Facts of the Case

The petitioner, Bhagwan Sahai Sharma, filed a writ petition challenging the notice dated 30.07.2022 issued under Section 148 of the Income-tax Act, 1961, the order dated 30.07.2022 passed under Section 148A(d), and the notice dated 02.06.2022 issued under Section 148A(b), all relating to Assessment Year 2015–16.

The petitioner had filed his return of income for AY 2015–16 on 26.08.2015 declaring total income of ₹60,64,800. An initial notice under Section 148 was issued on 27.06.2021 under the old reassessment regime. Following the Supreme Court’s decision in Union of India vs. Ashish Agarwal, the said notice was deemed to be a notice under Section 148A(b), and fresh material was supplied by the Assessing Officer on 02.06.2022.

Thereafter, the Assessing Officer passed an order under Section 148A(d) and issued the impugned notice under Section 148 on 30.07.2022, which was challenged as being barred by limitation.

Issues Involved

Whether the reassessment notice dated 30.07.2022 issued for Assessment Year 2015–16 was barred by limitation under Section 149 of the Income-tax Act, and whether the provisions of the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 could be applied to extend the period of limitation.

Petitioner’s Arguments

The petitioner contended that the reassessment notice was issued beyond the permissible limitation period prescribed under Section 149. It was argued that in view of the Supreme Court’s judgment in Union of India vs. Rajeev Bansal, the Revenue had expressly conceded that TOLA was not applicable to Assessment Year 2015–16.

Accordingly, any notice issued on or after 01.04.2021 for AY 2015–16 was required to be dropped. The petitioner relied on subsequent Delhi High Court decisions, including Ibibo Group Private Limited, where similar notices were quashed as time-barred.

Respondents’ Arguments

The Revenue sought to sustain the impugned notice by placing reliance on the directions issued by the Supreme Court in Union of India vs. Ashish Agarwal. It was contended that the reassessment proceedings were validly continued in compliance with the said directions.

Court Order / Findings

The Delhi High Court examined the statutory scheme and the authoritative pronouncement of the Supreme Court in Union of India vs. Rajeev Bansal, wherein it was categorically recorded that TOLA was not applicable for Assessment Year 2015–16 and that all notices issued on or after 01.04.2021 for that year were liable to be dropped.

The Court noted that the impugned notice under Section 148 was issued on 30.07.2022, well beyond the limitation period prescribed under Section 149(1). The Court further observed that similar notices had already been set aside by the Delhi High Court and that the Supreme Court had dismissed Special Leave Petitions in analogous cases by recording the Revenue’s concession in Rajeev Bansal.

In view of the settled legal position, the Court held that the impugned notice and all proceedings emanating therefrom were barred by limitation and unsustainable in law.

Important Clarification

The Court clarified that for Assessment Year 2015–16, the benefit of TOLA is unavailable, as expressly conceded by the Revenue before the Supreme Court in Rajeev Bansal. Consequently, reassessment notices issued on or after 01.04.2021 for that assessment year are liable to be quashed as time-barred, notwithstanding the procedural framework evolved in Ashish Agarwal.

Final Outcome

The writ petition was allowed. The Delhi High Court set aside the notice dated 30.07.2022 issued under Section 148, the order dated 30.07.2022 passed under Section 148A(d), and all proceedings emanating therefrom for Assessment Year 2015–16, holding the reassessment proceedings to be barred by limitation.

Link to download order - https://www.mytaxexpert.co.in/uploads/1769686023_BHAGWANSAHAISHARMAVsDEPUTYCOMMISSIONEROFINCOMETAXCIRCLE131DELHIANR..pdf

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