2024 (11) TMI 1204 - HC - Income Tax

Validity of reassessment proceedings - notice was issued beyond the period of limitation as prescribed in first proviso to Section 149(1) - HELD THAT - As decided in RAJEEV BANSAL 2024 (10) TMI 264 - SUPREME COURT (LB) a notice could be issued under Section 148 of the new regime for assessment year 2021-2022 and before only if the time limit for issuance of such notice continued to exist under Section 149(1)(b) of the old regime. The first proviso to Section 149(1)(b) requires the determination of whether the time limit prescribed under Section 149(1)(b) of the old regime continues to exist for the assessment year 2021-2022 and before. Resultantly, a notice under Section 148 of the new regime cannot be issued if the period of six years from the end of the relevant assessment year has expired at the time of issuance of the notice. This also ensures that the new time limit of ten years prescribed under Section 149(1)(b) of the new regime applies prospectively. For example, for the assessment year 2012-2013, the ten year period would have expired on 31 March 2023, while the six year period expired on 31 March 2019. Without the proviso to Section 149(1)(b) of the new regime, the Revenue could have had the power to reopen assessments for the year 2012-2013 if the escaped assessment amounted to Rupees fifty lakhs or more. The proviso limits the retrospective operation of Section 149(1)(b) to protect the interests of the assesses. In view of the above, the present petition is allowed. The impugned order dated 01.05.2024 as well as the notice issued under Section 148 in respect of the AY 2017-18 are set aside.

Summary

The High Court allowed the petition, setting aside the impugned order and notice issued under Section 148 for the assessment year 2017-18 due to being beyond the period of limitation as per the first proviso to Section 149(1) of the Income Tax Act, 1961. The decision was influenced by the Supreme Court's interpretation of the proviso in a recent case.