2025 (3) TMI 228 - HC - Income Tax

Reopening of assessment u/s 147 - time limit for notice - computation of the relevant assessment year - HELD THAT - The record would reflect that pursuant to a search and seizure operation conducted in respect of a third person on 02 March 2022 the petitioner was served a notice under Section 148 on 06 October 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 2015-16. It is ex facie evident that AY 2014-15 falls beyond the ten-year block period as set out u/s 153C r.w.s. 153A of the Act. Consequently the impugned notice is rendered unsustainable. Decided in favour of assessee.

Summary

The High Court considered a writ petition challenging a notice issued under Section 148 of the Income Tax Act, 1961, seeking to reassess the petitioner for Assessment Year (AY) 2014-15. The key issue was whether the notice for reassessment was valid under the applicable legal provisions.The Court noted that the notice was issued after the amended regime of reassessment came into effect from 01 April 2021. The action for reassessment had to satisfy the provisions of the First Proviso to Section 149(1) of the Act, which set out specific time limits for issuing notices for relevant assessment years.The Court emphasized that any action for reassessment relating to an AY before 01 April 2021 had to 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 2014-15 could not have been reopened based on the facts presented. Despite a notice served to the petitioner following a search operation, the action could have been initiated only up to AY 2015-16 as per the proviso to Section 149(1).Referring to previous decisions, the Court highlighted the computation of the time limit for the relevant assessment year under the Act. It clarified the legal framework regarding the calculation of block periods and the starting point for assessing the relevant assessment year in cases of search and seizure operations.Based on the legal analysis and precedents cited, the Court concluded that the impugned notice issued under Section 148 of the Act on 06 February 2024 was unsustainable. The Court allowed the writ petition, quashing the notice and disposing of the objections raised by the petitioner.In summary, the Court's decision was based on the interpretation of relevant legal provisions, application of established principles, and consideration of the specific facts of the case. The Court's ruling clarified the limitations on reassessment actions and upheld the petitioner's challenge to the notice issued for AY 2014-15.