Facts of the Case

The petitioner, ATS Township Pvt. Ltd., filed a writ petition challenging the notice dated 23.08.2024 issued under Section 148A(b) of the Income-tax Act, 1961, the order dated 31.08.2024 passed under Section 148A(d), and the consequential notice dated 31.08.2024 issued under Section 148 for Assessment Year 2014–15.

The reassessment proceedings were initiated on the basis of information allegedly emanating from a search conducted on 10.10.2021 at the premises of KALA Rathi RSW Steel Pvt. Ltd., during which one Mr. Rajesh Rathi allegedly disclosed fictitious purchase transactions amounting to ₹9,83,65,488/- pertaining to the petitioner for Financial Year 2013–14. Significantly, the impugned notice did not allege that any asset representing income escaping assessment belonging to the petitioner was found during the search.

Issues Involved

Whether reassessment proceedings initiated for AY 2014–15 pursuant to search-related information after 01.04.2021 were barred by limitation, and whether such proceedings could be sustained without satisfying the statutory conditions and timelines applicable under Sections 153A and 153C of the Act as preserved by the first proviso to Section 149.

Petitioner’s Arguments

The petitioner contended that the reassessment proceedings were clearly barred by limitation. It was argued that since the proceedings were founded on material allegedly arising from a search conducted after 01.04.2021, the timelines applicable under Sections 153A and 153C as they stood prior to the Finance Act, 2021 were required to be satisfied by virtue of the first proviso to Section 149. Reliance was placed on the decisions of the Delhi High Court in Dinesh Jindal v. ACIT and Pr. CIT v. Ojjus Medicare Pvt. Ltd. to submit that AY 2014–15 fell beyond even the permissible ten-year block and that mere uploading of information on the Insight Portal could not substitute the statutory requirements of Section 153C.

Respondent’s Arguments

The Revenue did not dispute that the controversy was covered against it by the binding decisions of the Delhi High Court in Dinesh Jindal v. ACIT and Pr. CIT v. Ojjus Medicare Pvt. Ltd. However, it was suggested that the date of placing information on the Insight Portal could be considered relevant for computing limitation.

Court Order / Findings

The Delhi High Court held that reassessment proceedings initiated pursuant to a search conducted after 01.04.2021 must necessarily satisfy the foundational requirements of Sections 153A and 153C as preserved by the first proviso to Section 149. The Court reiterated that uploading of information on the Insight Portal does not amount to recording of satisfaction or handing over of seized material as contemplated under Section 153C.

Relying on its earlier decisions in Dinesh Jindal v. ACIT and Pr. CIT v. Ojjus Medicare Pvt. Ltd., the Court held that AY 2014–15 was clearly beyond the permissible block period. The Court further noted that there was no allegation of discovery of any asset representing income escaping assessment, and therefore extended limitation was not available.

Important Clarification

The Court clarified that post-Finance Act, 2021, reassessment proceedings linked to search material must strictly comply with the timelines under Sections 153A and 153C as they existed prior to 01.04.2021 by virtue of the first proviso to Section 149. Mere electronic dissemination of information cannot substitute statutory prerequisites such as recording of satisfaction and handover of material.

Final Outcome

The writ petition was allowed. The Delhi High Court quashed the notice dated 23.08.2024 issued under Section 148A(b), the order dated 31.08.2024 passed under Section 148A(d), and the consequential notice dated 31.08.2024 issued under Section 148 of the Income-tax Act, 1961 for Assessment Year 2014–15. All pending applications were disposed of accordingly.


Link to download the order - https://www.mytaxexpert.co.in/uploads/1769840708_ATSTOWNSHIPPVTLTDVsASSISTANTCOMMISSIONEROFINCOMETAXCIRCLE11DELHIORS..pdf

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