The Delhi High Court has quashed the reassessment notice citing it to be beyond 10 years block period.
The bench of Justice Vibhu Bakhru and Justice Swarana Kanta Sharma has relied on the judgement of Dinesh Jindal v. Assistant Commissioner of Income Tax, Central Circle 20, Delhi & Others in which it was held that a reassessment action would thus have to not only satisfy the time frames constructed in terms of Section 149, but in a relevant case and which is concerned with a search, also those which would be applicable by virtue of the provisions of Section 153A and 153C of the Income Tax Act.
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Background
The petitioner/assessee has filed the petition challenging the notice issued under Section 148 of the Income Tax Act, 1961 for reopening the assessment in respect of the assessment year (AY) 2015-16.
It is the case of the petitioner that the notice has been issued beyond the period of the limitation as stipulated under Section 149(1) of the Income Tax Act.
The first proviso of Section 149(1) of the Income Tax Act provides that no notice under Section 148 of the Act could be issued at any time in a case for the relevant AY beginning on or before the first day of April, 2021, if a notice under Section 148, Section 153A or Section 153C of the Income Tax Act could not have been issued on account of being beyond the time limit as stipulated under the provisions of Section 149(1)(b) or Section 153A or Section 153C of the Income Tax Act as the provisions stood immediately prior to the commencement of the Finance Act, 2021.
The petitioner’s assessment is sought to be reopened on the basis of the information available pursuant to a search conducted on 11.10.2023 in respect of Sterling Agro Industries Ltd. Apparently, certain information pertaining to the petitioner was found during the course of the proceedings and it was forwarded to the Assessing Officer exercising jurisdiction in the case of the assessee.
On receipt of the information, the AO issued a notice under Section 148A(b) of the Income Tax Act setting out the information, which according to the AO suggested that the petitioner’s income for the relevant AY 2015-16, has escaped assessment.
The AO passed the order under Section 148A(d) and dropped the initiation of the proceedings for issuance of notice under Section 148A(b) on the ground that the separate proceedings for the same assessment year (AY 2015-2016) have been initiated under Section 148 of the Act. The AO also recorded its conclusion that it was not a fit case for issuance of the notice under Section 148.
Concededly, in case any incriminating material was found in respect of a non-search party during the search proceedings, procedure under Section 148A of the Act is not required to be followed. It is on this basis that the notice under Section 148 was issued.
Issue Raised
The issued raised was whether the notice has been issued beyond the period of limitation as stipulated under Section 149(1)(b) of the Income Tax Act.
Conclusion – Reassessment Notice
The court, while allowing the petition, quashed the reassessment notice. Consequently, the department was restrained from the proceeding with the reassessment proceedings in respect of the AY 2015-16.
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Case Details
Case Title: Kad Housing Private Limited Versus Deputy Commissioner Of Income Tax Central Circle 6 Delhi
Case No.: W.P.(C) 14866/2024 & CM APPL. 62415-16/2024
Date: 23.10.2024
Counsel For Petitioner: Sumit Lalchandani
Counsel For Respondent: Aseem Chawla
