Facts of the Case

BJN Holdings (I) Ltd. filed multiple writ petitions challenging notices issued under Section 148 of the Income-tax Act, 1961 for various assessment years ranging from AY 1998–99 to AY 2005–06. The impugned notices were issued between 2015 and 2021 by invoking Section 149(1)(c), as introduced by the Finance Act, 2012, which extended the limitation period to sixteen years in cases involving income in relation to assets located outside India.

The assessments for the relevant years had already become final and time-barred under the unamended Section 149, where the maximum permissible period for reopening was six years from the end of the relevant assessment year. The Revenue sought to reopen these concluded assessments on the ground that the petitioners allegedly held overseas assets.

Issues Involved

Whether Section 149(1)(c), introduced with effect from 01.07.2012 extending the limitation period to sixteen years for cases involving foreign assets, could be applied retrospectively to reopen assessments that had already become time-barred prior to its insertion, and whether the impugned reassessment notices were barred by limitation.

Petitioner’s Arguments

The petitioner contended that the reassessment notices were issued long after the expiry of the six-year limitation period applicable under the law prevailing at the relevant time. It was argued that Section 149(1)(c) could not be applied retrospectively to revive dead and concluded assessments. Reliance was placed on binding precedents including Brahm Datt vs. ACIT, K.M. Sharma vs. ITO, and S.S. Gadgil vs. Lal & Co., which held that limitation provisions must be strictly construed and cannot reopen matters that have attained finality unless the statute expressly provides for retrospective operation.

Respondent’s Arguments

The Revenue contended that by virtue of the Explanation to Section 149 inserted by the Finance Act, 2012, the extended limitation period applied to all assessment years beginning on or before 01.04.2012. It was argued that since the reassessment related to foreign assets, the extended sixteen-year period was applicable notwithstanding the fact that earlier limitation had expired.

Court Order / Findings

The Delhi High Court held that the issue was squarely covered by its earlier decision in Brahm Datt vs. ACIT, which in turn followed authoritative Supreme Court judgments in K.M. Sharma and S.S. Gadgil. The Court reiterated that limitation provisions confer finality and certainty and that concluded assessments cannot be reopened by subsequent amendments unless such amendments are expressly retrospective.

The Court rejected the Revenue’s reliance on the Explanation to Section 149, holding that it could not be interpreted to retrospectively revive assessments that were already time-barred prior to 01.07.2012. The Court emphasized that fiscal statutes, particularly those relating to limitation, must be strictly construed and cannot be applied in a manner that unsettles vested rights.

Important Clarification

The Court clarified that Section 149(1)(c) extending limitation to sixteen years applies only to cases where the limitation to reopen assessments had not expired as on 01.07.2012. It does not authorize reopening of assessments that had already become final and barred by limitation under the earlier law.

Final Outcome

The writ petitions were allowed. The Delhi High Court quashed the impugned notices issued under Section 148 for the relevant assessment years, holding them barred by limitation. All proceedings initiated pursuant thereto were set aside, and the decision was rendered in favour of the petitioner and against the Revenue.

Link to download the order - https://www.mytaxexpert.co.in/uploads/1769676167_BJNHOLDINGSILTDVsDY.COMMISSIONEROFINCOMETAXCENTRALCIRCLE8ORS..pdf

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