Advs v. Assistant Commissioner Of Income Tax Central Circle 28 Delhi & Ors

versus ASSISTANT COMMISSIONER OF INCOME TAXCENTRAL CIRCLE 28 DELHI & ORS......RespondentsThrough:Mr. Shlok Chandra, SSC with Ms. NaincyJain, JSC, Ms. Madhavi Shukla, JSC &Mr. Ujjwal Jain, Advs. CORAM: HON'BLE MR. JUSTICE VIBHU BAKHRUHON'BLE MR. JUSTICE TEJAS KARIAO R D E R22.05.2025 % 1.The petitioner has filed the present petition, inter alia, impugning thenotice dated 30.08.2024 [the impugned notice] issued under Section 148 of theIncome Tax Act, 1961 [the Act] in respect of the Assessment Year 2016-17. 2.The petitioner is a Hindu Undivided Family . The petitioner filedits return of income for AY 2016-17 on 30.07.2016, declaring an income of₹15,97,840/-. On 14.10.2020, a search was conducted under Section 132 of the Act in the case of one Sh. Manoj Kumar Singh, his associates, and various otherentities, which also covered the premises and locker of the petitioner. 3.It is the petitioner’s contention that no incriminating material was foundduring the said search therefore, no further proceedings were justified. However,the respondent issued a notice under Section 148 of the Act on 30.06.2021. 4.Subsequently, proceedings under Section 153C of the Act were initiatedagainst the petitioner by issuance of a notice dated 17.01.2022. Pursuant to thesaid notice, an assessment order dated 04.10.2022 was passed under Section153A read with Section 143(3) of the Act, whereby the Assessing Officer assessed the income of the petitioner at ₹1,89,75,946/-. 5.The petitioner appealed against the said assessment order dated04.10.2022 before the Commissioner of Income Tax (Appeals)-30 [CIT(A)].The CIT(A) by the order dated 18.10.2023, annulled the proceedings initiatedunder Section 153C of the Act and deleted the addition of ₹1,73,78,106/- made by the AO by relying on the judgment of the Supreme Court in Commissionerof Income Tax-III, Pune v. Sinhgad Technical Education Society, (2017) 397ITR 344 and the Madras High Court in Agni Vishnu Ventures Pvt. Ltd. v.Deputy Commissioner of Income Tax & Anr., 2023 SCC OnLine Mad 8017. 6.On 07.08.2024, relying on Section 150 of the Act and CBDT InstructionNo.1/2023, the AO issued a notice under Section 148A(b) of the Act requiringthe petitioner to show cause why the assessment for AY 2016-2017 should notbe reopened under Section 148 of the Act. The AO proceeded on an assumptionthat the reassessment proceedings were required as a “consequence of or to giveeffect to any finding or direction contained in an order passed by any authorityin any proceeding under this Act by way of appeal, reference or revision [or bya Court in any proceeding under any other law”. The AO construed the direction given by the Supreme Court in Principal Commissioner of Income-tax, Central-3 v. Abhisar Buildwell (P.) Ltd.: (2024) 2 SCC 433 as a finding or direction toinitiate an action under Section 148 of the Act. 7.In response to the aforesaid, the petitioner filed a reply on 13.08.2024,challenging the initiation of the reassessment proceedings. The petitionerclaimed that the proceedings are barred by limitation and Section 150(1) of theAct would be inapplicable, as there was no direction from the Supreme Court toreopen the case, citing the rejection of such a prayer advanced by the Revenue 8.The AO rejected the petitioner’s reply and passed an order dated30.08.2024 under Section 148A(d) of the Act, deeming it a fit case for reopeningthe assessment. The AO also issued the impugned notice dated 30.08.2024,requiring the petitioner to furnish its return within a period of 90 days from date. 7.In response to the aforesaid, the petitioner filed a reply on 13.08.2024,challenging the initiation of the reassessment proceedings. The petitionerclaimed that the proceedings are barred by limitation and Section 150(1) of theAct would be inapplicable, as there was no direction from the Supreme Court toreopen the case, citing the rejection of such a prayer advanced by the Revenue 8.The AO rejected the petitioner’s reply and passed an order dated30.08.2024 under Section 148A(d) of the Act, deeming it a fit case for reopeningthe assessment. The AO also issued the impugned notice dated 30.08.2024,requiring the petitioner to furnish its return within a period of 90 days from date. 9.The impugned notice is clearly beyond the period as stipulated underSection 149(1) of the Act. However, it is the Revenue’s case that the impugnednotice has been issued within the stipulated time by virtue of the non-obstanteclause under Section 150 of the Act. The Revenue claims that the impugnednotice is premised on the ‘findings and directions’ as embodied in the decisionof the Supreme Court in Principal Commissioner of Income-tax, Central-3 v.Abhisar Buildwell (P.) Ltd.: (supra). In the said decision, the Supreme Courthad held that in certain cases, the assessing officer could exercise its powersunder Section 147/148 of the Act, even in cases which are related to a searchconducted under Section 132 of the Act or a requisition made under Section132A of the Act. The Revenue construes the said decision as constituting afinding or a direction for issuing such notices in respect of cases such as that of the assessee’s. 10.The question whether the decision in the case of Principal Commissionerof Income-tax, Central-3 v. Abhisar Buildwell (P.) Ltd., (supra) constitutes afinding and/or a direction for issuance of notices under Section 148 of the Act incases, which are otherwise beyond the period as stipulated under Section 149 ofthe Act is no longer res integra. This Court in the case of ARN InfrastructuresIndia Ltd. v. Assistant Commissioner of Income Tax Central Circle-28 Delhi& Ors.: Neutral Citation No.:2024:DHC:7423-DB had rejected a similar contention. The relevant extract of the said decision is set out below: “38. It is pertinent to note that a reference to Sections 147 and 148 ofthe Act in Abhisar Buildwell firstly appears in paragraph 33 of thereport and where the Supreme Court observed that in cases where asearch does not result in any incriminating material being found, theonly remedy that would be available to the Revenue would be toresort to reassessment. 39. However, the Supreme Court caveated that observation byobserving that the initiation of reassessment would be “…..subject tofulfilment of the conditions mentioned in Sections 147/148, as in sucha situation, the Revenue cannot be left with no remedy”. Thissentiment came to be reiterated with the Supreme Court observingthat the power of the Revenue to initiate reassessment must be savedfailing which it would be left with no remedy. It was thereafterobserved in paragraph 36.4 of the report that insofar as completed orunabated assessments were concerned, they could be reopened by theAO by invocation of Sections 147/148 of the Act, subject to thefulfilment of the conditions “……as envisaged/mentioned underSections 147/148 of the Act and those powers are saved”. 40. It thus becomes apparent that the liberty which the Supreme Courtaccorded and the limited right inhering in the Revenue to initiatereassessment was subject to that power being otherwise compliantwith the Chapter pertaining to reassessment as contained in the Act.The observations of the Supreme Court cannot possibly be read or 40. It thus becomes apparent that the liberty which the Supreme Courtaccorded and the limited right inhering in the Revenue to initiatereassessment was subject to that power being otherwise compliantwith the Chapter pertaining to reassessment as contained in the Act.The observations of the Supreme Court cannot possibly be read or construed as a carte blanche enabling the respondents to overcomeand override the restrictions that otherwise appear in Section 149 ofthe Act. The observations of the Supreme Court in Abhisar Buildwellwere thus intended to merely convey that the annulment of the searchassessments would not deprive or denude the Revenue of its powerto reassess and which independently existed. However, the SupremeCourt being mindful of the statutory prescriptions, which otherwiseimbue the commencement of reassessment, qualified that observationby providing that such an action would have to be in accordance withlaw. This note of caution appears at more than one place in thatjudgment and is apparent from the Supreme Court observing that thepower to reassess would be subject to the fulfilment of the conditionsmentioned in Sections 147 and 148 of the Act.” 11.Plainly, the controversy involved in this petition is covered by the decisionof this court in ARN Infrastructures India Ltd. v. Assistant Commissioner ofIncome Tax Cental Circle-28 Delhi & Ors. (supra). The contention that the timeperiod as stipulated under Section 149 of the Act is not applicable, in the givenfacts, is erroneous and thus rejected. 12.The petition is, accordingly, allowed and the impugned notice is set aside. VIBHU BAKHRU, J MAY 22, 2025/KS TEJAS KARIA, J Click here to check corrigendum, if any