Facts of the Case

The petitioner, Shashank Gupta, filed a writ petition challenging the notice dated 25.03.2025 issued under Section 148 of the Income-tax Act, 1961 for Assessment Year 2014–15 and the proceedings initiated pursuant thereto. The reassessment proceedings were initiated pursuant to a search conducted under Section 132 on 15.02.2024. The petitioner contended that the impugned notice was barred by limitation under the proviso to Section 149(1) read with the erstwhile provisions of Section 153A applicable to search cases.

Issues Involved

Whether a notice under Section 148 for Assessment Year 2014–15 issued pursuant to a search conducted on 15.02.2024 was barred by limitation, how the ten-year block period under Section 153A is to be computed, and whether the Assessing Officer had jurisdiction to proceed for an assessment year falling outside the permissible block period.

Petitioner’s Arguments

The petitioner argued that since the reassessment proceedings were initiated pursuant to a search under Section 132, the limitation provisions contained in the erstwhile Section 153A applied. Relying on the Delhi High Court judgment in Principal Commissioner of Income Tax-Central-1 vs. Ojjus Medicare Pvt. Ltd., it was submitted that the ten-year block period is to be computed from the end of the assessment year relevant to the financial year in which the search took place. Applying this computation, the ten-year block extended from AY 2024–25 backwards up to AY 2015–16, rendering AY 2014–15 barred by limitation.

Respondent’s Arguments

The Revenue contended that under the pre-amended provisions, notice could be issued to a non-searched person for a period of up to ten years from the end of the relevant assessment year in which the search was conducted, as per Section 153C read with Section 153A. It was argued that AY 2014–15 fell within the ten-year period and that incriminating material pertaining to the petitioner was found during the search and handed over to the Assessing Officer having jurisdiction over the petitioner.

Court Order / Findings

The Delhi High Court noted that the tabular computation of the ten-year block period placed on record by the petitioner was not disputed by the Revenue. The Court relied upon its binding decision in Principal Commissioner of Income Tax-Central-1 vs. Ojjus Medicare Pvt. Ltd., which clarified that the ten-year period under Section 153A is to be reckoned from the end of the assessment year relevant to the financial year in which the search was conducted.

Applying the said principle, the Court held that AY 2014–15 fell outside the permissible ten-year block and was therefore barred by limitation. The Court observed that mere pendency of a Special Leave Petition against the Ojjus Medicare decision did not dilute its binding effect within the jurisdiction of the Delhi High Court. Consequently, the Assessing Officer lacked jurisdiction to proceed further for AY 2014–15.

Important Clarification

The Court clarified that where an assessment year is found to be barred by limitation under the computation mandated by Section 153A, the Assessing Officer cannot proceed with reassessment. Binding precedents of the jurisdictional High Court must be followed unless stayed or set aside by the Supreme Court.

Final Outcome

The writ petition was allowed. The Delhi High Court set aside the notice dated 25.03.2025 issued under Section 148 of the Income-tax Act, 1961 for Assessment Year 2014–15 and all proceedings initiated pursuant thereto, holding them barred by limitation. The pending application was disposed of accordingly.

 

Link to Download Order- https://www.mytaxexpert.co.in/uploads/1769595471_SHASHANKGUPTAVsASSISTANTCOMMISSIONEROFINCOMETAXCENTRALCIRCLE16DELHI.pdf  

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