2015 (11) TMI 408 - HC - Income Tax

Validity of notice issued under section 201(1)/201(1A) - whether the said notice was time barred in view of the provisions of section 201(3) as it then existed? - Held that - In the present case, no new information has come and the impugned notice that was issued on January 20, 2015, was on the basis of the same information in respect of which the notice dated February 17, 2014, had been issued. Thus, those proceedings which had ended and attained finality with the passing of the order dated December 5, 2014, of this court in cannot now be sought to be revived through this methodology adopted by the Assessing Officer. Even otherwise, in so far as the financial year 2007-08 is concerned, the period for completing the assessment under section 201(1)/201(1A) has expired on March 31, 2015. Therefore, looked at from any point of view, in so far as the facts of the present case are concerned, the impugned notice dated January 20, 2015, and subsequent order dated March 17, 2015, cannot be sustained. The same are set aside. The writ petition is allowed.

Issues:
1. Challenge against notice dated January 20, 2015, under section 201(1)/201(1A) of the Income-tax Act, 1961 for the financial year 2007-08.
2. Interpretation of section 201(3) of the Income-tax Act.
3. Effect of the amendment to section 201(3) brought into effect from October 1, 2014.
4. Application of the limitation period on the power of the Assessing Officer.
5. Consideration of new information and its impact on the limitation period for assessment under section 201(1)/201(1A).

Analysis:

1. The writ petition challenged a notice issued on January 20, 2015, under section 201(1)/201(1A) of the Income-tax Act for the financial year 2007-08, following a previous notice issued on February 17, 2014. The High Court had earlier set aside the 2014 notice as time-barred under section 201(3), which stipulated a limitation for passing orders. The court held the 2015 notice was an attempt to take advantage of an amendment to section 201(3) effective from October 1, 2014, extending the limitation period to seven years.

2. The court emphasized that the limitation period under section 201(3) was a significant restriction on the Assessing Officer's power to act. The petitioner relied on Supreme Court precedents to argue that the power for the financial year 2007-08 had expired on March 31, 2011, and could not be revived without a retrospective legislative amendment. The court noted that the 2014 amendment was not retrospective and, in this case, no new information justified the extended limitation period.

3. The Assessing Officer contended that if new information arose post the 2014 amendment, the limitation could be extended to seven years. However, the court found that no new information had surfaced in this case, and the 2015 notice was based on the same information as the 2014 notice. The court ruled that the proceedings finalized by the court's earlier order in December 2014 could not be revived through the current notice. Additionally, the limitation for completing the assessment for the financial year 2007-08 had expired by March 31, 2015.

4. Consequently, the court held that the notice dated January 20, 2015, and the subsequent order dated March 17, 2015, were unsustainable in the present case. Both were set aside, and the writ petition was allowed. The court clarified it had not opined on the extension of the limitation period in case of fresh or new information, as raised by the Revenue's representative during the proceedings.

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