2024 (1) TMI 312 - HC - Income Tax

Validity of reopening of assessment - period of limitation - COVID period from 24.02.2021 to 13.03.2023 was required to be excluded from computation of limitation as stipulated under Explanation 1 (ii) of Section 153 (2) - Exclusion of certain period - HELD THAT - In the instant case, as per the notification No. 10 of 2021/S.O. 966 (E) dated 27th Feb. 2021, the period for completion of reassessment was extended from 31.3.2021 to 30.9.2021 and this Court stayed the proceedings on 24.2.2021, therefore, from the said date, time to complete the reassessment was available upto 30.9.2021 i.e. total 219 days were available with the department for completing the proceedings. The stay granted on 24.2.2021 remained operative till 13.3.2023 which period is required to be excluded as per the provisions of the Act and after dismissal of the assessee s writ petition on 13.3.2023, the period for completion of the reassessment proceedings is to be counted from 13.3.2023 by adding 219 days which comes to 18.10.2023. Thus, time upto 18.10.2023 is available to the Revenue to complete the reassessment proceedings. In this view of the matter, the stand taken by the petitioner regarding the impugned show cause notice/order being barred by limitation is not sustainable. The assessee is still having sufficient opportunity to defend his case during assessment proceedings by requesting for personal hearing and submitting documents well within time. So far as the stand taken by the petitioner claiming parity with the case of similarly situated assessee i.e. ASG Hospital Pvt. Ltd. is concerned, 219 days period was available on the date of granting stay and accordingly, after dismissal of the writ petition on 13.03.2023, again that period of 219 days will be available to the department for completing the reassessment proceedings thereby the reassessment proceedings are to be completed by 18.10.2023 and therefore, we do not find any substance in the argument raised by the petitioner regarding parity also.

Summary

Issues:
The judgment involves the issue of quashing an impugned show cause notice/order issued by the respondent and determining whether the notice is barred by limitation under Section 153 of the Income Tax Act.

Issue 1: Quashing of Impugned Show Cause Notice/Order

The petitioner filed a writ petition seeking to quash the show cause notice dated 27.09.2023 issued by the respondent Assessing Officer under Section 148 of the Income Tax Act for the Assessment Year 2013-14. The petitioner argued that the respondent arbitrarily rejected the ground of limitation raised by the petitioner without appreciating the provisions of law correctly. The petitioner claimed that the notice was barred by limitation as per Section 153 of the Act, as the limitation for passing the reassessment order had expired on 12.05.2023. The respondents, however, justified their action in passing the notice within the limitation period.

Issue 2: Interpretation of Section 153 of the Income Tax Act

The main argument of the petitioner was based on Section 153(2) of the Act, which specifies the time limit for making an assessment/reassessment after the service of a notice under Section 148. The petitioner contended that the period of limitation for passing the reassessment order expired on 12.05.2023, considering the exclusion of time due to a stay order granted by the Court. The petitioner also claimed parity with another assessee, ASG Hospital Pvt. Ltd., regarding the limitation period.

Decision:

The Court analyzed the provisions of Section 153 of the Income Tax Act and the impact of the stay order on the limitation period for completing the reassessment proceedings. The Court held that the impugned show cause notice was not barred by limitation and did not suffer from any illegality or perversity. The Court dismissed the writ petition, stating it lacked merit, and also dismissed the stay application. The Court emphasized that the petitioner still had the opportunity to defend their case during the assessment proceedings by requesting a personal hearing and submitting relevant documents within the specified time frame.