2023 (1) TMI 775 - HC - Income Tax

Reopening of assessment u/s 147 - proceedings barred by limitation - HELD THAT - According to Respondents in the normal course, the proceedings would have become time barred only on 31.03.2021, but because of the intercession of Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020, the same stood extended further. Petitioner in rejoinder, says that by virtue of Finance Act, 2021, the maximum timeframe under Section 149 of the Act has been reduced to ten years. This is a matter which would require examination qua both issues raised before us.Accordingly, issue notice. List the matter on 26.07.2023.

Summary

Issues:
1. Validity of the impugned order and notice under the Income Tax Act, 1961.
2. Impact of retrospective amendments on time-barred assessments.

Issue 1: Validity of the impugned order and notice under the Income Tax Act, 1961:
The petitioner challenges the order dated 30.07.2022 passed under Section 148A(d) of the Income Tax Act, 1961, and the subsequent notice issued under Section 148 of the Act. The petitioner argues that these actions were based on an earlier notice addressed to a deceased individual, which renders them flawed. The petitioner relies on the judgment in Savita Kapila v. ACIT (2020) 426 ITR 502 (Del) to support this contention. Additionally, it is claimed that the proceedings became time-barred on 31.03.2011, as per the unamended Section 149 of the Act. Despite retrospective amendments via the Finance Act, 2012, it is argued that assessments already time-barred would not be affected. This argument is supported by the judgment in Brahm Dutt v. ACIT [2019] 260 Taxman 380 (Del).

Issue 2: Impact of retrospective amendments on time-barred assessments:
The respondent contends that the explanation inserted by the Finance Act, 2021, gives Section 149 retrospective effect. It is argued that the timeframe for proceedings was sixteen years from the end of the relevant Assessment Year (AY), which in this case is AY 2004-2005. The respondent states that due to the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020, the time limit was extended beyond 31.03.2021. However, the petitioner rebuts this by pointing out that the Finance Act, 2021, has reduced the maximum timeframe under Section 149 to ten years. The court acknowledges the need for further examination of both issues raised and issues notice to the parties. The matter is scheduled for the next hearing on 26.07.2023, with a stay on the operation of the impugned order and notice until then.

This detailed analysis of the judgment addresses the validity of the impugned order and notice under the Income Tax Act, 1961, as well as the impact of retrospective amendments on time-barred assessments. The arguments presented by both parties are thoroughly examined, citing relevant legal precedents and statutes. The court's decision to issue notice and schedule further proceedings demonstrates a nuanced approach to resolving the complex legal issues raised in the case.