Facts of the Case

The petitioner, K.S. Dhingra, filed writ petitions challenging notices issued under Section 148 of the Income-tax Act, 1961 seeking to reopen concluded assessments for Assessment Years 1997–98 and 2000–01. The impugned notices were issued on 27.03.2014 and 29.03.2017 respectively, long after the expiry of the limitation period prescribed under Section 149 as it stood at the relevant time.

The Revenue sought to justify reopening by invoking Section 149(1)(c), inserted by the Finance Act, 2012, contending that income relating to assets located outside India permitted reopening up to sixteen years.

Issues Involved

Whether Section 149(1)(c) introduced with effect from 01.07.2012 could be applied retrospectively to reopen assessments where the limitation period had already expired prior to its introduction, and whether the impugned notices under Section 148 were barred by limitation.

Petitioner’s Arguments

The petitioner argued that reassessment proceedings for the relevant assessment years had become time-barred under the unamended provisions of Section 149 and had attained finality. It was contended that Section 149(1)(c) could not retrospectively revive concluded assessments in the absence of express legislative intent. Reliance was placed on settled Supreme Court precedents including K.M. Sharma v. ITO and S.S. Gadgil v. Lal & Co.

Respondent’s Arguments

The Revenue contended that Section 149(1)(c) had retrospective application in view of the Explanation appended to Section 149 by the Finance Act, 2012, and that reassessment could be initiated even if the limitation had expired prior to 01.07.2012 where income relating to foreign assets had escaped assessment.

Court Order / Findings

The Delhi High Court examined the statutory history of Sections 147 and 149 and reiterated that provisions extending limitation cannot revive proceedings that were already barred by time. Relying on Supreme Court judgments in K.M. Sharma v. ITO and S.S. Gadgil v. Lal & Co., as well as its own earlier decision in Brahm Datt v. ACIT, the Court held that Section 149(1)(c) operates prospectively and does not apply to assessments that had already attained finality prior to its insertion.

The Court rejected the Revenue’s reliance on the Explanation to Section 149, holding that it does not expressly or by necessary implication provide for retrospective revival of time-barred reassessments.

Important Clarification

The Court clarified that limitation provisions in fiscal statutes must be strictly construed and that, in the absence of clear legislative intent, amendments extending limitation cannot reopen concluded assessments, even where allegations relate to foreign assets.

Final Outcome

The writ petitions filed by K.S. Dhingra were allowed. The Delhi High Court quashed the impugned notices issued under Section 148 for the relevant assessment years, holding them to be barred by limitation and unsustainable in law.

Link to download the order - https://www.mytaxexpert.co.in/uploads/1769676586_K.S.DHINGRAVsASSTT.COMMISSIONEROFINCOMETAXCENTRALCIRCLE8ANR..pdf

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