Calcutta High Court Upholds Order Under Section 148A(d) as Within Limitation After Excluding Assessee’s Reply Period

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In a recent ruling, the Calcutta High Court clarified that the time granted to the assessee to respond to a notice under Section 148A(b) of the Income Tax Act must be excluded while calculating the limitation period for passing the order under Section 148A(d). The Court upheld the validity of a reassessment order, dismissing the plea that it was time-barred. This judgment provides crucial guidance on interpreting the time limits under the reassessment regime introduced by the Finance Act, 2021.

🔍 Case Overview:

  • Court: Calcutta High Court

  • Issue: Whether the order under Section 148A(d) was passed within the statutory time limit.

  • Assessee’s Claim: The reassessment order was barred by limitation.

  • Revenue’s Argument: The time given to the assessee to respond under Section 148A(b) must be excluded while computing the time limit.

  • Statutory Provision Involved: Section 148A(d) of the Income Tax Act, 1961.

⚖️ Court’s Findings:

  1. Statutory Scheme:
    The Court emphasized that Section 148A(d) provides that an order must be passed within a prescribed time limit, which is governed by Rule 3 of the Income Tax Rules, 1962 and relevant CBDT instructions.

  2. Exclusion of Time:
    The High Court held that the period during which the assessee is given time to respond to the notice under Section 148A(b) must be excluded while computing the limitation period under Section 148A(d). This exclusion is necessary to ensure procedural fairness and effective implementation of the scheme.

  3. Limitation Calculation:
    Upon computing the limitation period by excluding the time granted to the assessee for reply, the Court found that the order under Section 148A(d) was well within the permissible time frame.

🧾 Key Takeaways:

  • Assessee’s response window is excludable while calculating the limitation for passing a reassessment order under Section 148A(d).

  • The judgment affirms the procedural validity of the reassessment regime under the amended law post-2021.

  • It provides clarity on the interpretation of time limits involved in reassessment proceedings.

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