Delhi High Court
Acropolis Realty Pvt. Ltd vs Income Tax Officer, Ward 1-1, Delhi & ... on 23 October, 2024
Author: Vibhu Bakhru
Bench: Vibhu Bakhru, Swarana Kanta Sharma
$~113
* IN THE HIGH COURT OF DELHI AT NEW DELHI
% Date of Decision: 23.10.2024
+ W.P.(C) 14317/2024 & CM No.59931/2024
ACROPOLIS REALTY PVT. LTD .....Petitioner
Through: Mr. Sumit Lalchandani, Adv.
Versus
INCOME TAX OFFICER, WARD 1-1,
DELHI & ANR. .....Respondents
Through: Mr. Vipul Aggarwal, Adv.
CORAM:
HON'BLE MR. JUSTICE VIBHU BAKHRU
HON'BLE MS. JUSTICE SWARANA KANTA SHARMA
VIBHU BAKHRU, J. (Oral)
1. The petitioner has filed the present petition, inter alia, praying as
under:
"(a) Stay the operation of the impugned notice dated
17.04.2023 issued under Section 148 of the Act in the
case of the Petitioner for A.Y. 2019-20 along with the
order dated 17.04.2023 passed under Section 148A(d);
the impugned notice dated 01.04.2023 issued under
Section 148(b) of the Act and impugned order dated
01.08.2024 disposing off objections;"
2. The petitioner filed its return of income for the assessment year (AY)
2019-20 on 20.03.2020 declaring 'NIL' income. The petitioner did not
receive any intimation regarding its return at the material time.
3. The Assessing Officer (AO) sought to reopen the assessment by
initiating proceedings under Section 148A of the Income Tax Act, 1961
(hereafter the Act). Accordingly, the AO issued a notice dated 01.04.2023
under Section 148A(b) of the Act (hereafter the impugned notice) alleging
that he had information, which suggests that the petitioner's income for the
relevant assessment year (AY 2019-20) had escaped assessment. The
annexure to the impugned notice indicated that the quantum of income that
has escaped assessment was ascertained at ₹4,86,300/-. The tabular statement
as set out in the said annexure, is reproduced below:
"Sl. Particulars Information
No.
1 PAN AAMCA4253A
2 Name ACROPOLIS REALTY PRIVATE
LIMITED
3 Assessment Year (s) 2019-20
Involved
4 Income Tax Authority Insight Portal as flagged by High
from whom the Risk CRIU/VRU Information.
information received.
5 Gist of the information As per information, the assessee
received/ gathered had entered into accommodation
entries during the year under
consideration. The pieces of
information are as under which as
per Insight portal are under
verification: -
1. Transaction with M/s
Capacious Tradex Pvt. Ltd.
of Rs. 1,70,800/-.
2. Transaction with M/s Alight
Tradex Pvt. Ltd. of Rs.3,
15,500/-.
The above information suggests
that income chargeable to tax has
escaped assessment.
6 Whether the assessee Yes, ITR has been filed declaring
has filled ITR(s) for income of Rs.5,18,690/- on
the respective 25.09.2019.
assessment years
7 Reason why reopening As per information, the assessee
is required had entered into cash transaction
during the year under
consideration. The pieces of
information are as under: -
1. Transaction with M/s
Capacious Tradex Pvt. Ltd.
of Rs. 1,70,800/-.
2. Transaction with M/s Alight
Tradex Pvt. Ltd. of
Rs.3,15,500/-.
Considering the information
received through Insight Portal
suggests escapement of income. A
show cause notice is hereby issued
to the assessee requiring it to
submit the details with
documentary evidences.
1. Transaction with M/s
Capacious Tradex Pvt. Ltd.
along with supporting
documentary evidences.
2. Transaction with M/s Alight
Tradex Pvt. Ltd. along with
supporting documentary
evidences.
3. Copy of audited financials
with all annexures.
8 Income escaped/likely Rs.4,86,300/-."
to be escaped
4. Section 149(1)(a) of the Act, provides that no notice under Section
148 of the Act shall be issued beyond the period of three years except in
cases that fall within the scope of Section 149(1)(b) of the Act. It is clear
from the annexure to the said impugned notice that the assessee's income,
which has possibly escaped assessment, is below the threshold limit of
₹50,00,000/-. Therefore, the time limit as provided in Clause (b) of Section
149(1) of the Act is not applicable. It is thus the petitioner's case that the
impugned notice was issued beyond the period prescribed under the Act and
therefore the same is liable to be set aside.
5. It is the Revenue's contention that although the impugned notice bears
the date of 01.04.2023, however, the same should be construed as having
been issued on 31.03.2023. This contention is premised on the basis that the
process for issuing the impugned notice had begun in the late hours of
31.03.2023 and the final act of affixing the digital signature - which is
system generated process - was completed on 12:02 AM on 01.04.2023. It
is thus contended that the delay is of only about two minutes in issuance of
the impugned notice under Section 148A(b) of the Act. Therefore, the same
be construed as having been issued within the period of three years from the
end of the relevant assessment year (AY 2019-20).
6. The question as to when a notice can be considered as issued was
considered by a Coordinate Bench of this Court in Suman Jeet Agarwal v.
Income Tax Officer, Ward 61(1) & Ors.: Neutral Citation
2022:DHC:3994-DB. In the said case, this Court had observed as under:
"25.12 The review of the aforesaid judgments of the Supreme
Court and the several High Courts shows that all Courts have
consistently held that the expression 'issue' in its common
parlance and its legal interpretation means that the issuer of the
notice must after drawing up the notice and signing the notice,
make an overt act to ensure due despatch of the notice to the
addressee. It is only upon due despatch, that the notice can be
said to have been 'issued'.
25.13 Further, a perusal of the Compliance Affidavit reveals
that while the function of generation of Notice on ITBA portal
and digital signing of the Notice is executed by the JAO, the
function of drafting of the e-mail to which the Notice is
attached and triggering the e-mail to the assessee is performed
by the ITBA e-mail software system.
Thus, mere generation of Notice on the ITBA Screen
cannot in fact or in law constitute issue of notice, whether the
notice is issued in paper form or electronic form. In case of
paper form, the notice must be despatched by post on or before
31st March 2021 and for communication in electronic form the
e-mail should have been despatched on or before 31st March
2021.
In the present writ petitions, the despatch by post and e-
mail was carried out on or after 01st April 2021 and therefore,
we hold that, the impugned Notices were not issued on 31st
March 2021."
7. In the present case the impugned notice was digitally signed on
01.04.2023. Thus, the process of digitally generating the same on the system
was completed on 01.04.2023. Plainly, the impugned notice could not have
been issued prior to the same being signed. The fact that the steps to
generate the impugned notice commenced on 31.03.2023 cannot be a ground
to hold that the impugned notice was issued on 31.03.2023. The date of the
said notice is correctly reflected as 01.04.2023. In addition, it is also pointed
out that the DIN & Notice Number mentioned in the impugned notice -
ITBA/AST/F/148A(SCN)/2023-24/1051828274(1) - also indicates that the
impugned notice was issued in the financial year 2023-24.
8. In view of the above, we find merit in the contention that the re-
assessment proceedings could not have been initiated beyond the period of
three years from the end of the relevant assessment year (AY 2019-20) as
the income in respect of which the AO has information to suggest that it has
escaped assessment, is below the threshold limit of ₹50,00,000/-.
9. The petition is accordingly allowed and the impugned notices dated
01.04.2023 and 17.04.2023 as well as the impugned orders dated 17.04.2023
and 01.08.2024 are set aside. Pending application is also disposed of.
VIBHU BAKHRU, J
SWARANA KANTA SHARMA, J
OCTOBER 23, 2024
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