2023 (10) TMI 1353 - HC - Income Tax

Reopening of assessment u/s 147 - applicability of the time frame provided in Section 149(1) - validity of order passed u/s. 148A(d) - as argued reassessment proceeding is based upon search conducted in October, 2014, thus the provisions of Section 148A are inapplicable in view of second proviso to Section 149 HELD THAT - A bare perusal of second proviso to Section 149(1) of IT Act reveals that in cases where notice u/S.153A or Section 153C read with Section 153A is required to be issued in relation to a search conducted u/S.132 or books of account and other documents or any asset are requisitioned u/S.132A on or before 31.03.2021, the time frame prescribed by Section 149(1) of IT Act is inapplicable. Thus, it is obvious that in cases of search as is the case at hand, there is no restriction of time period for issuance of notice u/S.148 of IT Act. The object of second proviso to Section 149(1) of IT Act is to keep the cases pertaining to search conducted for reassessment outside the purviews of the time restriction prescribed in Section 149(1) of IT Act. Thus the second proviso to Section 149(1) of IT Act does not eclipse the power of Revenue to issue notice u/S. 148 of IT Act. Restriction, if any, imposed by second proviso to Section 149(1) of IT Act, is to the applicability of the time frame provided in Section 149(1) of IT Act to cases inter alia pertaining to search - ground raised by petitioner by relying upon second proviso to Section 149(1) of IT Act is not tenable. Petition dismissed.

Summary

Issues:
The issues involved in this case are the challenge to the order passed under Section 148A(d), the consequential notice issued under Section 148, and the assessment order. The main contention is regarding the applicability of the second proviso to Section 149 of the Income Tax Act, 1961.

Challenge to Orders and Notice:
The petitioner challenged the orders and notice, arguing that the reassessment proceeding, based on a search conducted in 2014, should not be subject to Section 148A(d) due to the second proviso to Section 149 of the Income Tax Act. The dispute is deemed purely legal, and the court refrains from delving into the factual aspects.

Legal Provisions:
The court reproduced the relevant provision of Section 149 of the Income Tax Act, emphasizing that the second proviso exempts cases related to searches from the time limitations for issuing notices under Section 148. The amendment brought by the Finance Act, 2021, clarifies the time frame for issuing notices under Section 148.

Interpretation of Proviso:
The court clarified that in cases of searches, like the present one, there is no restriction on the time period for issuing notices under Section 148. The objective of the second proviso is to exclude cases of search conducted for reassessment from the time restrictions under Section 149.

Conclusion:
The court concluded that the second proviso to Section 149 does not limit the Revenue's power to issue notices under Section 148. The restriction imposed by the proviso pertains to the applicability of time frames in cases related to searches. Therefore, the petitioner's reliance on the proviso was deemed untenable, and the petition was dismissed without costs.