Court dismisses Sunil Bhalla's petition challenging time-barred proceedings under Income Tax Act, 1961
In a significant judgment, the Delhi High Court has dismissed a writ petition filed by Sunil Bhalla challenging the validity of proceedings initiated against him under Sections 148A(d) and 148 of the Income Tax Act, 1961. The petitioner argued that the notices were issued after the expiration of the limitation period. However, the court upheld the validity of the notices, affirming that the time taken by the assessee to respond to notices should be excluded from the computation of the limitation period as per the fifth and sixth provisos to Section 149.
The court, comprising Justices Dinesh Mehta and Vinod Kumar, delivered the judgment on May 29, 2026, in the case of Sunil Bhalla v. Deputy Commissioner of Income Tax Circle 13(1), New Delhi. The court elaborated on the legal framework governing the issuance of notices and orders under the Income Tax Act, emphasizing the provisions that allow for the exclusion of time when the assessee seeks adjournments or delays in filing a reply.
According to the court, the Deputy Commissioner of Income Tax issued a notice to Sunil Bhalla on March 28, 2024, under Section 148A(b), with a deadline to reply by April 8, 2024. Bhalla sought adjournments on April 5 and April 15, 2024, which were denied. The Assessing Officer subsequently issued an order under Section 148A(d) and a notice under Section 148 on April 16, 2024.
The court clarified that the limitation period for issuing notices and orders should exclude the time taken by the assessee to file a reply or seek adjournments. In this case, since Bhalla's request for adjournment was turned down on April 15, 2024, the Assessing Officer had seven days from this "deemed date" to pass the order and issue the notice. The actions taken on April 16, 2024, were therefore within the permissible period.
The judgment also referenced a similar case, Shailendra Nath Rai v. Assistant Commissioner of Income Tax Circle 60(1) New Delhi, where the court had clarified that excluding the time taken for filing a reply ensures the observance of principles of natural justice.
In conclusion, the court dismissed Bhalla's petition, affirming that the notices and orders issued were not time-barred. This judgment reinforces the interpretation of provisions under the Income Tax Act concerning the computation of limitation periods, providing clarity for future cases.
Bottom line:-
Income Tax Act - The time taken by the assessee to file a reply or seek adjournments under Section 148A(b) of the Income Tax Act, 1961, is to be excluded for computing the limitation period as per the fifth and sixth provisos to Section 149. An order passed under Section 148A(d) and a notice issued under Section 148, within the permissible period of limitation, are valid.
Statutory provision(s):
Income Tax Act, 1961 Sections 148A(b), 148A(d), 149
