Facts of the Case

Satya Realtors Private Limited filed a writ petition challenging reassessment proceedings initiated for Assessment Year 2010-11 by issuance of notice under Section 148 of the Income-tax Act, 1961 dated 29 April 2024.

The reassessment was initiated pursuant to the decision of the Supreme Court in Principal Commissioner of Income Tax (Central-3) v. Abhisar Buildwell Pvt. Ltd. and CBDT Instruction No. 1/2023 dated 23 August 2023. The Revenue sought to reopen completed assessments that had earlier been set aside on the ground that no incriminating material was found during search proceedings.

The petitioner contended that the reassessment notice was issued well beyond the limitation period prescribed under the First Proviso to Section 149(1) of the Act, as applicable post Finance Act, 2021.

 

Issues Involved

Whether reassessment proceedings initiated after the Finance Act, 2021 are barred by limitation under the First Proviso to Section 149(1).

Whether the Supreme Court decision in Abhisar Buildwell constitutes a “finding or direction” under Section 150 enabling reopening of time-barred assessments.

Whether CBDT Instruction No. 1/2023 can override statutory limitation prescribed under the Act.

Whether reassessment notices issued for completed/unabated assessments beyond limitation are without jurisdiction.

 

Petitioner’s Arguments

The petitioner argued that the reassessment notice was clearly barred by limitation under the First Proviso to Section 149(1), which mandates that no notice can be issued if it was already time-barred under the erstwhile law as on 31 March 2021.

It was contended that Abhisar Buildwell merely preserves the power of reassessment subject to fulfilment of statutory conditions and does not constitute a binding “finding or direction” under Section 150 of the Act. The petitioner submitted that CBDT Instruction No. 1/2023 cannot override or dilute the statutory bar of limitation.

 

Respondent’s Arguments

The Revenue argued that the reassessment was initiated pursuant to the liberty noted by the Supreme Court in Abhisar Buildwell, which observed that the Revenue could resort to Sections 147/148 where no incriminating material was found in search proceedings.

It was contended that the reassessment action was protected under Section 150 of the Act and that the CBDT Instruction was issued to ensure uniform implementation of the Supreme Court judgment.

 

Court Order / Findings

The Delhi High Court allowed the writ petition and quashed the impugned reassessment notice and proceedings. The Court held that:

The First Proviso to Section 149(1) clearly bars issuance of reassessment notices which were already time-barred under the old law as on 31 March 2021.

The observations made by the Supreme Court in Abhisar Buildwell do not constitute a “finding or direction” within the meaning of Section 150.

Section 150 cannot be invoked to override the express bar of limitation under Section 149.

CBDT Instruction No. 1/2023 is merely administrative in nature and cannot confer jurisdiction where none exists under the statute.

The Court concluded that reassessment proceedings initiated in such cases are without jurisdiction and liable to be quashed.

 

Important Clarification

The judgment conclusively clarifies that:

Abhisar Buildwell does not revive or extend limitation for reassessment proceedings.

Reassessment of completed/unabated assessments must strictly comply with the First Proviso to Section 149(1).

Administrative instructions cannot override statutory limitation.

Notices issued beyond limitation are void ab initio, irrespective of merits.

This decision decisively curtails attempts to reopen time-barred assessments under the guise of implementing Abhisar Buildwell and reinforces certainty and finality in tax proceedings.

Link to download the order - https://www.mytaxexpert.co.in/uploads/1770203435_SATYAREALTORSPRIVATELIMITEDTHROUGHDIRECTORSANJAYGUPTAVsINCOMETAXOFFICERWARD223DELHIORS..pdf 

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