2024 (9) TMI 1281 - HC - Income Tax

Validity of reassessment proceedings - period of limitation - Time limit for notice u/s 149 - relevant period u/s 153C is liable to be reckoned - computation of the relevant assessment year from the date of the impugned Section 148 notice - HELD THAT - As is evident from a reading of that provision any action for reassessment pertaining to an AY prior to 01 April 2021 can be sustained only if it be compliant with the timeframes specified under Section 149 (1) (b), Section 153A or Section 153C as the case may be and on the anvil of those provisions as they existed prior to the commencement of Finance Act 2021. Viewed in that light, it is manifest that the assessment for AYs 2012-13 and 2013-14 could not have been reopened. The record would reflect that pursuant to a search and seizure operation conducted in respect of a third party on 09 February 2022, the petitioner was served with the notices under Section 148 on 30 March 2023. Undisputedly and for the purposes of reopening, bearing in mind the Proviso to Section 149 (1), action could have been initiated only up to AY 2014-15. As ex facie evident that AYs 2012-13 and 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 notices are rendered unsustainable. Thus, we allow the instant writ petitions and quash the notice referable to Section 148 - Assessee appeal allowed.

Summary

Issues:
Reassessment notices for Assessment Years 2012-13 and 2013-14 under Section 148 of the Income Tax Act, 1961; Applicability of the amended regime of reassessment from 01 April 2021; Compliance with timeframes specified under Section 149 (1) (b), Section 153A or Section 153C; Validity of reassessment actions based on Proviso to Section 149 (1); Impact of search and seizure operation on the reassessment timeline; Interpretation of the relevant assessment year for computation purposes.

Analysis:
The High Court judgment dealt with the challenge to reassessment notices for Assessment Years 2012-13 and 2013-14 issued under Section 148 of the Income Tax Act, 1961. The court noted that the amended regime of reassessment from 01 April 2021 would apply to the case, requiring compliance with the provisions of the First Proviso to Section 149(1) of the Act. The court emphasized that any action for reassessment before 01 April 2021 must adhere to the timeframes specified under Section 149(1)(b), Section 153A, or Section 153C as they existed prior to the Finance Act 2021. It concluded that the assessment for the mentioned years could not have been reopened based on these provisions.

The judgment highlighted that the reassessment actions were initiated following a search and seizure operation involving a third party, where the notices under Section 148 were served on the petitioner. Considering the Proviso to Section 149(1), the court determined that the reassessment could have been initiated only up to Assessment Year 2014-15. Citing previous decisions, the court clarified the computation of the relevant assessment year and the limitation period under Section 149(1)(b) and Explanation 1 to Section 153A. It emphasized that the impugned notice issued under Section 148 could not be sustained based on these legal principles.

Further, the court computed the ten-year block period from the date of the impugned Section 148 notice to establish that Assessment Years 2012-13 and 2013-14 fell beyond this period as outlined in Section 153C read with Section 153A of the Act. Consequently, the court found the reassessment notices unsustainable and quashed them. In conclusion, the court allowed the writ petitions and invalidated the notices dated 30 March 2023 under Section 148 of the Act, based on the statutory limitations and legal interpretations provided in the judgment.