reply.

• The Assessing Officer subsequently passed the reassessment order under section 148A(d) and issued the section 148 notice on April 16, 2024.

• The assessee challenged the order and notice, claiming the proceedings were barred by limitation.

Decision

• Held, yes; according to the fifth and sixth provisos to section 149, the time or extended time granted to an assessee to reply to a show-cause notice under section 148A(b) must be entirely excluded when calculating the limitation period.

• Held, yes; the exact duration between the initial date of the section 148A(b) notice and the date the reply is actually filed is excludable. Once that period is omitted, the sixth proviso grants the Assessing Officer an additional buffer period of 7 days from the reply date to pass the final order and issue the notice.

• Held, yes; since the assessee failed to file a regular reply and the final adjournment was rejected, April 15, 2024, was correctly designated as the deemed date of filing.

• Held, yes; calculating from the deemed reply date of April 15, 2024, the final order under section 148A(d) and the accompanying notice under section 148 passed on April 16, 2024, fall squarely within the permissible 7-day extended limitation window.

Key Takeaways

• Exclusion of Adjournment Windows: Time extensions sought by and granted to an assessee to file answers to a reassessment show-cause notice operate to expand the revenue’s ultimate deadline by equivalent margins.

• The Concept of Deemed Reply Date: If an assessee continues to seek adjournments and fails to file a substantive defense, the date on which the final adjournment is rejected is legally treated as the “deemed date of reply” to anchor limitation timelines.

• Statutory 7-Day Extension Rule: The sixth proviso to section 149 functions as a safety valve for the revenue; if the available limitation period after excluding the reply window is less than 7 days, the deadline automatically extends to a full week from the date the reply is received or deemed filed.