2024 (6) TMI 695 - HC - Income Tax

Reopening of assessment u/s 147 - Time limit for notice u/s 149 - HELD THAT - The record would reflect that pursuant to a search and seizure operation conducted in respect of the Alankit Group on 18 October 2019, the petitioner was served a notice u/s 153C on 03 March 2022. On culmination of those proceedings, the respondent proceeded to pass a final order of assessment on 23 March 2023, accepting the income which had been assessed originally u/s 143 (3) - The petitioner discloses that insofar as the original Section 143 (3) assessment was concerned, an appeal was taken to the Income Tax Appellate Tribunal which ultimately accorded relief to the petitioner with respect to disallowances made u/s 40 (a) (ia) of the Act. The subsequent notice u/s 148 was concerned with a search which was conducted in the case of the Proform Group on 09 February 2022. Undisputedly and for the purposes of reopening, bearing in mind the proviso to Section 149(1), action could have been initiated only upto AY 2014-15. We take note of the decision in Filatex India Ltd. 2023 (9) TMI 1484 - DELHI HIGH COURT and where while dealing with an identical question, upon taking note of the manner in which the relevant period under Section 153C is liable to be reckoned, and which we had otherwise dealt with in some detail in our decision rendered in Ojjus Medicare Pvt. Ltd. 2024 (4) TMI 268 - DELHI HIGH COURT It is therefore ex facie evident that AY 2013-14 falls beyond the ten-year block period as set out under Section 153C read with Section 153A of the Act. Consequently, the impugned notice is rendered unsustainable.

Summary

Issues:
1. Validity of notice dated 31 March 2023 under Section 148 of the Income Tax Act, 1961 for Assessment Year 2013-14.

Analysis:
The High Court analyzed the validity of the notice issued under Section 148 of the Income Tax Act, 1961 for Assessment Year 2013-14. The Court noted that the notice was issued on 31 March 2023, falling under the amended regime of reassessment effective from 01 April 2021. The Court referred to the provisions of the First Proviso to Section 149(1) of the Act, which sets the time limit for issuing a notice for a relevant assessment year. The Court emphasized that any action for reassessment before 01 April 2021 must comply with the timeframes specified under Section 149(1)(b), Section 153A, or Section 153C as they existed before the Finance Act, 2021.

The Court observed that the assessment for AY 2013-14 could not have been reopened based on the relevant provisions. It considered additional facts, including a search and seizure operation in the Alankit Group, leading to a notice under Section 153C and subsequent assessment orders. The Court also mentioned a search in the Proform Group, highlighting that action for reopening could have been initiated only up to AY 2014-15 based on the proviso to Section 149(1).

Referring to previous judgments, the Court cited the decision in Filatex India Ltd. vs. Deputy Commissioner of Income Tax, addressing the computation of the time limit for the relevant assessment year under Section 153C. The Court reiterated the legal position concerning the starting block for the six and ten-year periods, emphasizing the significance of the date of receipt of books of accounts in such assessments. Based on these considerations, the Court concluded that the impugned notice dated 13 March 2023 under Section 148 of the Act could not be sustained.

Consequently, the High Court allowed the writ petition, quashing the notice dated 31 March 2023 under Section 148 of the Act. The Court's detailed analysis of the relevant provisions and precedents led to the decision to invalidate the notice for reassessment of AY 2013-14.