In a significant ruling, the division bench of the Delhi High Court has upheld the validity of the re-assessment notices issued by the income tax department from 1st April 2021 To 30th June, 2021 holding that the same are not time-barred.
The petitioner, M/s Touchstone Holdings Pvt. Ltd approached the High Court challenging the paragraph 6.2. (i) of the CBDT Instruction No. 1/2022 dated 11th May, 2022. The petitioner contended that as per the first proviso to Section 149 of the Act (as amended by Finance Act, 2021), no notice for re-assessment can be issued for assessment year 2013-14, as the time limit for initiating the proceedings expired on 30th March, 2020, as per the provisions of Section 149 (as it stood prior to its amendment by Finance Act, 2021).
Noting the submission is not maintainable, a bench comprising Justice Manmohan and Justice Manmeet Pritam Singh Arora observed that “The contention of the petitioner that assessment for AY 2013-14 became time barred on 31st March, 2020 is incorrect. The time period for assessment stood extended till 30th June, 2021. The initial reassessment notice for AY 2013-14 has been issued to the petitioner within the said extended period of limitation. The Supreme Court has declared that the said reassessment notice be deemed as a notice issued under Section 148A of the Act and permitted Revenue to complete the said proceedings. In this case, the income alleged to have escaped assessment is more than 50 lakhs and therefore, the rigour of Section 149(1)(b) of the Act (as amended by the Finance Act, 2021) has been satisfied.”
The Court further found that the petitioner has not brought on record anything to prove that the reassessment proceedings are being undertaken in an arbitrary manner, and held that “the time limit for initiating assessment proceedings for AY 2013-14 stood extended till 30th June, 2021. The petitioner does not dispute the said facts, consequently, the reassessment notice dated 29th June, 2021, which has been issued within the extended period of limitation is not time barred.”
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