2022 (4) TMI 1561 - HC - Income Tax

Reopening of assessment - Limitation period to issue notice - distinction between issuing of notice and delivery of notice or receipt of notice - HELD THAT - Limitation prescribed for completing the assessment under Section 147 is at Section 153(2) of the Act which says - No order of assessment re-assessment or re-computation shall be made under Section 147 after the expiry of 9 months from the end of the financial year in which the notice under Section 148 was served As in the present case the limitation started from the last date of financial year during which the notice u/s 148 was served on the assessee. The word served has been predominantly and unambiguously used by the legislature that means the limitation starts only from the last date of the financial year wherein the notice was served on the assessee and not from the notice was issued or sent by the Revenue. In the case in hand admittedly the notice dated 30.03.2018 has been served on the assessee only on 03.04.2018. If that being so 03.04.2018 is the date of serving of notice. Therefore if that date falls in a particular financial year the limitation starts only after the last date of that financial year. Here in the case in hand since the notice was served on 03.04.2018 since that falls in the financial year 2018-19 the last date of the financial year being 31.03.2019 the limitation of nine months as contemplated under Section 153(2) of the Act would necessarily start only from 01.04.2019 and not from 01.04.2018 as projected by the learned counsel for the assessee. In this context the submission made by the learned Standing Counsel for the Revenue is to be accepted. If that being the factual position certainly the order impugned dated 21.02.2022 passed under Section 147 of the Act is well within the limitation of nine months period and therefore it cannot be stated that it is beyond the period of limitation and hence on that ground it can be assailed before this Court invoking the extraordinary jurisdiction. Hence this Court has no hesitation to hold that the ground raised by the petitioner on the basis of limitation as contemplated under Section 153(2) of the Act is to be answered in favour of the Revenue and against the assessee. Thus impugned order cannot be assailed successfully on the ground of limitation within the meaning of Section 153(2) of the Act. Hence the challenge fails and the writ petition is liable to be rejected.

Summary

Issues Involved:
1. Validity of notice under Section 148 of the Income Tax Act, 1961.
2. Limitation period for completion of assessment under Section 147 read with Section 153(2) of the Income Tax Act, 1961.

Issue-wise Detailed Analysis:

1. Validity of notice under Section 148 of the Income Tax Act, 1961:

The petitioner, an assessee, received a notice under Section 148 of the Income Tax Act on 03.04.2018 for the assessment year 2011-12, intending to reopen the assessment under Section 147. The petitioner challenged this notice on the ground that it was issued beyond the limitation period prescribed under Section 149. The High Court had previously ruled that the limitation for the issuance of notice under Section 149 is satisfied when the notice is signed by the competent authority, regardless of when it is received by the assessee. The petitioner and others had unsuccessfully challenged the notice but later cooperated with the Revenue for the assessment proceedings.

2. Limitation period for completion of assessment under Section 147 read with Section 153(2) of the Income Tax Act, 1961:

The petitioner challenged the assessment order dated 21.02.2022 on the ground that it was beyond the limitation period prescribed under Section 153(2). The petitioner argued that the nine-month limitation period should be calculated from the last date of the financial year in which the notice was issued (31.03.2018), and after excluding the period during which there was a stay (06.06.2018 to 26.04.2021), the assessment should have been completed by 20.11.2021.

The Revenue contended that the limitation period should start from the last date of the financial year in which the notice was served (31.03.2019), making the assessment order within the permissible period. The court examined the language of Sections 149 and 153(2) and noted the distinction between "issued" and "served." The court held that the limitation period under Section 153(2) starts from the end of the financial year in which the notice was served, not issued. Since the notice was served on 03.04.2018, falling in the financial year 2018-19, the limitation period started from 01.04.2019.

Conclusion:

The court concluded that the assessment order dated 21.02.2022 was within the nine-month limitation period starting from 01.04.2019, and thus, the petitioner's challenge on the ground of limitation failed. The court dismissed the writ petition but allowed the petitioner to appeal the assessment order through appropriate legal channels.