VIKAS AGGARWAL vs. DEPUTY COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE-28, NEW DELHI

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W.P.(C)/5424/2025HC DelhiDLHC01024208202528 April 2025Author: HON'BLE MR. JUSTICE VIBHU BAKHRU,HON'BLE MR. JUSTICE TEJAS KARIA4 pages
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What did the High Court hold?

The Delhi High Court held that the contention that the time stipulated under Section 149 of the Income Tax Act, 1961, is not applicable in the given facts is erroneous and rejected it. The Court referred to its own decision in ARN Infrastructures India Ltd. v. Assistant Commissioner of Income Tax Cental Circle-28 Delhi & Ors., which had previously rejected a similar argument. The Court clarified that the Supreme Court's observations in Abhisar Buildwell were not a carte blanche to override the restrictions in Section 149. The liberty granted to the Revenue to initiate reassessment was subject to fulfilling the conditions laid down in Sections 147 and 148, and the powers were saved only if compliant with the Chapter pertaining to reassessment. The impugned notice was set aside. No issue was expressly left undecided.

What were the facts?

The petitioner, Vikas Aggarwal, filed a writ petition challenging a notice dated March 31, 2025, issued under Section 148 of the Income Tax Act, 1961, for Assessment Year 2015-16. The Revenue contended that the notice, though seemingly beyond the period stipulated in Section 149(1) of the Act, was valid by virtue of Section 150 of the Act. This contention was based on the Revenue's interpretation of the Supreme Court's decision in Principal Commissioner of Income-tax, Central-3 v. Abhisar Buildwell (P.) Ltd., which they believed permitted issuing such notices in cases related to search under Section 132, even if time-barred under Section 149.

What were the issues?

1. Whether the decision in Principal Commissioner of Income-tax, Central-3 v. Abhisar Buildwell (P.) Ltd. constitutes a finding or direction permitting the issuance of notices under Section 148 of the Income Tax Act, 1961, in cases otherwise beyond the period stipulated under Section 149 of the Act? (Question of law) Assessee's Contention: The petitioner implicitly argued that the notice was invalid as it was beyond the period prescribed by Section 149(1), and the Revenue's reliance on Abhisar Buildwell was misplaced. Revenue's Contention: The Revenue argued that the Supreme Court's decision in Abhisar Buildwell provided a basis for issuing the Section 148 notice, as it was within the scope of Section 150 of the Act, allowing for reassessment based on findings and directions from that judgment, even if time-barred under Section 149.

Which sections of the Income-tax Act were involved?

Section 148,Section 149,Section 150,Section 132,Section 147

AI-generated summary — verify with the full judgment below

Cause title — parties, addresses and appearances
$~85 * IN THE HIGH COURT OF DELHI AT NEW DELHI + W.P.(C) 5424/2025 and CM APPLs. 24720-21/2025 VIKAS AGGARWAL .....Petitioner Through: Mr Gaurav Jain with Mr Shubham Gupta and Ms Shalini, Advocates. versus DEPUTY COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE-28, NEW DELHI .....Respondent Through: Mr Gaurav Gupta, SSC with Mr Shivendra Singh and Mr Yojit Pareek, JSCs. CORAM: HON'BLE MR. JUSTICE VIBHU BAKHRU HON'BLE MR. JUSTICE TEJAS KARIA

O R D E R % 28.04.2025

1.

Issue notice. Mr Gupta, the learned counsel for the Revenue accepts notice.

2.

The petitioner has filed the present petition, inter alia, impugning the notice dated 31.03.2025 [impugned notice] issued under Section 148 of the Income Tax Act, 1961 [the Act] in respect of Assessment Year [AY] 2015-

16.3.

The impugned notice is clearly beyond the period as stipulated under Section 149(1) of the Act. However, it is the Revenue’s case that the said notice is within the time by virtue of Section 150 of the Act. The Revenue claims that the notice is premised on the ‘findings and directions’ as embodied in the decision of the Supreme Court in Principal Commissioner This is a digitally signed order. The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 01/07/2025 at 22:11:20

of 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, the Assessing Officer [AO] could exercise its powers under Section 147/148 of the Act even in cases, which are related to a search conducted under Section 132 of the Act. The Revenue construes the decision as constituting a finding or a direction for issuing such notice in respect of cases such as of the assessee’s.

4.

The question whether the decision in the case of Principal Commissioner of Income-tax, Central-3 v. Abhisar Buildwell (P.) Ltd. (supra) constitutes a finding or a direction for permitting the issuance of notices under Section 148 of the Act in cases, which are otherwise beyond the period as stipulated under Section 149 of the Act is no longer res integra. This Court in the case of ARN Infrastructures India Ltd. v. Assistant Commissioner of Income Tax Cental 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 of the Act in Abhisar Buildwell firstly appears in paragraph 33 of the report and where the Supreme Court observed that in cases where a search does not result in any incriminating material being found, the only remedy that would be available to the Revenue would be to resort to reassessment.

39.

However, the Supreme Court caveated that observation by observing that the initiation of reassessment would be “…..subject to fulfilment of the conditions mentioned in Sections 147/148, as in such a situation, the Revenue cannot be left with no remedy”. This sentiment came to be reiterated with the Supreme Court observing that the power of the Revenue to initiate reassessment must be saved This is a digitally signed order. The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 01/07/2025 at 22:11:20

failing which it would be left with no remedy. It was thereafter observed in paragraph 36.4 of the report that insofar as completed or unabated assessments were concerned, they could be reopened by the AO by invocation of Sections 147/148 of the Act, subject to the fulfilment of the conditions “……as envisaged/mentioned under Sections 147/148 of the Act and those powers are saved”.

40.

It thus becomes apparent that the liberty which the Supreme Court accorded and the limited right inhering in the Revenue to initiate reassessment was subject to that power being otherwise compliant with 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 overcome and override the restrictions that otherwise appear in Section 149 of the Act. The observations of the Supreme Court in Abhisar Buildwell were thus intended to merely convey that the annulment of the search assessments would not deprive or denude the Revenue of its power to reassess and which independently existed. However, the Supreme Court being mindful of the statutory prescriptions, which otherwise imbue the commencement of reassessment, qualified that observation by providing that such an action would have to be in accordance with law. This note of caution appears at more than one place in that judgment and is apparent from the Supreme Court observing that the power to reassess would be subject to the fulfilment of the conditions mentioned in Sections 147 and 148 of the Act.”

5.

Plainly, the controversy involved in the present petition is covered by the decision of this Court in ARN Infrastructures India Ltd. v. Assistant Commissioner of Income Tax Cental Circle-28 Delhi & Ors. (supra). The contention that the time as stipulated under Section 149 of the Act is not applicable, in the given facts, is erroneous and is rejected.

6.

The petition is, accordingly, allowed and the impugned notice is set This is a digitally signed order. The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 01/07/2025 at 22:11:20

aside. All pending applications are also disposed of. VIBHU BAKHRU, J TEJAS KARIA, J APRIL 28, 2025/tr Click here to check corrigendum, if any This is a digitally signed order. The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 01/07/2025 at 22:11:20

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