DHARAMPAL PREMCHAND LTD vs. 1. ASSISTANT COMMISSIONER OF INCOME TAX CENTRAL CIRCLE & ORS.

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W.P.(C)/3104/2024HC DelhiDLHC01010099202428 October 2024Author: HON'BLE MR. JUSTICE VIBHU BAKHRU,HON'BLE DR. JUSTICE SWARANA KANTA SHARMA4 pages
AI SummaryAllowed

What did the High Court hold?

The Delhi High Court held that the controversy was covered by its previous decision in ARN Infrastructures India Ltd. v. Assistant Commissioner of Income Tax Cental Circle-28 Delhi & Ors. The Court reiterated that the Supreme Court's observations in Abhisar Buildwell (P.) Ltd. were not a carte blanche to override the restrictions in Section 149 of the Act. The liberty granted to the Revenue to initiate reassessment was subject to the fulfillment of conditions stipulated in Sections 147 and 148 of the Act. The Court found the Revenue's contention that the time period under Section 149 was not applicable to be erroneous. Consequently, the petitions were allowed, and the impugned notices were set aside. The Court did not expressly leave any issue undecided.

What were the facts?

The petitioner, Dharampal Premchand Ltd., filed three writ petitions challenging notices dated 30.11.2023 issued under Section 148 of the Income Tax Act, 1961. These notices pertained to assessment years (AY) 2007-08, 2006-07, and 2005-06. The petitioner argued that these notices were issued beyond the time limits prescribed by Section 149(1) of the Act. The Revenue contended that the notices were valid by virtue of Section 150 of the Act, relying on the Supreme Court's decision in Principal Commissioner of Income-tax, Central-3 v. Abhisar Buildwell (P.) Ltd. The Revenue interpreted this decision as a directive to issue such notices in cases like the petitioner's, even if otherwise time-barred.

What were the issues?

1. Whether notices issued under Section 148 of the Income Tax Act, 1961, for AYs 2007-08, 2006-07, and 2005-06, which are otherwise beyond the period stipulated under Section 149(1) of the Act, can be considered valid by virtue of Section 150 of the Act, based on the findings and directions in the Supreme Court's decision in Principal Commissioner of Income-tax, Central-3 v. Abhisar Buildwell (P.) Ltd. (2024) 2 SCC 433? Assessee's Contention: The impugned notices are beyond the period stipulated under Section 149(1) of the Act. Revenue's Contention: The impugned notices are valid under Section 150 of the Act, as they are premised on the 'findings and directions' in the Supreme Court's decision in Principal Commissioner of Income-tax, Central-3 v. Abhisar Buildwell (P.) Ltd., which permits reassessment in certain cases related to search even if otherwise time-barred.

Which sections of the Income-tax Act were involved?

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

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Heard together (3 matters)

W.P.(C) 3104/2024
W.P.(C) 5068/2024
W.P.(C) 5100/2024

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

Cause title — parties, addresses and appearances
$~43 to 45 * IN THE HIGH COURT OF DELHI AT NEW DELHI + W.P.(C) 3104/2024 & CM APPL. 12770/2024 + W.P.(C) 5068/2024 & CM APPL. 20782/2024 + W.P.(C) 5100/2024 & CM APPL. 20920/2024 DHARAMPAL PREMCHAND LTD. .....Petitioner Through: Ms.Bina Gupta, Ms. Sheena Taqui, Ms. Akansha Saini and Mr. Shiv Vinayak Gupta, Advs. versus ASSISTANT COMMISSIONER OF INCOME TAX & ORS. .....Respondents Through: Mr. Shlok Chandra, SSC, Ms. Madhvi Shukla, JSC, Ms. Naincy Jain, JSC and Mr. Sushant Pandey, Adv. for Revenue. Mr. Krishna Kumar Sharma, Sr. Panel Counsel for UOI. CORAM: HON'BLE MR. JUSTICE VIBHU BAKHRU HON'BLE MS. JUSTICE SWARANA KANTA SHARMA

O R D E R %

28.10.

2024

1.

The petitioner has filed the present petitions, inter alia, impugning notices dated 30.11.2023 issued under Section 148 of the Income Tax Act, 1961 (hereafter the Act) in respect of assessment year (AY) 2007-08 in W.P.(C) 3104/2024, AY 2006-07 in W.P.(C) 5068/2024 and AY 2005-06 in W.P.(C) 5100/2024. 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 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 11/11/2024 at 11:33:16

impugned notices are within the time by virtue of Section 150 of the Act. The Revenue claims that the impugned notices are 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. The Revenue construes the 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. 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 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 11/11/2024 at 11:33:16

“…..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 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.” 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 11/11/2024 at 11:33:16

4.

Plainly, the controversy involved in these petitions 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.

5.

The petition is, accordingly, allowed and the impugned notices are set aside. All pending applications are also disposed of.

VIBHU BAKHRU, J

SWARANA KANTA SHARMA, J OCTOBER 28, 2024/A 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 11/11/2024 at 11:33:16

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