Facts of the Case

The petitioner, Sanjay Singhal, challenged the notice dated 31.08.2024 issued under Section 148A(b), the order dated 24.09.2024 passed under Section 148A(3), and the consequential notice dated 25.09.2024 issued under Section 148 of the Income-tax Act, 1961 for Assessment Year 2015–16.

Search and seizure operations were conducted on 07.04.2017 in the Sharp Group of cases, during which the petitioner’s premises were also searched. Pursuant thereto, notice under Section 153A was issued and assessment under Section 153A read with Section 143(3) was completed on 23.12.2019 making an addition of ₹11,35,85,032/- under Section 69A.

The Commissioner of Income Tax (Appeals) deleted the addition on 12.07.2022 on the ground that no incriminating material was found during the search. The Revenue’s appeal before the ITAT was dismissed on 17.04.2023, and the Revenue’s further appeal before the Delhi High Court was dismissed on 22.12.2023.

Subsequently, the Assessing Officer initiated reassessment proceedings for AY 2015–16 by issuing notices under Sections 148A and 148, which were challenged in the present writ petition.

Issues Involved

Whether reassessment proceedings initiated beyond the time limit prescribed under Section 149(1) could be sustained by invoking Section 150 on the basis of judicial observations made while dismissing Revenue appeals in earlier proceedings, and whether Abhisar Buildwell permits reopening notwithstanding limitation.

Petitioner’s Arguments

The petitioner contended that the impugned reassessment proceedings were clearly barred by limitation under Section 149(1). It was argued that dismissal of the Revenue’s appeal by the High Court did not contain any “finding” or “direction” within the meaning of Section 150 that could extend or override limitation. It was further contended that Abhisar Buildwell only preserves the power of reassessment subject to statutory conditions and does not grant carte blanche to reopen time-barred assessments.

Respondent’s Arguments

The Revenue argued that reassessment was saved by Section 150 on the premise that the High Court’s dismissal of the Revenue’s appeal and the observations in Abhisar Buildwell constituted a finding or direction enabling reopening under Sections 147 and 148 beyond limitation.

Court Order / Findings

The Delhi High Court rejected the Revenue’s contention and held that reassessment proceedings were barred by limitation. The Court observed that Abhisar Buildwell merely clarifies that where no incriminating material is found in search, the Revenue is not remediless and may resort to reassessment, but strictly subject to fulfilment of conditions under Sections 147, 148, and 149.

The Court held that dismissal of the Revenue’s appeal did not amount to a “finding” or “direction” within the meaning of Section 150 so as to permit reopening beyond the statutory time limit. Relying on its earlier decision in ARN Infrastructures India Ltd., the Court reiterated that Section 150 cannot be used to override limitation under Section 149 and that courts cannot extend limitation periods prescribed by statute.

Important Clarification

The Court clarified that judicial observations preserving reassessment powers do not constitute findings or directions under Section 150 unless they are essential to the decision and expressly authorise action under the Act. Abhisar Buildwell and similar judgments do not dilute or override statutory limitation under Section 149.

Final Outcome

The writ petition was allowed. The Delhi High Court set aside the order dated 24.09.2024 passed under Section 148A(3) and the notice issued under Section 148 for Assessment Year 2015–16 as being barred by limitation. All pending applications were disposed of accordingly.

 

Link to download the order - https://www.mytaxexpert.co.in/uploads/1769841408_SANJAYSINGHALVsASSISTANTCOMMISSIONEROFINCOMETAXCENTRALCIRCLE15DELHI.pdf

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