Facts of the Case

The petitioner, K.S. Dhingra, filed writ petitions challenging notices issued under Section 148 of the Income-tax Act, 1961 seeking to reopen concluded assessments for Assessment Years 1997–98 and 2000–01. The impugned notices were issued on 27.03.2014 and 29.03.2017 respectively, well beyond the limitation period of six years prescribed under Section 149 as applicable at the relevant time.

The Revenue sought to reopen the assessments by invoking Section 149(1)(c), inserted by the Finance Act, 2012 with effect from 01.07.2012, contending that the reassessment pertained to income in relation to assets located outside India and could therefore be reopened up to sixteen years.

Issues Involved

Whether Section 149(1)(c) introduced by the Finance Act, 2012 could be applied retrospectively to reopen assessments that had already become time-barred prior to its insertion, and whether the reassessment notices issued to the petitioner were barred by limitation.

Petitioner’s Arguments

The petitioner contended that the reassessment proceedings had attained finality under the unamended provisions of Section 149, and the limitation period had expired much before 01.07.2012. It was argued that Section 149(1)(c) could not revive concluded assessments in the absence of express retrospective intent. Reliance was placed on settled Supreme Court judgments including K.M. Sharma vs. ITO and S.S. Gadgil vs. Lal & Co., as well as the Delhi High Court’s earlier decision in Brahm Datt vs. ACIT.

Respondent’s Arguments

The Revenue argued that Section 149(1)(c) had retrospective application in view of the Explanation appended to Section 149 by the Finance Act, 2012. It was contended that the provision permitted reopening of assessments relating to foreign assets even if the limitation period under the earlier law had expired.

Court Order / Findings

The Delhi High Court examined the legislative history of Sections 147 and 149 and reiterated that limitation provisions in fiscal statutes must be strictly construed. Relying extensively on Supreme Court precedents in K.M. Sharma vs. ITO and S.S. Gadgil vs. Lal & Co., and its own binding decision in Brahm Datt vs. ACIT, the Court held that Section 149(1)(c) operates prospectively and cannot be used to revive reassessment proceedings that had already become barred by limitation prior to 01.07.2012.

The Court rejected the Revenue’s reliance on the Explanation to Section 149, holding that it does not expressly or by necessary implication authorize retrospective revival of time-barred assessments.

Important Clarification

The Court clarified that even where reassessment relates to alleged foreign assets, concluded assessments that have attained finality due to expiry of limitation cannot be reopened unless the statute expressly provides for retrospective operation. Certainty and finality in tax proceedings cannot be disturbed by subsequent amendments extending limitation.

Final Outcome

The writ petitions filed by K.S. Dhingra were allowed. The Delhi High Court quashed the impugned notices issued under Section 148 for the relevant assessment years, holding them to be barred by limitation and unsustainable in law.

Link to download the order - https://www.mytaxexpert.co.in/uploads/1769676813_MR.K.S.DHINGRAVsASSTT.COMMISSIONEROFINCOMETAXCENTRALCIRCLE8ORS..pdf

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