2024 (3) TMI 1376 - HC - Income Tax

Validity of re-assessment proceedings u/s 148 as time barred - HELD THAT - Having considered the submissions of learned counsel for the parties and particularly taking into consideration that the reassessment is initiated vide impugned notice issued on 26.03.2023 in relation to Assessment Year 2012-13 and also the provisions contained in Section 149(1)(b) of the Act, as amended vide Finance Act, 2021, pre-existing provisions of Section 149 and Section 153C as also the orders passed by the different High Courts, the petitioner has made out a strong prima-facie case. In that view of the matter, it is ordered that though reassessment proceedings may go on, final order shall not be passed without the leave of the Court. The respondents are granted four weeks time to file reply. List this case on 07.05.2024 for final disposal with other connected matters.

Summary

Issues:
1. Jurisdiction of re-assessment proceedings under Section 148 of the Income Tax Act, 1961.
2. Time limitation for issuance of notice under Section 148.
3. Prima facie case for time-barred assessment.
4. Material evidence for re-opening assessment.
5. Consideration of pre-existing provisions and amendments under Finance Act, 2021.

Jurisdiction of re-assessment proceedings under Section 148 of the Income Tax Act, 1961:
The petitioner argued that the initiation of re-assessment proceedings through the notice under Section 148 was time-barred and lacked jurisdiction. The counsel contended that as the notice was apparently time-barred, the proceedings should be deemed without jurisdiction. The petitioner highlighted that the assessment for the year 2012-13 was reopened through the impugned notice under Section 148, which, according to Section 149(1)(b) of the Act, could not have been issued for the relevant assessment year beginning on or before April 1, 2021, due to time limitations specified in the provisions.

Time limitation for issuance of notice under Section 148:
The respondent argued that a conjoint reading of Sections 148, 149(1)(b), and Section 153C of the Act indicated that the assessment was within the limitation period. The respondent emphasized that the notice under Section 148 was not barred by limitation and was within the prescribed time frame. It was pointed out that if the proceedings had been initiated before April 1, 2021, as per the pre-existing provisions of Section 149, it would have been within the limitation period. The respondent also mentioned the existence of material evidence found during a search operation, indicating a prima facie case justifying the reopening of the assessment.

Prima facie case for time-barred assessment:
Citing judgments from different High Courts, the petitioner established a strong prima facie case that the assessment was time-barred. The petitioner relied on precedents to support the argument that the assessment initiated through the impugned notice was beyond the permissible time frame, thereby questioning the jurisdiction of the re-assessment proceedings.

Material evidence for re-opening assessment:
The respondent highlighted the presence of material evidence discovered during a search operation, revealing suspicious transactions between the petitioner and another individual. This evidence was cited to justify the reopening of the assessment and to counter the petitioner's argument regarding the time limitation for issuing the notice under Section 148.

Consideration of pre-existing provisions and amendments under Finance Act, 2021:
After considering the submissions and the provisions of Section 149(1)(b) of the Act, along with the amendments introduced by the Finance Act, 2021, the Court acknowledged that the petitioner had presented a strong prima facie case. Consequently, the Court ordered that while the reassessment proceedings could continue, a final decision should not be made without the Court's permission, granting the respondents time to file a reply and scheduling the case for final disposal.