BALAR MARKETING PRIVATE LIMITED vs. ASSISSTANT COMMISSIONER OF INCOME TAX CENTAL CIRCLE-13 DELHI & ORS.

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W.P.(C)/6558/2024HC DelhiDLHC01026268202401 May 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 allowed the petition and set aside the impugned notice. The Court relied on its own decision in ARN Infrastructures India Ltd. v. Assistant Commissioner of Income Tax Cental Circle-28 Delhi & Ors. The Court held that the liberty granted to the Revenue by the Supreme Court in Abhisar Buildwell Pvt. Limited to resort to reassessment in cases where search did not yield incriminating material was subject to the fulfillment of conditions mentioned in Sections 147/148 of the Act and compliance with the chapter pertaining to reassessment. The Court explicitly rejected the contention that the time period stipulated under Section 149 of the Act is not applicable in the given facts, finding it erroneous. Therefore, the reassessment proceedings initiated under Section 148 were deemed invalid for not complying with the statutory prescriptions, including the limitations under Section 149.

What were the facts?

The petitioner, Balar Marketing Private Limited, is challenging a notice dated March 30, 2024, issued under Section 148 of the Income Tax Act, 1961, for Assessment Year 2013-14. A search under Section 132 was conducted on March 23, 2021, involving the petitioner, but the petitioner claims no incriminating material was found. Subsequently, proceedings under Section 153A were initiated, leading to an assessment order dated March 31, 2022, with an addition of ₹24,54,43,710/-. The Commissioner of Income Tax (Appeals) deleted this addition on August 11, 2023, relying on the Supreme Court's decision in PCIT v. Abhisar Buildwell Pvt. Limited, stating no addition was permissible without incriminating material for a non-abated assessment year. Subsequently, on February 1, 2024, the Assessing Officer issued a notice under Section 148A(b) for AY 2013-14, invoking Section 150 of the Act and CBDT Instruction No. 1/2023. The petitioner's reply challenging the reassessment was rejected on March 28, 2024, and a notice under Section 148 was issued.

What were the issues?

1. Whether the impugned notice dated March 30, 2024, issued under Section 148 of the Income Tax Act, 1961, for Assessment Year 2013-14, is valid, considering the prior search under Section 132 and subsequent proceedings under Section 153A and the deletion of additions by the CIT(A)? Assessee's Contention: The petitioner argues that the prior search did not yield incriminating material, and the assessment for the year in question was completed. They contend that Section 150(1) of the Act is inapplicable as there was no direction from the Supreme Court to reopen the case, citing the rejection of such a prayer by the Revenue in PCIT v. Abhisar Buildwell Pvt. Ltd. The petitioner also relies on the Delhi High Court's decision in ARN Infrastructures India Ltd. v. Assistant Commissioner of Income Tax. Revenue's Contention: The revenue initiated reassessment proceedings by issuing a notice under Section 148A(b) and subsequently under Section 148, asserting that the proceedings were within the limitation period by invoking Section 150 of the Act and relying on CBDT Instruction No. 1/2023. The revenue's specific arguments regarding the applicability of Section 150 and the conditions for reopening are not explicitly detailed in the judgment, beyond their action of issuing the notices.

Which sections of the Income-tax Act were involved?

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

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) 6558/2024 & CM APPL. 27318/2024 BALAR MARKETING PRIVATE LIMITED .....Petitioner Through: Mr Ruchesh Sinha and Ms Monalisa Maity, Advocates. versus ASSISSTANT COMMISSIONER OF INCOME TAX CENTAL CIRCLE-13 DELHI & ORS. .....Respondents Through: Mr Vipul Aggarwal, SSC, Ms Sakshi Shairwal, and Mr Akshat Singh, JSCs. CORAM: HON'BLE MR. JUSTICE VIBHU BAKHRU HON'BLE MR. JUSTICE TEJAS KARIA

O R D E R % 01.05.2025

1.

The petitioner has filed the present petition, inter alia, impugning the notice dated 30.03.2024 [impugned notice] issued under Section 148 of the Income Tax Act, 1961 [the Act] in respect of Assessment Year [AY] 2013-

14.2.

On 23.03.2021, a search was conducted under Section 132 of the Act in the case of Sh. Parasmal Jain including the petitioner. 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.

3.

However, subsequently, proceedings under Section 153A of the Act were initiated against the petitioner by issuance of a notice dated 07.12.2021 issued under Section 153A of the Act. Pursuant to the said notice, the petitioner had filed its return of income for AY 2012-13, declaring an 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.

income of ₹1,12,39,280/-. The Assessing Officer [AO] proceeded with an assessment order dated 31.03.2022 passed under the Section 153A read with Section 143(3) of the Act. The petitioner contends that the assessment for the assessment year in question was a completed assessment and, in absence of any incriminating material found during the course of the search, the addition of ₹24,54,43,710/- made by the AO was without jurisdiction and contrary to settled legal principles.

4.

Aggrieved by the assessment order dated 31.03.2022 passed by the AO, the petitioner preferred an appeal before the Commissioner of Income Tax (Appeals) [CIT(A)]. The CIT(A) deleted the addition made by the AO, by an order dated 11.08.2023. The CIT(A) relied upon the decision of the Supreme Court in PCIT v. Abhisar Buildwell Pvt. Limited: (2024) 2 SCC 433, and held that no addition was permissible in the absence of incriminating material, as the year in question was not an abated assessment year.

5.

On 01.02.2024, relying on Section 150 of the Act and 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 2013-14] should not be reopened under Section 148 of the Act.

6.

In response to the aforesaid notice, the petitioner filed a reply on 26.02.2024, challenging the initiation of the reassessment proceedings. The petitioner claimed that Section 150(1) of Act is inapplicable, as there was no direction from the Supreme Court to reopen the case, citing the rejection of such a prayer by the Revenue in the PCIT v. Abhisar Buildwell Pvt. Ltd. (supra). 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.

7.

On 28.03.2024, the AO rejected the petitioner’s reply, and passed an order under Section 148A(d) of the Act, deeming it a fit case 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.

8.

In ARN Infrastructures India Ltd. v. Assistant Commissioner of Income Tax Cental Circle-28 Delhi & Ors.: Neutral Citation No.:2024:DHC:7423-DB, this court held as under:

“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 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.

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.”

9.

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

10.

The petition is, accordingly, allowed and the impugned notice is set aside. The pending application is also disposed of. VIBHU BAKHRU, J TEJAS KARIA, J MAY 01, 2025 M 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.

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