Delhi High Court Quashes Notice Issued To ADM Agro Industries U/S 148 Income Tax Act
The Delhi High Court has quashed Notice issued to American multinational food processing company ADM Agro Industries under Section 148 Income Tax Act observing that same was issued after the expiry of limitation period.
The Court was considering a Writ Petition issued under Section 148 of the Income Tax Act, 1961 in respect of the Assessment Year [AY] 2013-14.
The division bench of Justice Vibhu Bakhru and Justice Tejas Karia observed, “In the present case, the time period for issuance of notice under Section 148 of the Act expired on 16.06.2022. However, the impugned notice was issued on 20.07.2022, which is beyond the said period. Thus, the notice was beyond the period of limitation.”
The Petitioner was represented by Advocate Ananya Kapoor while the Respondent was represented by SSC Debesh Panda.
Facts of the Case
The initial Notice under Section 148 of the Act for AY 2013-14 was issued on June 30, 2021. The said Notice was unsustainable as it was issued in accordance with the statutory regime as stood prior to March 31, 2021. The Court in the case of Mon Mohan Kohli v. Assistant Commissioner of Income Tax & Anr.: Neutral Citation No.: 2021:DHC:4181-DB had set aside such notices that were issued after March 31, 2021 without following the procedure as prescribed under Section 148A of the Act. Some of the other High Courts also took a similar view and struck down notices that were issued under Section 148 of the Act after March 31, 2021 but under the unamended provisions relating to the re-assessment of income that had escaped assessment.
The Revenue appealed the decisions rendered by various High Courts to the Supreme Court of India. In Union of India v. Ashish Agarwal: 2022 which was one of such appeals arising from the decision of the Allahabad High Court – the Supreme Court delivered its decision on May 04, 2022, whereby it concurred with the view that the amended provisions which came into force after March 31, 2021 would be applicable to Notices issued thereafter.
However, the Court also directed that all Notices that were issued under Section 148 of the Act after April 01, 2021 till the date of the said decision, including those that had been set aside by the High Courts, would be construed as show cause notices under Section 148A(b) of the Act. The Assessing Officers were directed to provide the information and material relied upon by the Revenue for issuance of such notices, to the respective assessees within a period of thirty days from the date of the decision so as to enable the respective assessees to respond to the same.
Reasoning By Court
The Court accepted the contention of the Petitioner and observed, “In the present case, the period of six years from the end of the assessment year for issuing a notice under Section 148 of the Act expired on 31.03.2020. Thus, in terms of Section 149 of the Act, a notice under Section 148 of the Act could not be issued. However, the said period was extended by the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 [TOLA]. Consequently, the time limit for issuing such a notice was extended to 30.06.2021. The original notice under Section 148 of the Act was issued on 30.06.2021, which was the last date of expiry of the period of limitation.
As the said Notice was deemed to be a Notice under Section 148A(b) of the Act by virtue of the decision of the Supreme Court in Union of India & Ors. v. Ashish Agarwal (supra), the Court further observed, “As explained by the Supreme Court in the case of Union of India v. Rajeev Bansal: 2024 SCC OnLine SC 2693, the period from the date of the issuance of the notice till 04.05.2022, the date on which the Supreme Court had rendered the decision in Union of India & Ors. v. Ashish Agarwal (supra), is required to be excluded. Additionally, the time provided till the date of providing the material, which should have accompanied a notice under Section 148A(b) of the Act, as well as the time available to the assessee to respond to the said notice is also required to be excluded by virtue of the Fourth Proviso to Section 149(1) of the Act, as applicable at the material time.”
The Petition was accordingly allowed.
Cause Title: ADM Agro Industries Latur and Vizag Private Limited vs. Assistant Commissioner of Income Tax (2025:DHC:3375-DB)
Appearances:
Petitioner- Advocate Ananya Kapoor
Respondent– Senior Standing Counsel Debesh Panda, Junior Standing Counsel Zehra Khan, Junior Standing Counsel Vikramaditya Singh, Advocate Anauntta Shankar, Advocate Ravicha Sharma
