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

$~109 *IN THE HIGH COURT OF DELHI AT NEW DELHI+W.P.(C) 3678/2025 and CM APPL. 17247/2025MANSI NARANG.....Petitioner .....PetitionerThrough:Mr Nischay Kantoor, Advocate. versus ASSISTANT COMMISSIONER OF INCOME TAX CENTRALCIRCLE 28 DELHI & ORS......Respondents Through: % CORAM:HON'BLE MR. JUSTICE VIBHU BAKHRUHON'BLE MR. JUSTICE TEJAS KARIAO R D E R15.05.2025 1.The petitioner has filed the present petition, inter alia, impugningnotice dated 30.08.2024 [the impugned notice] issued under Section 148 ofthe Income Tax Act, 1961 [the Act] in respect of assessment years 2016-17. 2.The petitioner had filed her original return of income for AY 2016-17on 30.07.2016, declaring an income of ₹9,91,200/-. On 14.10.2020, a search was conducted under Section 132 of the Act in the case of Sh. Manoj KumarSingh, his associates, and various transacting parties, which also covered thepremises and locker of the petitioner. 3.It is the petitioner’s contention that no incriminating materialpertaining to the searched persons was found during the said search.Accordingly, any proceedings ought not to have been initiated under Section153A of the Act; however, contrary to the statutory mandate, the respondentissued a notice under Section 148 of the Act on 30.03.2021. 4.Subsequently, proceedings under Section 153A of the Act wereinitiated against the petitioner by issuance of a notice dated 04.06.2021.Pursuant to the said notice, an assessment order dated 25.02.2022 waspassed under the Section 153A read with section 143(3) of the Act. Thepetitioner contends that the assessment year in question was a completedassessment and, in the absence of any incriminating material found duringthe course of the search, the addition of ₹1,62,49,042/- made by the Assessing Officer was without jurisdiction and contrary to settledlegal principles. 5.Aggrieved by the assessment order dated 25.02.2022 passed by theAO, the petitioner preferred an appeal before the Commissioner of IncomeTax (Appeals) [CIT(A)] on 11.03.2022. On 21.08.2023, the CIT(A) deletedthe total addition of ₹1,62,49,042/- made by the AO, by relying upon PCITv. Abhisar Buildwell Pvt. Limited: (2024) 2 SCC 433, stating that noaddition was permissible in the absence of any incriminating material, as theyear in question was not an abated assessment year. 6.On 07.08.2024, relying on Section 150 of the Act and CBDTInstruction No. 1/2023, the Respondent issued a notice under Section148A(b) of the Act requiring the petitioner to show cause why theassessment for the relevant assessment year should not bereopened under Section 148 of the Act. 7.In response to the aforesaid notice, the petitioner filed a reply on13.08.2024, challenging the reassessment proceedings as bad in law and thatSection 150(1) of Act would have no application, as there was no directionfrom the Supreme Court to reopen the case, citing the rejection of such aprayer by the Revenue in the PCIT v. Abhisar Buildwell Pvt. Ltd. (supra). 8.On 30.08.2024, the Respondent, arbitrarily rejected the petitioner’sreply, and passed an order under Section 148A(d) of the Act, deeming thecase fit for reopening and further issued a notice under Section 148 of theAct, asserting that the proceedings were within the limitation period byvirtue of Section 150 of the Act. 7.In response to the aforesaid notice, the petitioner filed a reply on13.08.2024, challenging the reassessment proceedings as bad in law and thatSection 150(1) of Act would have no application, as there was no directionfrom the Supreme Court to reopen the case, citing the rejection of such aprayer by the Revenue in the PCIT v. Abhisar Buildwell Pvt. Ltd. (supra). 8.On 30.08.2024, the Respondent, arbitrarily rejected the petitioner’sreply, and passed an order under Section 148A(d) of the Act, deeming thecase fit for reopening and further issued a notice under Section 148 of theAct, asserting that the proceedings were within the limitation period byvirtue of Section 150 of the Act. 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 theimpugned notice has been issued within the stipulated time by virtue of thenon-obstante clause under Section 150 of the Act. The Revenue claims thatthe impugned notice is premised on the ‘findings and directions’ asembodied in the decision of the Supreme Court in Principal Commissionerof Income-tax, Central-3 v. Abhisar Buildwell (P.) Ltd.: (2024) 2 SCC 433.In the said decision, the Supreme Court had held that in certain cases, theassessing officer (AO) could exercise its powers under Section 147/148 ofthe Act, even in cases which are related to a search conducted under Section132 of the Act or a requisition made under Section 132A of the Act. TheRevenue construes the said decision as constituting a finding or a directionfor issuing such notices in respect of cases such as that of the assessee’s. 10.The question whether the decision in the case ofPrincipalCommissioner of Income-tax, Central-3 v. Abhisar Buildwell (P.) Ltd.(supra) constitutes a finding and/or a direction for issuance of notices underSection 148 of the Act in cases, which are otherwise beyond the period asstipulated under Section 149 of the Act is no longer res integra. This Courtin the case of ARN Infrastructures India Ltd. v. Assistant Commissioner ofIncomeTaxCentralCircle-28Delhi&Ors.:NeutralCitationNo.: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 147and 148 of the Act in Abhisar Buildwell firstly appears inparagraph 33 of the report and where the Supreme Courtobserved that in cases where a search does not result in anyincriminating material being found, the only remedy thatwould be available to the Revenue would be to resort toreassessment. 39. However, the Supreme Court caveated that observationby observing that the initiation of reassessment would be“…..subject to fulfilment of the conditions mentioned inSections 147/148, as in such a situation, the Revenue cannotbe left with no remedy”. This sentiment came to bereiterated with the Supreme Court observing that the powerof the Revenue to initiate reassessment must be savedfailing which it would be left with no remedy. It wasthereafter observed in paragraph 36.4 of the report thatinsofarascompletedorunabatedassessmentswereconcerned, they could be reopened by the AO by invocationof Sections 147/148 of the Act, subject to the fulfillment ofthe conditions “……as envisaged/mentioned under Sections147/148 of the Act and those powers are saved”. 39. However, the Supreme Court caveated that observationby observing that the initiation of reassessment would be“…..subject to fulfilment of the conditions mentioned inSections 147/148, as in such a situation, the Revenue cannotbe left with no remedy”. This sentiment came to bereiterated with the Supreme Court observing that the powerof the Revenue to initiate reassessment must be savedfailing which it would be left with no remedy. It wasthereafter observed in paragraph 36.4 of the report thatinsofarascompletedorunabatedassessmentswereconcerned, they could be reopened by the AO by invocationof Sections 147/148 of the Act, subject to the fulfillment ofthe conditions “……as envisaged/mentioned under Sections147/148 of the Act and those powers are saved”. 40. It thus becomes apparent that the liberty which theSupreme Court accorded and the limited right inhering inthe Revenue to initiate reassessment was subject to thatpowerbeingotherwisecompliantwiththeChapterpertaining to reassessment as contained in the Act. Theobservations of the Supreme Court cannot possibly be reador construed as a carte blanche enabling the respondents toovercome and override the restrictions that otherwise appearin Section 149 of the Act. The observations of the SupremeCourt in Abhisar Buildwell were thus intended to merelyconvey that the annulment of the search assessments wouldnot deprive or denude the Revenue of its power to reassessand which independently existed. However, the SupremeCourt being mindful of the statutory prescriptions, whichotherwiseimbuethecommencement ofreassessment, qualified that observation by providing that such an actionwould have to be in accordance with law. This note ofcaution appears at more than one place in that judgment andis apparent from the Supreme Court observing that thepower to reassess would be subject to the fulfilment of theconditions mentioned in Sections 147 and 148 of the Act.” 11.Plainly, the controversy involved in this petition is covered by thedecision of this court in ARN Infrastructures India Ltd. v. AssistantCommissioner of Income Tax Cental Circle-28 Delhi & Ors. (supra). Thecontention that the time period as stipulated under Section 149 of the Act isnot applicable, in the given facts, is erroneous and thus rejected. 12.The petition is, accordingly, allowed and the impugned notice is setaside. Pending application stands also disposed of. VIBHU BAKHRU, J MAY 15, 2025/tr TEJAS KARIA, J Click here to check corrigendum, if any