In a significant judgment reinforcing procedural safeguards under income tax law, the Delhi High Court has quashed the second reassessment notice issued under Section 148 of the Income Tax Act for being beyond the prescribed limitation period of four years. The Court held that all reassessment proceedings initiated through the second notice are invalid and must be set aside.
Court’s Verdict on Limitation Period
The bench comprising Justice Vibhu Bakhru and Justice Tejas Karia ruled in the case Pratishtha Garg vs. ACIT (W.P.(C) 16681/2024), dated March 25, 2025, that the limitation for issuing reassessment notices under Section 148 is four years from the end of the relevant assessment year unless extended conditions apply under Section 149.
The Court emphasized that since the second notice under Section 148 was issued after the lapse of four years from AY 2016-17, the notice was clearly time-barred and hence liable to be quashed.
Background of the Case
The petitioner, Pratishtha Garg, had filed her return of income for Assessment Year (AY) 2016-17 on July 30, 2016. On June 23, 2021, the Assessing Officer (AO) issued the first notice under Section 148 seeking to reopen the assessment.
This notice, however, did not follow the updated reassessment procedure under Section 148A, which became mandatory post March 31, 2021, as per the Income Tax (Amendment) Act, 2021. The petitioner and several others had challenged such notices, and courts across the country, including the Delhi High Court, struck them down for non-compliance with procedural requirements.
Subsequent Notices and Overlapping Proceedings
Following the Supreme Court’s ruling in Union of India & Ors. v. Ashish Agarwal, the earlier notice was to be treated as a notice under Section 148A(b). Meanwhile, a notice under Section 153C was also issued based on materials found during a search on the Alankit Group, which included AY 2016-17 within its scope. The petitioner responded to this notice on July 9, 2022.
Despite these ongoing proceedings, the AO again issued an order under Section 148A(d) on July 14, 2022, and simultaneously issued a second notice under Section 148 for AY 2016-17 — which was beyond the limitation period of four years ending on March 31, 2021.
The petitioner raised objections to the second notice on August 31, 2022, and was later informed that the two parallel proceedings were overlapping, resulting in the closure of the earlier one.
Court’s Key Observations
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The second notice under Section 148 was issued beyond the statutory time limit.
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The first notice, although initially flawed, had been regularized under the Ashish Agarwal ruling.
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Since the AO had already invoked Section 153C proceedings and the matter was under process, initiating a fresh reassessment notice under Section 148 was unwarranted and procedurally redundant.
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Without even delving into the validity of the second notice on grounds of overlapping reassessment via Section 153C, the Court found that the limitation period violation alone was sufficient to quash the notice and all proceedings stemming from it.
Final Ruling
The Delhi High Court held that the second reassessment notice issued on July 14, 2022, was barred by limitation, and all proceedings initiated under it stand quashed. This judgment reiterates the importance of adhering strictly to statutory timelines and procedural mandates under the Income Tax Act.
Case Summary
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Case Title: Pratishtha Garg vs. Assistant Commissioner of Income Tax (ACIT)
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Case No.: W.P.(C) 16681/2024
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Judgment Date: March 25, 2025
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Court: Delhi High Court
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Bench: Justice Vibhu Bakhru and Justice Tejas Karia
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Counsel for Petitioner: Mr. Sumit Lalchandani, Mr. Salil Kapoor, Mr. Tarun Chanana, and Ms. Ananya Kapoor
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Counsel for Respondent: Mr. Gaurav Gupta, Mr. Shivendra Singh, and Mr. Yojit Pareek
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