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Judgment
PER SUDHIR KUMAR, JM:
These are quantum as well as penalty appeals filed by the Assessee are directed against the separate orders of the Ld. National Faceless Appeal Centre (NFAC) (in short “the Ld. CIT(A)) relevant to assessment year 2018-19.
At the time of hearing, Ld. AR for the assessee submitted that the notice issued under section 148A(b) of the Income Tax Act, 1961 on 12.03.2022 and the time given for compliance is 17.03.2022 which is less than the requisite seven days period. It was further submitted that under identical circumstances, the Hon’ble Delhi High Court in the case of Shri Sai Cooperative Thrift and Credit Society Ltd. vs. ITO [2022] 447 ITR 350 (Delhi) dated 12.5.2022 has quashed the assessment. Hence, it was prayed to follow the aforesaid ratio and notice u/s. 148 of the Act and its consequent assessment may be quashed. Further, it is submitted that since the notice u/s. 148 as well as assessment are bad in law, the penalty is also not valid and thus be deleted.
In reply, the Ld. CIT(DR) relied upon the orders of the authorities below.
We have considered the rival submissions. On perusal of the records, it is noted that the instant issue of the notice under section 148A(b) of the Act is now squarely covered by the decision of the Hon’ble Delhi High Court in the case of Shri Sai Cooperative Thrift and Credit Society Ltd. vs. ITO [2022] 447 ITR 350 (Delhi) dated 12.5.2022 wherein, the Hon’ble has observed as under:-
“A minimum time of seven days has to be granted to the assessee to file a reply to the show-cause notice issued under section 148A(b) of the Income Tax Act, 1961 before issuing an order under section 148A(d) for issue of notice under section 148 for reopening the assessment under section 147. Held, that there had been a violation of the mandatory time period stipulated under section 148A(b) and therefore, prejudice had been caused to the assessee. Though the assessee had responded to the show-cause notice, it could not provide all the relevant details and documents since the time of three days to respond to show-cause notice was inadequate. Consequently, the order dated April 6, 2022 passed under section 148A(d) and notice under section 148 were quashed.”
In the backdrop of the aforesaid discussions and respectfully following the aforesaid precedent, we are of the considered view that the time provided in the notice issued under section 148A(b) of the Act is less than the seven days prescribed by statute, thus the notice issued is held to be bad in law and consequently stands quashed. Since the notice issued under section 148A(b) of the Act stands quashed, as aforesaid, the consequential assessment order also stands quashed.
In the result, the quantum appeal being ITA No. 5494/Del/2025 is allowed.
As regards penalty No. ITA 5495/Del/2025 is concerned, since we have already quashed the notice as well as assessment, as aforesaid, the penalty in dispute is not sustainable in the eyes of law, hence, the same is hereby deleted and accordingly, the penalty appeal of the assessee is also allowed.
In the result, both the appeals of the assessee are allowed.