APPLE COMMODITIES LIMITED vs. ASSISTANT COMMISSIONER OF INCOME TAX CENTRAL CIRCLE 2 DELHI & ANR.

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W.P.(C)/16928/2024HC DelhiDLHC01089963202409 December 2024Author: HON'BLE MR. JUSTICE TUSHAR RAO GEDELA,HON'BLE THE ACTING CHIEF JUSTICE4 pages
AI SummaryAllowed

What did the High Court hold?

The Delhi High Court held that the controversy in these petitions is covered by its earlier decision in ARN Infrastructures India Ltd. v. Assistant Commissioner of Income Tax Central Circle-28 Delhi & Ors. The Court reiterated that the Supreme Court's observations in Abhisar Buildwell were not a carte blanche to override the restrictions in Section 149 of the Act. The Supreme Court's decision was intended to convey that the annulment of search assessments would not deprive the Revenue of its power to reassess, but such reassessment must independently exist and be in accordance with law, fulfilling the conditions stipulated in Sections 147 and 148 of the Act. Therefore, the contention that the time stipulated under Section 149 of the Act is not applicable in the given facts was rejected as erroneous. The petitions were allowed, and the impugned notices were set aside.

What were the facts?

The petitioner, Apple Commodities Limited, has filed four writ petitions challenging notices issued under Section 148 of the Income Tax Act, 1961, dated October 30, 2024. These notices pertain to assessment years 2011-12, 2012-13, 2013-14, and 2014-15. The petitioner contends that these notices are time-barred as they fall outside the period stipulated in Section 149(1) of the Act. The Revenue, represented by the Assistant Commissioner of Income Tax, argues that the notices are saved by the non-obstante clause of Section 150 of the Act. The Revenue's contention is based on the Supreme Court's decision in Principal Commissioner of Income-tax, Central-3 v. Abhisar Buildwell (P.) Ltd., which they interpret as a direction to issue such notices in cases related to search operations under Section 132 of the Act, even if time-barred.

What were the issues?

1. Whether the Supreme Court's decision in Principal Commissioner of Income-tax, Central-3 v. Abhisar Buildwell (P.) Ltd. constitutes a finding and direction permitting the issuance of notices under Section 148 of the Income Tax Act, 1961, for cases otherwise beyond the period stipulated under Section 149 of the Act? (Question of law) Assessee's Contention: The impugned notices are time-barred as they are issued beyond the period prescribed under Section 149(1) of the Act. Revenue's Contention: The impugned notices are not barred by limitation due to the non-obstante clause under Section 150 of the Act. The Revenue relies on the Supreme Court's decision in Principal Commissioner of Income-tax, Central-3 v. Abhisar Buildwell (P.) Ltd., interpreting it as a directive to issue such notices in cases related to search operations under Section 132, even if time-barred.

Which sections of the Income-tax Act were involved?

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

AI-generated summary — verify with the full judgment below

Heard together (4 matters)

W.P.(C) 16928/2024
W.P.(C) 16929/2024
W.P.(C) 16956/2024
W.P.(C) 16957/2024

Read from the judgment's own cause title. This page is filed under one of them.

Cause title — parties, addresses and appearances
$~70, 71, 74 and 75 * IN THE HIGH COURT OF DELHI AT NEW DELHI + W.P.(C) 16928/2024 & CM APPL. 71714-15/2024 + W.P.(C) 16929/2024 & CM APPL. 71716-17/2024 + W.P.(C) 16956/2024 & CM APPL. 71824-25/2024 + W.P.(C) 16957/2024 & CM APPL. 71826-27/2024 APPLE COMMODITIES LIMITED .....Petitioner Through: Mr Mani Bhadra Jain and Mr Pranav Yadav, Advocates. versus ASSISTANT COMMISSIONER OF INCOME TAX CENTRAL CIRCLE 2 DELHI & ANR. .....Respondents Through: Mr Sunil Aggarwal, SSC, Ms Priya Sarkar, Mr Shivansh B Pandya, Mr Viplav Acharya, JSCs and Mr Utkarsh Tiwari, Advocate. CORAM: HON'BLE THE ACTING CHIEF JUSTICE HON'BLE MR. JUSTICE TUSHAR RAO GEDELA

O R D E R % 09.12.2024

1.

The petitioner has filed the present petitions, inter alia, impugning the notices dated 30.10.2024 (hereafter the impugned notices) issued under Section 148 of the Income Tax Act, 1961 (hereafter the Act) in respect of the assessment years (AYs) 2011-12, 2012-13, 2014-15 and 2013-14, in W.P.(C) 16928/2024, W.P.(C) 16929/2024, W.P.(C) 16956/2024 and W.P.(C) 16957/2024, respectively.

2.

The impugned notices are clearly beyond the period as stipulated under Section 149(1) of the Act. However, it is the Revenue’s case that the impugned notices are not barred by limitation by virtue of the non-obstante clause under Section 150 of the Act. The Revenue claims that the impugned notices are premised on the ‘findings and directions’ as embodied in 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. The Order is downloaded from the DHC Server on 13/12/2024 at 12:31:06

decision of the Supreme Court in Principal Commissioner of Income-tax, Central-3 v. Abhisar Buildwell (P.) Ltd.: (2024) 2 SCC 433. The Supreme Court had held that 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 said decision as constituting a finding or a direction for issuing such notices in respect of cases such of the assessee’s.

3.

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 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. In ARN Infrastructures India Ltd. v. Assistant Commissioner of Income Tax Central Circle-28 Delhi & Ors.: Neutral Citation No.:2024:DHC:7423-DB this Court 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 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 13/12/2024 at 12:31:06

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 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.”

4.

Plainly, the controversy involved in these petitions is covered by 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. The Order is downloaded from the DHC Server on 13/12/2024 at 12:31:06

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 thus rejected.

5.

The petitions are, accordingly, allowed and the impugned notices are set aside. All pending applications are also disposed of. ACTING CHIEF JUSTICE TUSHAR RAO GEDELA, J DECEMBER 09, 2024 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. The Order is downloaded from the DHC Server on 13/12/2024 at 12:31:06

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