Facts of the Case

The petitioner challenged the order dated 25.07.2022 passed under Section 148A(d) of the Income-tax Act, 1961 and the consequential notice dated 26.07.2022 issued under Section 148 for Assessment Year 2015–16. The reassessment proceedings were initiated after the coming into force of the Finance Act, 2021.

The petitioner contended that the reassessment was barred by limitation in light of the amended Section 149 and the law declared by the Supreme Court in Union of India and Others vs. Rajeev Bansal. It was submitted that identical notices issued after 01.04.2021 for AY 2015–16 had consistently been quashed by the Delhi High Court.

Issues Involved

Whether reassessment proceedings initiated for Assessment Year 2015–16 by issuance of notice under Section 148 after 01 April 2021 are barred by limitation, whether the order passed under Section 148A(d) could survive in view of binding Supreme Court precedent, and whether the proceedings were liable to be quashed in writ jurisdiction.

Petitioner’s Arguments

The petitioner argued that as per the amended regime introduced by the Finance Act, 2021, and the authoritative interpretation rendered by the Supreme Court in Rajeev Bansal, all reassessment notices issued on or after 01.04.2021 for AY 2015–16 are required to be dropped as they would not fall within the permissible period of limitation even after considering the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020.

Reliance was placed on subsequent Delhi High Court decisions including Mectech Knitfabs Pvt. Ltd. and Lombard Portfolio Pvt. Ltd., where similar notices and proceedings were set aside. It was submitted that the issue was no longer res integra.

Respondents’ Arguments

The learned counsel for the Revenue did not contest the applicability of the Supreme Court judgment in Rajeev Bansal or the subsequent Delhi High Court decisions following the same. It was fairly conceded that the controversy stood covered in favour of the petitioner.

Court Order / Findings

The Delhi High Court noted that the challenge raised by the petitioner was squarely covered by the judgment of the Supreme Court in Union of India and Others vs. Rajeev Bansal, wherein the Revenue had conceded that for Assessment Year 2015–16, all notices issued on or after 01 April 2021 would have to be dropped as they would not fall for completion within the period prescribed under the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020.

The Court further observed that the said principle had been consistently followed by the Delhi High Court in Mectech Knitfabs Pvt. Ltd., Lombard Portfolio Pvt. Ltd., and other cases. In view of the settled legal position and the concession made by the Revenue, the impugned order under Section 148A(d) and notice under Section 148 were held to be unsustainable.

Important Clarification

The Court clarified that reassessment proceedings for Assessment Year 2015–16 initiated after 01 April 2021 are barred by limitation notwithstanding the benefit of TOLA, and such proceedings cannot be sustained under the amended reassessment regime introduced by the Finance Act, 2021.

Final Outcome

The writ petition was allowed. The Delhi High Court set aside the order dated 25.07.2022 passed under Section 148A(d) and the notice dated 26.07.2022 issued under Section 148 for Assessment Year 2015–16. All proceedings initiated pursuant thereto were quashed, and the petition was disposed of accordingly.

Link to download the order - https://www.mytaxexpert.co.in/uploads/1769506604_SARTHAKGUPTAVSINCOMETAXOFFICERWARD35910ANDANR.pdf

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