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2025 (3) TMI 1438 - HC - Income TaxReopening of assessment beyond the period of limitation as stipulated u/s 149(1) - manner in which a block of six or ten assessment years for which assessments could be reopened in terms of Section 153C - HELD THAT - The period of limitation of ten years is required to be reckoned from the end of the assessment year relevant to the financial year in which the decision to take action for re-opening the assessments was initiated that is the date on which the notice u/s 148 of the Act was issued. The relevant assessment year in question (AY 2014-15) is beyond the period of ten years as contemplated u/s 153C r.w.s. 153A of the Act from the end of the assessment year. The petition is accordingly allowed and the impugned notice is set aside.
ISSUES PRESENTED and CONSIDERED
The core legal issue in this case was whether the notice issued under Section 148 of the Income Tax Act, 1961, for the assessment year 2014-15 was beyond the period of limitation as stipulated under Section 149(1) of the Act. The petitioner contended that the notice was time-barred, and thus, it should be set aside. ISSUE-WISE DETAILED ANALYSIS Relevant Legal Framework and Precedents The legal framework primarily involved Sections 148, 148A, 149, 153A, and 153C of the Income Tax Act, 1961. Section 148 pertains to the issuance of notice for income escaping assessment, while Section 149 sets the time limit for issuing such notices. Section 153C deals with the assessment of income of persons other than the searched person, and Section 153A pertains to the assessment in case of search or requisition. Precedents considered include the decisions in The Pr. Commissioner of Income Tax - Central-I v. Ojjus Medicare Pvt. Ltd., Dinesh Jindal v. Assistant Commissioner of Income Tax, and Pankaj Jain v. Assistant Commissioner of Income Tax, which elucidate the computation of the period for reopening assessments under Sections 153C and 153A. Court's Interpretation and Reasoning The Court interpreted the relevant provisions to determine the commencement of the limitation period for issuing a notice under Section 148. The Court emphasized that the computation of the ten-year period for reopening assessments under Section 153C should start from the end of the assessment year relevant to the financial year in which the decision to initiate proceedings is taken, as opposed to the year of search. Key Evidence and Findings The key evidence included the satisfaction note dated 11.03.2023, which recorded the AO's satisfaction regarding the initiation of proceedings under Section 153C for AYs 2015-16 to 2021-22. However, no satisfaction note was recorded for AY 2014-15. The notice under Section 148A(b) was issued on 06.08.2024, and the subsequent notice under Section 148 was issued on 31.08.2024. Application of Law to Facts The Court applied the legal principles derived from the relevant sections and precedents to the facts of the case. It noted that the satisfaction note did not pertain to AY 2014-15, and thus, the initiation of proceedings for this year was not valid under Section 153C. Consequently, the notice under Section 148 was beyond the permissible ten-year period as computed from the end of the assessment year in which the decision to initiate proceedings was made. Treatment of Competing Arguments The Court considered the respondent's argument that the block period should be reckoned with reference to the date of search. However, it rejected this contention, aligning with the established legal position that the period should be computed from the date when the decision to initiate action is taken, especially for cases post-31.03.2021. Conclusions The Court concluded that the notice for AY 2014-15 was issued beyond the statutory limitation period and thus was invalid. The petition was allowed, and the impugned notice was set aside. SIGNIFICANT HOLDINGS Core Principles Established The Court reiterated that the computation of the limitation period for issuing notices under Section 153C should be based on the date of the decision to initiate proceedings, not the date of search, especially in cases where the search occurred after 31.03.2021. This principle aligns with the statutory amendments introduced by the Finance Act, 2021. Final Determinations on Each Issue The final determination was that the notice issued for AY 2014-15 was beyond the permissible period as per the amended provisions of the Income Tax Act. The Court set aside the notice, allowing the petition in favor of the petitioner.
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