MECTECH KNITFABS PVT. LTD. vs. DCIT CIRCLE 16(1) NEW DELHI & ANR.

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W.P.(C)/1261/2023HC DelhiDLHC01002787202322 May 2025Author: HON'BLE MR. JUSTICE VIBHU BAKHRU,HON'BLE MR. JUSTICE TEJAS KARIA5 pages
AI SummaryAllowed

What did the High Court hold?

The High Court held that the notice dated 26.07.2022 issued under Section 148 of the Income Tax Act, 1961, and all proceedings initiated pursuant thereto are quashed and set aside. The Court's decision was based on the concession made by the Revenue before the Supreme Court in Union of India and Ors. v. Rajeev Bansal (2024 INSC 754). The Court noted that paragraph 19(f) of the Rajeev Bansal decision explicitly states the Revenue's concession that for AY 2015-16, all notices issued on or after 1 April 2021 must be dropped as they would not fall for completion within the period prescribed under TOLA. The Court also referred to the Supreme Court's decision in Deepak Steel and Power Ltd. v. Central Board of Direct Taxes and Ors. (decided on 02.04.2025), where the Supreme Court allowed appeals based on the same concession in Rajeev Bansal. The Court found that the controversy was covered in favour of the petitioner by its own decision in Makemytrip India Pvt. Ltd. v. Deputy Commissioner of Income Tax Circle 16 (1) Delhi & Anr. (2025:DHC:1892-DB). Consequently, the petition was allowed, and all proceedings were set aside.

What were the facts?

The petitioner, MECTECH KNITFABS PVT. LTD., filed a writ petition challenging a notice dated 26.07.2022 issued under Section 148 of the Income Tax Act, 1961, and subsequent proceedings for Assessment Year (AY) 2015-16. The petitioner had filed its return for AY 2015-16 on 28.09.2014. An earlier notice under Section 148 was issued on 21.04.2021, which the Assessing Officer (AO) later treated as a notice under Section 148A(b) in light of the Supreme Court's decision in Union of India & Ors. v. Ashish Agarwal. Following the procedure under Section 148A, the AO passed an order on 26.07.2022 holding it was a fit case for issuing a notice under Section 148, which was also issued on the same date. The petitioner contended that these proceedings should be set aside based on a concession made by the Revenue before the Supreme Court.

What were the issues?

1. Whether the notice dated 26.07.2022 issued under Section 148 of the Income Tax Act, 1961, and the subsequent proceedings for AY 2015-16 are liable to be set aside in view of the concession made by the Revenue before the Supreme Court in Union of India and Ors. v. Rajeev Bansal. Assessee's Contention: The petitioner argued that the proceedings initiated by the impugned notice dated 26.07.2022 should be set aside. This contention is based on the concession made by the Revenue before the Supreme Court in Union of India and Ors. v. Rajeev Bansal (2024 INSC 754). Specifically, the petitioner referred to paragraph 19(f) of the said decision, which states that for AY 2015-16, all notices issued on or after 1 April 2021 will have to be dropped as they will not fall for completion during the period prescribed under the Taxation and other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 (TOLA). Revenue's Contention: The judgment does not record any specific arguments made by the Revenue in opposition to the petitioner's contentions. However, the Revenue's concession in the cited Supreme Court case is the basis for the petitioner's argument.

Which sections of the Income-tax Act were involved?

Section 148,Section 148A,Section 149

AI-generated summary — verify with the full judgment below

$~83

* IN THE HIGH COURT OF DELHI AT NEW DELHI

%

Date of Decision: 22.05.2025

+ MECTECH KNITFABS PVT. LTD.

.....Petitioner Through: Mr. Ruchesh Sinha, Ms. Monalisa Maity, Mr. Aakash Saini & Ms. Shilpa Chaudhary, Advs.

versus

DCIT CIRCLE 16(1) NEW DELHI & ANR. .....Respondents

Through:

CORAM:

HON'BLE MR. JUSTICE VIBHU BAKHRU

HON'BLE MR. JUSTICE TEJAS KARIA

VIBHU BAKHRU, J. (Oral)

CM APPL. 31860/2025

1.

This is an application seeking early hearing of the present petition.

2.

For the reasons stated in the application, the same is allowed.

3.

The petition is taken on Board.

4.

The hearing scheduled for 16.09.2025 stands cancelled.

5.

The petitioner has filed the present petition, inter alia, impugning a notice dated 26.07.2022 [impugned notice] issued under Section 148 of the Income Tax Act, 1961 [the Act] and further proceedings relating to the said notice in respect of the Assessment Year [AY] 2015-16. 6. The petitioner is a private limited company and is engaged in the W.P.(C) 1261/2023 business of garments. The petitioner filed its return of income for AY 2015- 16 on 28.09.2014, declaring a total income of ₹1,41,25,950/-.

7.

The Assessing Officer [AO] issued a notice dated 21.04.2021 under Section 148 of the Act seeking to reopen the assessment for AY 2015-16. Although the said notice was issued after 31.03.2021, the procedure as prescribed under Section 148A of the Act was not followed, as the notice was premised on the provisions relating to reassessment as were in force prior to 31.03.2021. 8. Thereafter, by a communication dated 18.05.2022, the AO referred to the decision of the Supreme Court in Union of India & Ors. v. Ashish Agarwal: (2022) 444 ITR 1 and forwarded certain information, which, according to the AO, suggested that the petitioner‟s income had escaped assessment. The said communication also mentioned that in terms of the aforementioned decision in Union of India & Ors. v. Ashish Agarwal (supra), the notice dated 18.05.2022 issued under Section 148 of the Act was deemed to be a notice under Section 148A(b) of the Act. The petitioner responded to the said notice on 10.06.2022. 9. The AO passed an order dated 26.07.2022 under Section 148A(d) of the Act holding that it was a fit case for issuance of a notice under Section 148 of the Act in respect of AY 2015-16. The said order was forwarded to the petitioner along with a notice dated 26.07.2022 issued under Section 148 of the Act.

10.

The petitioner contends that the proceedings initiated pursuant to the impugned notice dated 26.07.2022 are required to be set aside in view of the concession made by the Revenue before the Supreme Court in Union of India and Ors. v. Rajeev Bansal: 2024 INSC 754. 11. It is relevant to refer to paragraph 19(e) and 19(f) from the decision of W.P.(C) 1261/2023 the Supreme Court in Union of India and Ors. v. Rajeev Bansal (supra), which sets out the concession as made on behalf of the Revenue:

“e. The Finance Act 2021 substituted the old regime for re- assessment with a new regime. The first proviso to Section 149 does not expressly bar the application of TOLA. Section 3 of TOLA applies to the entire Income-tax Act, including Sections 149 and 151 of the new regime. Once the first proviso to Section 149(1)(b) is read with TOLA, then all the notices issued between 1 April 2021 and 30 June 2021 pertaining to assessment years 2013-14, 2014-15, 2015-16, 2016-17, and 2017-18 will be within the period of limitation as explained in the tabulation below:

Assessment year Within 3 Years Expiry of Limitation read with TOLA for (2) Within six Years Expiry of Limitation read with TOLA for (4) (1) (2) (3) (4) (5) 2013-2014 31-3-2017 TOLA not applicable 31-3-2020 30-6-2021 2014-2015 31-3-2018 TOLA not applicable 31-3-2021 30-6-2021 2015-2016 31-3-2019 TOLA not applicable 31-3-2022 TOLA not applicable 2016-17 31-3-2020 30-6-2021 31-3-2023 TOLA not applicable 2017-2018 31-3-2021 30-6-2021 31-3-2024 TOLA not applicable

f. The Revenue concedes that for the assessment year 2015-16, all notices issued on or after 1 April 2021 will have to be dropped as they will not fall for completion during the period prescribed under TOLA;”

12.

In view of the above concession, the impugned notice and the proceedings relating thereto are required to be set aside. We may also note the decision of the Supreme Court in Deepak Steel and Power Ltd. v. Central Board of Direct Taxes and Ors.: Civil Appeal No.5177/2025, decided on 02.04.2025. The said appeal arose from orders passed by the Hon‟ble High Court of Orissa and Cuttack declining to entertain batch of petitions filed by W.P.(C) 1261/2023 the Assessees. The attention of the Supreme Court was drawn to the concession made on behalf of the Revenue in Union of India & Ors. v. Rajeev Bansal (supra) and noting the same, the Supreme Court allowed the appeals. The relevant extract of the said decision is set out below:

“4. The learned counsel appearing for the revenue with his usual fairness invited the attention of this Court to a three judge bench decision of this Court in Union of India and Ors. v. Rajeev Bansal, reported in 2024 SCC OnLine SC 2693, more particularly, paragraph 19(f) which reads thus:- “19. (f) The Revenue concedes that for the assessment year 2015-2016, all notices issued on or after April 1, 2021 will have to be dropped as they will not fall for completion during the period prescribed under the Taxation and other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020.”

5.

As the revenue made a concession in the aforesaid decision that is for the assessment year 2015-2016, all notices issued on or after 1st April, 2021 will have to be dropped as they would not fall for completion during the period prescribed under the taxation and other laws (Relaxation and Amendment of certain Provisions Act, 2020). Nothing further is required to be adjudicated in this matter as the notices so far as the present litigation is concerned is dated 25.6.2021. 6. In view of the aforesaid, in such circumstances referred to above the original writ petition nos.2446 of 2023, 2543 of 2023 and 2544 of 2023 respectively filed before the High Court of Orissa at cuttack stands allowed.

13.

The notice dated 26.07.2022 issued under Section 148 of the Act stands quashed and set aside. Concededly, the controversy is covered in favour of the petitioner by the decision of this court in Makemytrip India Pvt. Ltd. v. Deputy Commissioner of Income Tax Circle 16 (1) Delhi & Anr.: Neutral Citation No.: 2025:DHC:1892-DB. W.P.(C) 1261/2023 14. The petition is, accordingly, allowed and all proceedings initiated pursuant thereto are set aside.

15.

The next date of hearing, that is, 16.09.2025, stands cancelled.

VIBHU BAKHRU, J

TEJAS KARIA, J MAY 22, 2025 „ab‟

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