2024 (11) TMI 320 - HC - Income Tax

Validity of reassessment proceedings beyond period of limitation - whether the assessment order dated 12.05.2023 and the consequent proceedings taken thereafter could have been so done when the notice u/s 148 was issued on 29.03.2021? - HELD THAT - A perusal of sub-section (2) of Section 153 would indicate that assessment, reassessment, or recomputation shall not be made after the expiry of nine months from the end of the financial year in which the notice under Section 148 was issued. The proviso, however, provides that in respect of notices under Section 148 served on or after first day of April 2019, the period of nine months as aforesaid will be substituted by twelve months. In the present case, notice has been issued on 29.03.2021, thereby making applicable the provisio to sub-section (2) of Section 153 requiring the reassessment to be made within twelve months from that date. Thus, we find credence in the submission made the petitioner that the reassessment was required to be completed by 31.03.2021. In the present case, the reassessment having been done by way of assessment order dated 12.05.2023 is beyond the period of twelve months indicated above. Respondents submission as regards the TOLA , would be applicable to the present case would be liable to be rejected for the simple reason that the said Act was applicable to the period from 01.04.2020 to 30.06.2021. In the present case, the notice having been issued u/s 148 on 29.03.2021, is within the period of extended limitation and therefore, the notice having been issued under Section 148, the rigor of proviso to sub-section (2) of Section 153 would be equally applicable. Thus the reassessment order dated 12.05.2023 and all actions taken pursuant thereto would be non-est. Decided in favour of assessee.

Summary

Issues:
Validity of assessment order and subsequent proceedings based on the timeline of notice under Section 148 of the Income Tax Act, 1961.

Analysis:
The petitioner sought various reliefs, including quashing of notices and orders related to the assessment year 2013-14. The main issue was the timeliness of the assessment order dated 12.05.2023 (Annexure-A2) and subsequent proceedings concerning the notice issued under Section 148 on 29.03.2021.

The petitioner's counsel argued that the assessment order exceeded the statutory timeline of twelve months from the notice date, as per the first proviso to subsection (2) of Section 153. The assessment should have been completed by 31.03.2022, but it was passed on 12.05.2023. The counsel contended that this delay rendered the order invalid.

In response, the revenue's counsel contended that since the proceedings were initiated within time under Section 148 on 29.03.2021, the assessment order was also within the stipulated time frame. Additionally, the counsel cited the Taxation & Other Laws (Relaxation & Amendment of Certain Provisions) Act, 2020, claiming that the relaxation provisions applied to the case due to the COVID period.

The court examined Section 153(2) and its proviso, which specified the time limits for assessment, reassessment, or recomputation after a notice under Section 148. The proviso extended the period to twelve months for notices served post 1st April 2019. As the notice in this case was issued on 29.03.2021, the reassessment should have been completed by 31.03.2022. Since the assessment order was passed on 12.05.2023, it exceeded the prescribed timeline.

Regarding the contention on the applicability of the TOLA, the court rejected it, noting that the Act was effective from 01.04.2020 to 30.06.2021, making it inapplicable to the notice issued on 29.03.2021. Consequently, the court held that the reassessment order and subsequent actions were invalid due to non-compliance with the statutory timeline.

In the final order, the court allowed the writ petition and quashed all relevant orders and notices pertaining to the assessment year 2013-14, emphasizing the importance of adhering to statutory timelines in assessment proceedings.