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

$~103 *IN THE HIGH COURT OF DELHI AT NEW DELHI+W.P.(C) 3561/2025 and CM APPL. 16646/2025MANAN NARANG.....Petitioner .....Petitioner Through:Mr Ved Jain, Mr Nischay Kantoor,Ms Soniya Dodeja, and Mr SarthakAbrol, Advocates. versus ASSISTANT COMMISSIONER OF INCOME TAX CENTRALCIRCLE 28 DELHI & ORS......Respondents .....RespondentsThrough:Mr Apoorv Aggarwal, JSC. CORAM: HON'BLE MR. JUSTICE VIBHU BAKHRUHON'BLE MR. JUSTICE TEJAS KARIAO R D E R29.04.2025 % 1.The petitioner has filed the present petition, inter alia, impugning thenotice dated 30.08.2024 [the impugned notice] issued under Section 148 ofthe Income Tax Act, 1961 [the Act] in respect of assessment year (AY)2016-17. 2.The petitioner had filed a revised return of income for AY 2016-17 on07.06.2017, declaring an income of ₹26,84,910/-. 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, thus nofurther proceedings were warranted. However, the respondent issued anotice 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 07.06.2021.Pursuant to the said notice, an assessment order dated 23.03.2022 waspassed under the Section 153A of the Act. The petitioner contends that theassessment year in question was a completed assessment and, in the absenceof any incriminating material found during the course of the search, theaddition of ₹86,83,853/- made by the Assessing Officer was withoutjurisdiction and contrary to the settled legal principles. 5.Aggrieved by the assessment order dated 23.03.2022 passed by theAO, the petitioner preferred an appeal before the Commissioner of IncomeTax (Appeals) [CIT(A)] on 31.03.2022. On 21.08.2023, the CIT(A) deletedthe addition of ₹86,83,853/- made by the AO, by relying on PrincipalCommissioner of Income-tax, Central-3 v. Abhisar Buildwell Pvt. Limited:(2024) 2 SCC 433, that no addition was permissible in the absence ofincriminating material, as the year in question was not an abated assessmentyear. 6.On 07.08.2024, relying on Section 150 of the Act and CBDTInstruction No. 1/2023, the AO issued a notice under Section 148A(b) of theAct requiring the petitioner to show cause why the assessment for therelevant assessment year should not be reopened underSection 148 of the Act. 7.In response to the aforesaid notice, the petitioner filed a reply on13.08.2024, challenging the initiation of the reassessment proceedings. Thepetitioner claimed that Section 150(1) of the Act is inapplicable, as there wasno direction from the Supreme Court to reopen the case, citing the rejectionof such a prayer by the Revenue in the Principal Commissioner of Income- tax, Central-3 v. Abhisar Buildwell Pvt. Ltd. (supra). 8.On 30.08.2024, the AO, rejected the petitioner’s reply, and passed anorder under Section 148A(d) of the Act, deeming the case fit for reopeningand further issued a notice under Section 148 of the Act, asserting that theproceedings were within the limitation period by invoking Section 150 ofthe Act. 7.In response to the aforesaid notice, the petitioner filed a reply on13.08.2024, challenging the initiation of the reassessment proceedings. Thepetitioner claimed that Section 150(1) of the Act is inapplicable, as there wasno direction from the Supreme Court to reopen the case, citing the rejectionof such a prayer by the Revenue in the Principal Commissioner of Income- tax, Central-3 v. Abhisar Buildwell Pvt. Ltd. (supra). 8.On 30.08.2024, the AO, rejected the petitioner’s reply, and passed anorder under Section 148A(d) of the Act, deeming the case fit for reopeningand further issued a notice under Section 148 of the Act, asserting that theproceedings were within the limitation period by invoking Section 150 ofthe 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 is within the time by virtue of Section 150 of the Act. TheRevenue claims that the impugned notice is premised on the ‘findings anddirections’ as embodied in the decision of the Supreme Court in PrincipalCommissioner of Income-tax, Central-3 v. Abhisar Buildwell (P.) Ltd.(supra). In the said decision, the Supreme Court had held that in certaincases, the assessing officer (AO) could exercise its powers under Section147/148 of the Act, even in cases which are related to a search conductedunder Section 132 of the Act. The Revenue construes the decision asconstituting a finding or a direction for issuing such notices in respect ofcases 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 a direction for permitting the issuance ofnotice under Section 148 of the Act in cases which are otherwise beyond theperiod as stipulated under Section 149 of the Act, is no longer res integra.This Court in the case of ARN Infrastructures India Ltd. v. AssistantCommissioner of Income Tax Cental Circle-28 Delhi & Ors.: NeutralCitation: 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 Sections147 and 148 of the Act in Abhisar Buildwell firstlyappears in paragraph 33 of the report and where theSupreme Court observed that in cases where a searchdoes not result in any incriminating material beingfound, the only remedy that would be available to theRevenue would be to resort to reassessment. 39.However,theSupremeCourtcaveatedthatobservationbyobservingthattheinitiationofreassessment would be “…..subject to fulfilment of theconditions mentioned in Sections 147/148, as in such asituation, the Revenue cannot be left with no remedy”.This sentiment came to be reiterated with the SupremeCourt observing that the power of the Revenue toinitiate reassessment must be saved failing which itwould be left with no remedy. It was thereafterobserved in paragraph 36.4 of the report that insofar ascompleted or unabated assessments were concerned,they could be reopened by the AO by invocation ofSections 147/148 of the Act, subject to the fulfilmentof the conditions “……as envisaged/mentioned underSections 147/148 of the Act and those powers aresaved”. 40. It thus becomes apparent that the liberty which theSupreme Court accorded and the limited right inheringin the Revenue to initiate reassessment was subject tothat power being otherwise compliant with the Chapterpertaining to reassessment as contained in the Act. Theobservations of the Supreme Court cannot possibly beread or construed as a carte blanche enabling therespondents to overcome and override the restrictionsthat otherwise appear in Section 149 of the Act. TheobservationsoftheSupremeCourtinAbhisarBuildwell were thus intended to merely convey thatthe annulment of the search assessments would not 40. It thus becomes apparent that the liberty which theSupreme Court accorded and the limited right inheringin the Revenue to initiate reassessment was subject tothat power being otherwise compliant with the Chapterpertaining to reassessment as contained in the Act. Theobservations of the Supreme Court cannot possibly beread or construed as a carte blanche enabling therespondents to overcome and override the restrictionsthat otherwise appear in Section 149 of the Act. TheobservationsoftheSupremeCourtinAbhisarBuildwell were thus intended to merely convey thatthe annulment of the search assessments would not deprive or denude the Revenue of its power to reassessandwhichindependentlyexisted.However,theSupremeCourtbeingmindfulofthestatutoryprescriptions,whichotherwiseimbuethecommencementofreassessment,qualifiedthatobservation by providing that such an action wouldhave to be in accordance with law. This note of cautionappears at more than one place in that judgment and isapparent from the Supreme Court observing that thepower to reassess would be subject to the fulfilment ofthe conditions mentioned in Sections 147 and 148 ofthe 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 is also disposed of. VIBHU BAKHRU, JTEJAS KARIA, JAPRIL 29, 2025/trClick here to check corrigendum, if any