MEERA GUPTA vs. ASSISTANAT COMMISSIONER OF INCOME TAX AND ANR

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W.P.(C)/5781/2025HC DelhiDLHC01026048202502 May 2025Author: HON'BLE MR. JUSTICE VIBHU BAKHRU,HON'BLE MR. JUSTICE TEJAS KARIA5 pages
AI SummaryAllowed

What did the High Court hold?

The Delhi High Court held that the contention that the time period stipulated under Section 149 of the Act 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. (Neutral Citation No.: 2024:DHC:7423-DB), which had dealt with a similar contention. The Court clarified that the Supreme Court's observations in Abhisar Buildwell (P.) Ltd. were not a carte blanche to override the restrictions in Section 149. The Supreme Court's intent was to convey that the annulment of search assessments would not deprive the Revenue of its power to reassess, but such reassessment must be in accordance with law and subject to the conditions envisaged in Sections 147 and 148 of the Act. Therefore, the impugned notice, being beyond the period stipulated in Section 149, was set aside. The petition was allowed, and the pending applications were disposed of.

What were the facts?

The petitioner, Meera Gupta, filed a writ petition challenging a notice dated 21.02.2024 under Section 148 of the Income Tax Act, 1961, for Assessment Year (AY) 2011-12. The petitioner had filed her return for AY 2011-12 on 28.07.2011. A search was conducted on 11.11.2014 in the case of Sh. Y.K. Gupta and his family, including the petitioner. Proceedings under Section 153A were initiated, leading to an assessment order dated 30.12.2016, which made additions of ₹14,82,60,830/-. The CIT(A) deleted these additions, finding no incriminating material for a non-abated year. The ITAT upheld the CIT(A)'s order. Subsequently, the Assessing Officer (AO) issued a notice under Section 148A(b) on 11.01.2024, relying on CBDT Instruction No.1/2023. The petitioner objected, citing time bar and lack of signature. The AO rejected the objection and issued the impugned notice under Section 148 on 21.02.2024, invoking Section 150 of the Act.

What were the issues?

1. Whether the notice dated 21.02.2024 issued under Section 148 of the Income Tax Act, 1961, for AY 2011-12 is beyond the period stipulated under Section 149(1) of the Act, and if Section 150 of the Act can be invoked to extend this period. Assessee's Contention: The petitioner argued that the impugned notice is time-barred as it is beyond the period stipulated under Section 149(1) of the Act. The petitioner also contended that the notice under Section 148A(b) lacked the AO's signature and that the subsequent notice under Section 148 was invalid. Revenue's Contention: The Revenue contended that the impugned notice was issued within the stipulated time by virtue of the non-obstante clause under Section 150 of the Act. The Revenue relied on the Supreme Court's decision in Principal Commissioner of Income-tax, Central-3 v. Abhisar Buildwell (P.) Ltd. (2024) 2 SCC 433, interpreting it as a direction to issue such notices in cases related to search, even if otherwise beyond the period of limitation.

Which sections of the Income-tax Act were involved?

Section 148,Section 153A,Section 143(3),Section 148A,Section 149,Section 150,Section 147,Section 132

AI-generated summary — verify with the full judgment below

Cause title — parties, addresses and appearances
W.P.(C) 5781/2025 Page 1 of 5 $~45 * IN THE HIGH COURT OF DELHI AT NEW DELHI + W.P.(C) 5781/2025 & CM APPL. 26369-71/2025 MEERA GUPTA .....Petitioner Through: Mr Aditya Kumar Garg, Advocate. versus ASSISTANAT COMMISSIONER OF INCOME TAX AND ANR .....Respondents Through: Mr Sanjay Kumar, SSC, Ms Monica Benjamin and Ms Easha Kadian, JSCs for the Revenue. CORAM: HON'BLE MR. JUSTICE VIBHU BAKHRU HON'BLE MR. JUSTICE TEJAS KARIA

O R D E R % 02.05.2025

1.

The petitioner has filed the present petition, inter alia, impugning the notice dated 21.02.2024 [impugned notice] issued under Section 148 of the Income Tax Act, 1961 [the Act] in respect of the Assessment Year [AY] 2011-12. 2. The petitioner had filed its return of income for AY 2011-12 on 28.07.2011, declaring an income of ₹16,06,270/-. On 11.11.2014, a search was conducted under Section 132 of the Act in the case of Sh. Y.K. Gupta and his family members (Smt. Meera Gupta and Mukul Gupta).

3.

It is the petitioner’s contention that no incriminating material pertaining to the searched persons was found during the said search, thus no further proceedings were warranted.

4.

Pursuant to the search, proceedings under Section 153A of the Act were initiated against the petitioner by issuance of a notice dated 22.12.2016. Thereafter, the assessment order dated 30.12.2016 was passed under Section 153A read with Section 143(3) of the Act. The petitioner Draft Only 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 02/07/2025 at 00:03:57 contends that the assessment year in question was a completed assessment and, in the absence of any incriminating material found during the course of the search, the addition of ₹14,82,60,830/- made by the Assessing Officer [AO] was without jurisdiction and contrary to the settled legal principles.

5.

Aggrieved by the assessment order dated 30.12.2016 passed by the AO, the petitioner preferred an appeal before the Commissioner of Income Tax (Appeals) [CIT(A)]. By an order dated 12.09.2019, the CIT(A) deleted the additions made by the AO, by relying on Commissioner of Income-tax v. Kabul Chawla: (2016) 380 ITR 573 and Principal Commissioner of Income-tax v. Meeta Gutgutia (2017) 395 ITR 526, that no addition was permissible in the absence of incriminating material, as the year in question was not an abated assessment year.

6.

The Revenue appealed against the order dated 12.09.2019 passed by the CIT(A) before the learned Income Tax Appellate Tribunal [ITAT]. The learned ITAT dismissed the appeal preferred by the Revenue by the order dated 12.10.2022, relying upon Commissioner of Income-tax v. Kabul Chawla (supra) and Chintels India Ltd. v. Deputy Commissioner of Income-tax: (2017) 397 ITR 416. 7. On 11.01.2024, relying on the CBDT Instruction No.1/2023, dated 23.08.2023, the AO issued a notice under Section 148A(b) of the Act requiring the petitioner to show cause why the assessment for the relevant assessment year [AY 2011-12] should not be reopened under Section 148 of the Act.

8.

In response to the aforesaid notice, the petitioner filed a reply on 25.01.2024, challenging the initiation of the reassessment proceedings. The petitioner claimed that the notice dated 11.01.2024 was time barred and was Draft Only 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 02/07/2025 at 00:03:57 not valid as the said notice did not contain the signatures of the AO.

9.

On 21.02.2024, the AO rejected the petitioner’s reply and passed an order under Section 148A(d) of the Act, deeming the case fit for reopening and further issued a notice under Section 148 of the Act, asserting that the proceedings were within the limitation period by invoking Section 150 of the Act.

10.

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 impugned notice has been issued within the stipulated time by virtue of the non-obstante clause under Section 150 of the Act. The Revenue claims that the impugned notice is premised on the ‘findings and directions’ as embodied in the decision of the Supreme Court in Principal Commissioner 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 or a requisition made under Section 132A of the Act. The Revenue construes the said decision as constituting a finding or a direction for issuing such notices in respect of cases such as that of the assessee’s.

11.

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 and/or a direction for 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 Draft Only 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 02/07/2025 at 00:03:57 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 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 fulfillment 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 Draft Only 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 02/07/2025 at 00:03:57 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.”

12.

Plainly, the controversy involved in this 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 period as stipulated under Section 149 of the Act is not applicable, in the given facts, is erroneous and thus, rejected.

13.

The petition is, accordingly, allowed and the impugned notice is set aside. The pending applications are also disposed of. VIBHU BAKHRU, J TEJAS KARIA, J MAY 02, 2025/M Click here to check corrigendum, if any Draft Only 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 02/07/2025 at 00:03:57

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