A Single Bench of Justice Krishna Rao of Calcutta High Court granted stay to the reassessment proceedings against the petitioner beyond 6 years with regards to the assessment linked to the fraudulent reversal of the stocks in stock exchange. The bench also directed to file an affidavit-in-opposition within 8 weeks.
RPC Commercial LLP, the petitioner in this case, has lodged a petition against the income tax department. The petitioner has contested the notice issued on July 28, 2022, under Section 148 of the Income Tax Act, 1961, pertaining to the assessment year 2015-16.
Additionally, all the subsequent proceedings that stem from the aforementioned notice under Section 148 of the Income Tax Act have also been challenged by the petitioner. The primary basis for the challenge is the jurisdiction of the assessing officer in issuing the notice under Section 148 of the Income Tax Act, which is believed to be time-barred according to Section 149(1) (a)/149(1)(b) of the Income Tax Act.
The order being challenged under Section 148(d) of the Income Tax Act involved the assessing officer’s attempt to justify the initiation of the proceeding. This justification is based on the reliance placed upon Instruction 01/22, dated May 11, 2022, issued by the Central Board of Direct Taxes (CBDT).
The bench observed that, it was acknowledged that the issuance of notice and the initiation of reassessment proceedings have exceeded the time limit of six years. As a result, it is evident that these actions are prima facie barred by limitation, both under the previous provisions and the new amendment provisions concerning Section 149 of the Income Tax Act.
On the contrary, the Department’s Counsel strongly objected to the petitioner’s request for an interim order, arguing that the limitation does not apply in the petitioner’s case. Additionally, they claimed that the assessment of tax is linked to fraudulent activities involving the reversal of stocks in the Stock Exchange.
After carefully considering the arguments put forth by both parties, the Court determined that the matter should be heard based on its merits, following the exchange of affidavits. As a preliminary observation, the Court is inclined to believe that denying a stay at this stage would cause prejudice to the petitioner.
As a result, the respondents were instructed to submit their affidavit in opposition within a period of eight weeks starting from the present date. The petitioner shall then have a period of three weeks following the submission of the affidavit-in-opposition to provide a reply, if deemed necessary.
The Calcutta High Court further ordered that no additional proceedings should be initiated based on the challenged order dated July 28, 2022, which is attached as Annexure P-4 to the writ petition, until the writ application is resolved.
The matter will appear before the Circuit bench of the Calcutta High Court after the completion of a period of 11 weeks.
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